It’s no secret that the state of California has a strong economy. Thanks to the likes of the tech giants based in Silicon valley and the fact that the state is home to the global headquarters of some of the world’s leading companies, it should come as no surprise that there is a significant amount of cash flowing through the state’s veins.
As a matter of fact, the state has such a strong economy that it actually exceeds that of most countries. If California was considered as a separate entity to the rest of the United States, it would weigh in as the sixth largest economy in the world.
At certain points in 2017, California was only marginally behind the United Kingdom in rankings. If you were to look at California in comparison to the economies of other US states, the results are not even close. The next productive states are New York and Texas, however they are over $1 trillion dollars behind California in their annual GDP.
The only economies that outrank California’s are those of the United States, China, Japan, Germany and the United Kingdom – meaning that California performs better than the majority of western nations with strong economies. Since the year 2000, the Californian Economy has increased its GDP in billions of us dollars from circa 1600 billion, to 2300 billion in 2016 therefore demonstrating a phenomenal rate of growth.
The Apple company alone has a revenue that exceeds 215 billion dollars per annum (as of 2016). Other global giants that call the golden state there home include McKesson, Chevron and Wells Fargo who are all raking in the big bucks with close to, or above 100 billion dollars of annual revenue.
The predominant share of California’s exports consists of computers and electronics products. Other notable categories are vehicles and machinery, agriculture, food and beverages, and chemicals and pharmaceuticals. Silicon valley skewers the results significantly. In terms of actual production in California, 38% of products are produced in Los Angeles and Orange County. 17% of production takes place in the bay area, and the remainder occurs in the rest of the country.
The true picture of the California Economy
There is some debate among experts in the industry about the accuracy of the claim that California is the world’s sixth largest economy if it is compared with other global economies on a like-for-like basis. Although the economic reports look at California’s GDP and the cash that is flowing through the state, they do not consider California’s sky high cost of living which naturally bumps up the earning requirements and the local salaries if California residents want to have a comfortable standard of living. According to CNBC’s rankings, California has the fourth highest living costs in the United States – behind Hawaii, New York and Delaware.
If someone were to rent a small apartment in a major Californian city such as San Francisco or San Diego, they would pay a small fortune and an amount that could get them a much more sizeable property in other parts of the United States. The higher costs of living associated with being based in California mean that residents could find themselves in difficulty if something untoward were to happen to their company or their job specifically.
California residents will need to pay more mind to taking care of their financial situation, and in reviewing their options for any potential issues should they lose their source of income. Taking out a cheap personal loan or a auto title loan in San Diego, CA to cope with high rent costs during a difficult period are some ways to help with your financial problems.
The Silicon Valley Factor
California has been loitering in and around the top ten rankings of world economies for the past ten years. There was a small slump in 2012 when California dropped to number 12 in the global economic rankings due to after effects of the global recession and related issues of the housing market slump.
After the storm had passed however, California’s economy picked itself up, dusted itself off and has grown year on year ever since – enjoying a rate of economic growth that is among the highest in the country. In this period, California’s unemployment rate has been almost halved – a phenomenal progression largely due to the continued success and growth of the tech industry.
The main concern for Californians and Economists presently however is the question of whether this ranking is sustainable. What happens if the tech economy sours? Are California placing too much dependence on this? After all, this is where the majority of the economic growth is coming from.
Economic consultant Chris Thornberg disagrees with claims that the California economy has become overly reliant on the tech industry and silicon valley, noting that Los Angeles county employers are creating more jobs than Silicon Valley and San Francisco combined.
Arguably the important thing is to remain aware of the percentage splits within the industry so that as time progresses, alternative avenues and industry opportunities can be reviewed yet not to the point where unnecessary cause for concern is raised. The Californian Economy is still growing at a rate that exceeds the US as a whole.