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California’s Global Economic Rank Faces Challenges as Growth Slows

Despite becoming the world’s fourth-largest economy in 2024, California’s position is threatened by a cooling economy, currency shifts, and rising global competition.

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FILE – California Gov. Gavin Newsom holds a fireside chat with Stephen Cheung, the President and Chief Executive Officer of the Los Angeles County Economic Development Corporation (LAEDC) and its subsidiary, the World Trade Center Los Angeles (WTCLA) at the 2025 Economic Forecast and Industry Outlook convening on Wednesday, Feb. 26, 2025, at the East LA College in Los Angeles. (AP Photo/Damian Dovarganes, File)
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Overview

  • California’s GDP reached $4.1 trillion in 2024, making it the fourth-largest economy globally, surpassing Japan for the first time.
  • The state’s economic growth slowed significantly in Q4 2024, with a 4% annualized rate, ranking 40th among U.S. states and trailing the national average of 4.8%.
  • A 10% appreciation of the Japanese yen against the U.S. dollar in early 2025 could impact California’s nominal GDP ranking, potentially allowing Japan to reclaim the fourth spot.
  • India’s rapidly growing economy, projected to expand by 6.2% in 2025, is poised to overtake California’s GDP in the near future.
  • Adjusting for California’s high cost of living, the state’s global economic ranking drops to 12th, highlighting affordability challenges for residents and businesses.