California‘s economy has overtaken that of the United Kingdom to become the world’s fifth largest economy, according to new federal data made public on Friday.
The Golden State’s gross domestic product rose by $127 billion from 2016 to 2017, surpassing $2.7 trillion, driven by strong productivity.
Meanwhile, the UK’s economic output slightly shrunk over that time when measured in U.S. dollars to reach $2.625 trillion, due in part to exchange rate fluctuations.
The data demonstrate the sheer immensity of California’s economy, home to nearly 40 million people, a thriving technology sector in Silicon Valley, the world’s entertainment capital in Hollywood and the nation’s salad bowl in the Central Valley agricultural heartland.
It also reflects a substantial turnaround since the Great Recession.
‘We have the entrepreneurial spirit in the state, and that attracts a lot of talent and money,’ said Sung Won Sohn, an economics professor at California State University Channel Islands.
‘And that’s why, despite high taxes and cumbersome government regulations, more people are coming into the state to join the parade.’
All economic sectors except agriculture contributed to California’s higher GDP, said Irena Asmundson, chief economist at the California Department of Finance.
Financial services and real estate led the pack at $26 billion in growth, followed by the information sector, which includes many technology companies, at $20 billion. Manufacturing was up $10 billion.
California last had the world’s fifth largest economy in 2002 but fell as low as 10th in 2012 following the Great Recession.
Since then, the largest U.S. state has added 2 million jobs and grown its GDP by $700 billion.
California’s economic output is now surpassed only by the total GDP of the United States, China, Japan and Germany.
The state has 12 percent of the U.S. population but contributed 16 percent of the country’s job growth between 2012 and 2017.
Its share of the national economy also grew from 12.8 percent to 14.2 percent over that five-year period, according to state economists.