California's rise in world economy rankings underscores growth narrative
A state spokesman points to California's recent designation as the worlds fifth-largest economy to counter the idea that busines is fleeing California.
The state’s economy outpaced the United Kingdom in 2017, according to data from the U.S. Commerce Department released Friday.
“If you look at our job growth, we have been growing at a faster clip than the U.S. as a whole – and our population growth shows we have added a fair number of people,” said H.D. Palmer, a state Department of Finance spokesman.
Gross domestic product grew by $127 billion in 2017 to more than $2.7 trillion in California while the UK’s economic output fell slightly when measured in U.S. dollars, though that was partly due to exchange rate fluctuations, said Irena Asmundson, chief economist for the California Department of Finance.
California has been responsible for one out of six new jobs created in the country over the past five years, Admundson said.
The growth in GDP also runs counter to arguments that the stair-step minimum wage increase to $15 by 2022 approved in April 2016 would squeeze growth, Palmer said.
The state’s inclusion on the list speaks to the diversity of California’s economic drivers from the tech-centric Silicon Valley to the north, the agricultural sector in the Central Valley and the twin ports in Southern California.
“I would worry if the growth were coming from only one sector,” Asmundson said.
Financial services and real estate saw the largest growth increasing by 20.7%, or $26 billion, but a number of other sectors had 8% or 9% growth, Asmundson said. All sectors except agriculture, saw positive growth, she said.
The information sector grew by $20 billion, a 15.8% increase; trade, transportation, and utilities grew $19 billion, a 14.9% increase; and professional and business services grew $16 billion, a 12.5% increase. Technology firms are generally classed in the information and professional and business services sectors.
“If you look at what the rating agencies consider, the diversity of the state’s economy is always considered a positive,” Palmer said.
The state’s population, which grew by 309,000 residents in 2017 to 39,810,000, is larger than that of Canada or Australia. Since 2010 population growth has averaged 333,000 a year, according to a Department of Finance report released last week.
The state has been in fifth place on the GDP comparison chart as recently as 2002, but had fallen to tenth place in 2012 as it struggled to recover from the recession.
“Since the recession, the state has done well at creating jobs, we have expanded our exports and had a lot of innovations,” Asmundson said.