You’ve been reading for years that companies are fleeing California, putting the Golden State’s economy in peril. However, new analysis suggests that California’s financial standing is better than some of the strongest economies globally.
Last week, Governor Gavin Newsom’s office put out a press release highlighting California’s move to surpass Germany as the world’s fourth-largest economy. The claim was based on an analysis from Bloomberg, which detailed California’s relative global strength. According to author Matthew A. Winkler, estimates suggest California may already have caught Germany. We likely won’t know for sure until data is made available next year.
The Golden State state had already outpaced Brazil and France in 2015 and passed the United Kingdom in 2017, making it number five relative to other nations. Bloomberg credits this continued upward movement to the state’s economy proving to be “relatively resilient through the pandemic and now through the current period of elevated inflation” and California’s continuously growing renewable energy businesses.
“While critics often say California’s best days are behind us, reality proves otherwise – our economic growth and job gains continue to fuel the nation’s economy,” said Governor Newsom said in the press release.
Newsom said the state would continue “doubling down on industries of the future, like renewables and clean energy.”
Bloomberg reported that the market capitalization of companies in renewable energy increased by 731% within the last three years, which is 1.74 times more than Germany’s renewable counterparts.
In addition, the state’s top three industries — technology hardware, media and software — have increased 63%, 95% and 115%, respectively, within the last three years, according to Bloomberg data. At the same time, German’s top markets have been whipsawed by pandemic volatility.
California has also experienced an increase in job creation and a decrease in the unemployment rate. In July 2022, the unemployment rate fell to 3.9%, the lowest since data was first collected in 1976. However, it rose to 4.1% in August.
While a significant amount of people were reported to have left the San Francisco Bay Area during the beginning of the COVID-19 pandemic, the business sector in the area didn’t reflect that, Bloomberg reported. In fact, the region actually grew its share of publicly traded market capitalization.
In response to the Bloomberg reporting, Newsom’s office highlighted inflation relief efforts and renewable energy spending as ways his administration is proactively working to position California to compete into the future.