California bounces back as No. 7 economy in world
SACRAMENTO >> After taking a significant recession-era hit, California’s economy has bounced back up to the seventh largest in the world as the state’s gross domestic product reached $2.3 trillion in 2014, according to figures released Wednesday by the U.S. Bureau of Economic Analysis.
That was enough for California to edge past Brazil’s 2014 GDP of $2.2 trillion, but still below the sixth-place United Kingdom.
California had slipped in the ranks since 2002, when it last claimed the No. 6 spot. The state bottomed out at ninth in 2010 after a harsh drop in economic output after the 2008 financial crisis.
But 2014 saw statewide economic growth on multiple fronts, particularly in professional and technical services, which includes jobs spanning from IT consulting to construction-related engineering and architecture, as well as in manufacturing. The agricultural sector also grew in 2014 despite an ongoing drought.
“People see us as Silicon Valley, where computers are made, and Los Angeles, where movies are made, but we’re doing a lot more than that,” said Robert Kleinhenz, chief economist at the Los Angeles County Economic Development Corp.
Kleinhenz cautioned against taking the statistic “seventh largest” at face value, however, noting the figure does not take exchange rates into consideration.
“The appreciation of the dollar will just by itself improve the ranking of the state of California,” he said.
Still, Gov. Jerry Brown has reasons for optimism.
“California certainly has its share of challenges, but these figures reaffirm the strength and diversity of our economy,” Brown spokesman Evan Westrup said in an email. “We aren’t competing with Texas or Florida, we’re challenging world economies like Brazil and Germany.”
California’s economic resurgence has emboldened Democratic lawmakers who are pushing for a 2015-16 spending plan that’s roughly $2 billion higher than the Democratic governor’s $115 billion proposal.
Most of the money would go to social programs for the poor, namely health care, welfare, child care and higher education. Despite its booming economy, California has one of highest poverty rates in the country.
Los Angeles-based economist and consultant Chris Thornberg, principal at Beacon Economics LLC, worries not enough attention is being paid at the state level to the rising cost of housing, which he said will ultimately cap economic growth.
“If you want to continue to grow at these excessive paces, you’re going to need to bring people in — which is going to be difficult when the median cost of a house here is three times what it is in the rest of the nation,” he said.
By Julia Horowitz, The Associated Press