We frequently hear that California is a terrible place to conduct business. It is rife with unnecessary restrictions that make it difficult for businesses to survive.
The critics of this state take great pleasure in pointing out that California suffered modest population decreases for some time prior to this year. The trend of white-collar workers working from home, which started during the COVID-19 pandemic, contributed to some of that. Numerous corporate offices have also left the state.
But why is California still driving the national economy if all of that is accurate? This might surprise you, but it’s true. Texas, which ranks second with a GDP of $2.69 trillion, is just matched by California, which has a gross domestic product (GDP, the total value of all products and services generated in a place) of $4.08 trillion, which is roughly proportionate to the two states’ respective populations.
With a GDP that makes up over 17% of the US economy, California is the fifth largest economy globally, behind the US as a whole, China, Japan, and Germany. California’s GDP share is significantly higher than its 12% population share in the US.
This is a little-known fact about the wildly publicized corporate defections: Even if their headquarters are now located elsewhere, companies like Tesla, Toyota, and Chevron still carry out a significant portion of their activities here. Texas, where Tesla and Toyota currently have their headquarters, has significantly more than any other state.
For the numerous people who like disparaging this state and claiming that its healthy environment is the only reason it survives economically, here is another surprise: Five Republican governors and ten Democratic governors lead the 15 states with the highest GDPs, according to the U.S. Bureau of Economic Analysis.
Among them are Colorado, Massachusetts, New York, Illinois, Pennsylvania, New Jersey, North Carolina, Washington, and Massachusetts. Approximately 90% of the US economy is accounted for by the top 15 states combined. In the end, a large portion of Donald Trump’s disparaging remarks about California and other blue states during his intensely public 2024 campaign were untrue.
It turns out that California’s enormous economy barely notices when a large corporation relocates its headquarters. In actuality, California outperforms the majority of the world, which is a major factor in America’s success.
Ignore the fact that energy and real estate are more expensive here than practically anywhere else (only in Hawaii are real estate and energy expenses greater than in Alaska and Hawaii). California is largely responsible for maintaining the U.S. economy as the strongest in the world since it continues to generate considerably more goods and services than its fair share.
All of that also fails to acknowledge that California is the birthplace of the majority of significant industrial advancements over the past 50 years, including artificial intelligence, cellphones, and electric vehicles. All of this is supported by data from county GDP ratings.
California is home to two of America’s five most productive counties, for instance. Together, the counties of Santa Clara and Los Angeles generate about a fifth of the economic activity in the 23 wealthiest counties in the country.
Only seven of the 23 most productive counties, however, are located in states that Trump has won in each of the previous three presidential elections. Two Texas counties, Travis (Austin) and Harris (Houston), are among the seven; they have long been Democratic islands amid the Republican red sea of Texas.
For instance, Los Angeles County produced more this year than the combined output of Philadelphia County, Pennsylvania; Fulton County, Georgia (Atlanta); Maricopa County, Arizona (Phoenix); and Dallas County, Texas.
The U.S. Bureau of Economic Analysis’s comparisons of California county GDPs with those of other countries are equally important. Productivity in Los Angeles County surpasses that of Switzerland. With a population of almost 100 times that of Pakistan, Santa Clara County, the birthplace of Silicon Valley, produces more.
We are discussing businesses that generate enormous amounts of economic activity, such as Google and Sony Studios, Snapchat and Hewlett-Packard, Netflix and Hulu. Even if none of this will stop Trump from disparaging California, he still needs to rely on the state if he hopes to have any sort of economic success during his next term.
You can read more of Thomas Elias’s essays online at Californiafocus.net and send him an email [email protected].
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