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Fact Sheet · October 2024

California’s Economy

Jenny Duan and Sarah Bohn

Supported with funding from the Blue Shield of California Foundation and the James Irvine Foundation

California is an economic powerhouse, nationally and globally.

  • In 2023, California’s GDP was about $3.9 trillion, comprising 14% of national GDP ($27.7 trillion). Texas and New York are the next largest state economies at 9% and 8%, respectively.
  • California’s economy ranks 5th internationally, behind the US, China, Germany, and Japan. On a per capita basis, California’s GDP is greater than all of these countries.
  • California’s economy has grown relatively slowly in recent years, averaging 2.3% per year between 2020 and 2023, compared to 3.9% on average over the previous four years. By comparison, Florida (4.6%) and Texas (3.9%) grew faster than California since 2020.
  • Over the long term, California’s economy has grown faster than the nation overall (111% vs 75% over the past 25 years) and faster than other large states except for Texas (128%). On a per capita basis, California’s economic growth outpaces all other large states over the long term.

California’s GDP per capita has grown faster than the rest of the country

Growth in GDP per capita since 1998

figure - California’s GDP per capita has grown faster than the rest of the country

SOURCE: Bureau of Economic Analysis.
NOTES: GDP is the monetary value of goods and services produced in a place in a given year. This calculation uses population estimates in the middle of each year and GDP in inflation-adjusted dollars.

Technology has grown over time, but real estate, manufacturing, and health care are still big.

  • Private industry comprises 90% of California’s GDP—up from 84% in over the last 25 years. Government makes up the remaining 10%—down from 17% in the same time period.
  • Real estate and finance are the largest contributors to the state’s GDP (18%), which has been the case for more than 25 years. Professional services and information grew substantially over that time—driven primarily by tech—and are now 16% and 14% of GDP, respectively. Manufacturing has also grown, from 8% to 11%.
  • Health care is among the fastest growing contributors, making up 7% of GDP in 2023. It is the largest sector statewide in terms of businesses (40%) and jobs (16%).

Growth in jobs and businesses have powered the state’s economy.

  • California’s labor market grew by 4.1 million jobs (29%) between 1998 and 2023; over the same 25 year period, the number of businesses with employees grew more than 72%. Both outpaced population growth (18%), leading to robust gains in economic output.
  • About 62% of Californians age 16+ participate in the labor force, down from a peak of about 67% in 2000; this shift is due primarily to an aging workforce. Most are wage and salary workers (89%) but over 2 million are self-employed as business owners, independent contractors, or gig workers.
  • California’s employment growth is generally similar to that of the nation (averaging 1.2% and 1.0%, respectively, over the past 25 years); since the pandemic, the state’s employment growth has been a bit slower (0.8% vs 1.1% in the US).
  • Unemployment is typically a bit higher in California, averaging 6.8% since 1998 compared to 5.6% for the US (on a monthly basis). In the past two years, unemployment has been well below historical averages: 4.7% in California and 3.7% in the US.

California’s economy varies widely across regions.

  • In 2022, the Bay Area’s per capita income was $124,000, more than double that of the northern, Central Valley, and Inland Empire areas. In 1998, regions had at most a $32,000 difference in per capita income.
  • Growth in the professional services and information sectors is a driver of these regional patterns. Professional services has increased most in the Bay Area, where it is the most common employment sector; it is also a major employer in San Diego, Orange, and Los Angeles Counties.
  • Wages are higher in California’s coastal urban areas; in 2022, the median wage was $33/hour in the Bay Area and $26 in San Diego County, compared to $21 in the Inland Empire and $19 in the Central Valley and Sierra region.
  • The cost of housing and living overall is higher on the coast, contributing to larger shares of Californians who are working but experiencing poverty (from 7% in LA to 3% in the Central Valley, for those working full time).

California’s regions have grown apart economically

figure - California’s regions have grown apart economically

SOURCES: Bureau of Economic Analysis.
NOTES: Total personal income by region is adjusted to 2022 dollars using CPI-U and then divided by population. Regions are defined by counties; starting with the three largest counties, then Northern (Butte, Colusa, Del Norte, Glenn, Humboldt, Lake, Lassen, Mendocino, Modoc, Nevada, Plumas, Shasta, Sierra, Siskiyou, Tehama, Trinity, Sutter, Yuba), Sacramento (El Dorado, Placer, Sacramento, Yolo), Bay Area (Alameda, Contra Costa, Marin, Napa, San Francisco, San Mateo, Santa Clara, Santa Cruz, Solano, Sonoma), Central Valley and Sierras (Alpine, Amador, Calaveras, Fresno, Inyo, Kern, Kings, Madera, Mariposa, Merced, Mono, San Joaquin, Stanislaus, Tulare, Tuolumne), Central Coast (Monterey/San Benito, San Luis Obispo, Santa Barbara, Ventura), and Inland Empire (Imperial, Riverside, San Bernardino).

Global and national forces shape—and are shaped by—California’s economy.

  • Inflation spiked at 9% in mid-2022, driven by pandemic challenges to supply chains, buying patterns, and spending. Previously, inflation had averaged 2% since 1998. By fall 2024, inflation stood at 2.6%.
  • California produces 9% of the nation’s international exports of goods ($179 billion in 2023) and 20% of its exports of services (also $179 billion in 2022). It exports 17% of US agricultural products and 18% of computer and electronic products. Top export markets include Mexico (19% of goods exports), Canada (11%), and China (9%). California imports $121 billion in goods from China; Mexico is next at $61 billion.
  • Foreign businesses maintained an estimated 18,000 establishments in the state in 2024, generating around 800,000 jobs. About half of these jobs are in manufacturing or professional services sectors. Firms based in Japan, the United Kingdom, and France are most common.

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Economic Growth Economic Mobility Economic Trends Economy Housing Jobs and Employment Workforce and Training