While critics of California point to high taxes, eye-watering housing costs, earthquakes and wildfires as reasons for businesses to flee, the state’s economy is set to become the world’s fourth largest, according to a report.
Elon Musk turned heads when he decided to relocate Tesla’s headquarters from California to Texas, citing housing availability and commute time for employees in the Bay Area, but the state’s economy is now poised to overtake that of Germany, says Bloomberg.
And that would leave it sitting only behind the economies of the US, China and Japan.
California, which has a population of 40m people, overtook the UK for fifth place in 2017 and jumped ahead of Brazil for seventh, and France for sixth place in 2015.
The state’s latest economic figures will not be officially published until 2023, but Bloomberg says that estimates suggest California’s domestic product will be ahead of Germany’s by around $72bn.
California, which is home to the likes of Apple, Google and Facebook, currently has 379 companies with a market value of at least $1bn, compared to 155 publicly-traded firms in Germany.
Corporate revenues in California have increased by 147 per cent in the past three years and market capitalization by 117 per cent, compared to 41 per cent and 34 per cent in Germany.
In 2021 Germany had an advantage in GDP of $4.22 trillion to California’s $3.3576, but Bloomberg says that it was the smallest ever and is set to disappear.
The state’s top three industries – technology hardware, media and software – have increased by 63 per cent, 95 per cent and 115 per cent over the past three years, according to Bloomberg data.
California governor Gavin Newsom, who is set to win another term in office in the November midterm elections, welcomed the situation.
“All this data continues to belie the dominant narrative and illusion” of California’s ‘best days being behind us,’” Mr Newsom said.
“As somebody who’s grown up in California, I feel pride in California’s resilience, leadership, its entrepreneurs, its formula for success that goes back over half a century.
And Mr Newsom said that the state would continue “doubling down on industries of the future, like renewables and clean energy.”
Despite personally leaving California for Texas, Mr Musk has vowed to actually expand production at Tesla’s Fremont factory, while SpaceX also remains headquartered in the state.
