The Olympics pits the athletes of the United States against the rest of the world, but if the size of an economy is what defined a country, California would be walking in the Opening Ceremony with the best of them.
As shown in the latest forecast by the LAEDC, California makes up close to $2 trillion of the $15 trillion U.S. economy, meaning the Golden State would be the world’s ninth largest economy if it was its own country. But more important than the size of its economy, post-recession, is its recent economic growth. Within those numbers lie the real story of how the California economy is fairing.
The state is growing at a clip slightly faster than the country as a whole, with 2 percent growth edging the United States’ 1.8 percent. And California’s outpacing of the U.S. isn’t just a domestic phenomenon: the state also outgrew every country on the list with a larger economy, excluding juggernauts Germany, China, and Brazil. What about France, the U.K., Italy, Spain? All are green with envy over California’s superior growth rate.
What exactly is driving California’s economy to outpace marquee economies around the world? We looked to the California Department of Finance’s July Finance Bulletin for answers.
The contents of the bulletin break things into what is essentially a tale of two years: 2011 and 2012. Luckily, the trends from 2011 to 2012 show California finally walking towards the light at the end of the tunnel. While job growth in the first five months of this year was nothing to flaunt, it was at least consistent across all sectors and was spread fairly evenly across major metropolitan areas. In fact, 10 of California’s 13 leading metropolitan areas experienced job growth in the first five months of 2012, better than during all of 2011.
Four regions in California saw the growth hit a full percentage point, and three of the four were regions that desperately needed the boost. Fresno, Riverside, and Stockton, all inland regions, were some of the areas hardest hit by the recession, meaning their turnaround represents what is hopefully a change for the whole state.
Even real estate – the red herring of economic stagnation in the wake of the Great Recession – appears to be on a slow recovery track. May’s pending home sales indicate that demand is going up, which makes May the thirteenth month in a row with year-over-year improvement in the real estate market.
In an economic climate that sees much of the world experiencing miniscule to negligible growth, California is sitting comparatively pretty. However, economics are fickle, and California will need to continue to innovate and cultivate the growth of its businesses if it truly wants to keep this mild turnaround going.
We’ll need a smart, statewide economic strategy that ensures we can create jobs across all regions of the state and stay competitive in the race against the rest of the country and the world. Check out the Economic Summit Action Plan for the latest initiatives for doing just that.