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Economy of California

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The economy of California is a dominant force in the economy of the United States, with California paying more to the federal system than it receives in direct monetary benefits.[1]

The San Francisco Bay Bridge.

Economic regions

California is home to several significant economic regions. These include:

Sectors

In 2002, the U.S. government adopted an updated system of classifying economic activities (called the North America Industry Classification System, or NAICS), to better reflect today's economy.[2]

In terms of jobs, the largest sectors in California's economy as of 2006 are:

  • Trade, Transportation and Utilities: Wholesale and Retail, Import-Export businesses, Warehousing, etc.
  • Government
  • Professional and Business Services: Management of Companies and Enterprises; Legal, Scientific and Technical Services; Administrative and Support Services
  • Education, Health and Other services
  • Leisure and Hospitality: Tourism, Arts, Entertainment, Recreation, Food Services
  • Manufacturing: Computers and Electronics, Aerospace, Apparel, Oil, other
  • Financial Services: Finance, Insurance, Real Estate
  • Construction
  • Information: Motion Picture Production, Broadcasting, Publishing, Internet businesses and Telecommunications
The Hollywood sign is the most well-known symbol of California's huge entertainment industry.
  • Agriculture and Mining

In terms of output, the largest sectors are:

  • Financial Services
  • Trade, Transportation and Utilities
  • Education, Health and Other services
  • Government
  • Manufacturing
  • Professional and Business Services
  • Information
  • Leisure and Hospitality
  • Construction
  • Agriculture and Mining

International trade and tourism

California has historically derived significant revenue from international trade and tourism. However, the state's share of America's merchandise export trade has been steadily shrinking since 2000, from 15.4% to 11.1% in 2008. [3]The exports of goods made in California totaled $134 billion in 2007. $48 billion of that total was computers and electronics, followed by transportation, non-electrical machinery, agriculture, and chemicals. California trade and exports translate into high-paying jobs for over one million Californians. According to the U.S. Department of Commerce, Bureau of Economic Analysis, in 2005, foreign-controlled companies employed 542,600 California workers, the most of any state. Major sources of foreign investment in California in 2005 were Japan, the United Kingdom, Switzerland, France, and Germany. Foreign investment in California was responsible for 4.2 percent of the state's total private-industry employment in 2005.[4] Total direct travel spending in California reached $96.7 billion in 2007, a 3.6% increase over the preceding year.[5] Los Angeles County receives the most tourism in the state.[6]

Agriculture

Agriculture (including fruit, vegetables, dairy, and wine production) is a major California industry. In fact, California is the world's fifth largest supplier of food and agriculture commodities.[7] Agriculture accounts for just slightly over 2% of California's $1.55 trillion gross state product.[citation needed]

According to the California Department of Food and Agriculture, "California agriculture is nearly a $36.6 billion dollar industry that generates $100 billion in related economic activity."[8] The state’s agricultural sales first exceeded $30 billion 2004[9], making it more than twice the size of any other state's agriculture industry.

California is the leading dairy state.[10] Milk is California's number one farm commodity.[9] California's dairy industry generated $47 billion "in economic activity" in 2004 and employed over 400,000 people."[10]

Oil and electricity

Oil drilling has played a significant role in the development of the state. There have been major strikes in the Bakersfield, Long Beach, Los Angeles and off the California coast.

Historically, California's economy has been controlled by huge corporations such as the Southern Pacific Railroad, Standard Oil of California and the Pacific Gas and Electric Company.

Gross domestic product (GDP)

California is responsible for 13% of the United States' gross domestic product (GDP). The state's GDP is at about $1.7 trillion (as of 2006).

The GDP increased at an annual rate of 3.1% in the first quarter of 2005.[11]

California's gross state product

According to the California Department of Finance, California's gross state product is $1.543 trillion.*[12]

According to the Bureau of Economic Analysis, California's gross state product is $1.727 trillion (2006 data, last updated Thursday, June 07, 2007).[13]

According to the California Legislative Analyst's Office, "California's gross state product is nearly $1.5 trillion..." ("Gross product in 2003", released in 2004).[14]

California as an independent nation

California compared to other countries GDP is in the same range as Spain, Italy and China (corresponding with the Department of Finance figures)
See also Comparison between U.S. states and countries nominal GDP

The economy of California is often cited for how it would compare to other countries if California was an independent nation. The statistic quoted varies widely (usually placing California between 7th and 10th)depending on the source, but also depending on the year. [15] The most recent estimates (provided by the CIA's Factbook) put California tenth. The two main issues are:

  1. determining California's gross state product
  2. determining the gross domestic product (GDP) for various countries

Rankings from different sources

The World Factbook

According to The World Factbook published by the CIA, if California were an independent state, it would have had the tenth largest economy in the world in 2007.[16]

 

California Legislative Analyst's Office

According to the California Legislative Analyst's Office, if California were an independent state, it would have had the eighth largest economy in the world.[17]

 

California Department of Finance

According to the California Department of Finance, if California were an independent state, it would have had the seventh largest economy in the world. [18]

The rankings are:

  1. United States
  2. China
  3. Japan
  4. India
  5. Germany
  6. United Kingdom
  7. Russia
  8. France
  9. Brazil
  10. Italy
  11. Spain
  12. Mexico
  13. Canada
  14. South Korea

(2007 estimates)

The rankings are:

  1. United States
  2. Japan
  3. Germany
  4. P R China
  5. United Kingdom
  6. France
  7. Italy
  8. Spain
  9. Canada

(2005 data)

The rankings are:

  1. United States
  2. Japan
  3. Germany
  4. United Kingdom
  5. France
  6. Italy
  7. China (excluding Hong Kong)
  8. Spain
  9. Canada
  10. Mexico
  11. Korea
  12. India
  13. Australia
  14. Netherlands

(2003 data)

Per capita personal income

Per capita personal income was $38,956 as of 2006, ranking 11th in the nation.[19] Per capita income varies widely by geographic region and profession. The Central Valley has the most extreme contrasts of income, with migrant farm workers making less than minimum wage. While some coastal cities include some of the wealthiest per-capita areas in the U.S., notably La Jolla near San Diego, Beverly Hills, in Los Angeles County, Newport Beach in Orange County in Southern California, San Francisco and Marin County. The most expensive and largest housing markets in the U.S. are in the state of California, so there are a number of communities where average housing prices hover between US$1-2 million. Generally, the Central Valley in northern California is the least expensive area, as is the Inland Empire in Southern California, though prices in the Inland Empire, though falling, are still much higher than the Central Valley, to the point that there are also communities in this area where housing prices average around the $1 million mark. The agricultural central counties have some of the highest poverty rates in the U.S. The high-technology sectors in Northern California, specifically Silicon Valley, in Santa Clara and San Mateo counties, are currently emerging from the economic downturn caused by the dot-com bust, which caused the loss of over 250,000 jobs in Northern California alone. Recent (Spring 2005) economic data indicates that economic growth has resumed in California, although still slightly below the national annualized forecast of 3.9%. The international boom in housing prices has been most pronounced in California, with the median property price in the state rising to about the half-million dollar mark in April 2005.

Tax burden

Starting in April of 2009 there will be a new tax increase that is set to increase sales tax from 8.25% to 9%+.

In 2006 California's overall tax burden of $10.66 per $100 of personal income was slightly above the $10.43 average for the United States.[20] In 2008, when measured as a percentage of GDP, California had the 6th highest tax burden of the fifty states. [21]

Housing

The international boom in housing prices has been most pronounced in California, with the median property price in the state rising to about the half-million dollar mark in April 2005. Orange County, Ventura County and the San Francisco Bay Area have the highest median prices, each approaching $650,000.[14] The least expensive region is the Central Valley, with a median price of $290,000.[14]

Various real estate markets in California experienced sharp increases in value in the early 2000's, followed by declines in 2007 and 2008, as a housing bubble burst.

However, beginning in 2007 with the Credit Crunch in the banking system, thousands of homes have been foreclosed statewide, thereby plummeting home prices.

25 wealthiest places in California

File:Mendocinovineyard.jpg
Vineyards, such as this one in Mendocino County, are an important component of the state's economy.

Thanks to the state's powerful economy, certain California cities are among the wealthiest on the planet. The following list is ranked by per capita income:

  1. Belvedere, California – Marin County – $113,595
  2. Rancho Santa Fe, California – San Diego County – $113,132
  3. Atherton, California – San Mateo County – $112,408
  4. Rolling Hills, California – Los Angeles County – $111,031
  5. Woodside, California – San Mateo County – $104,667
  6. Portola Valley, California – San Mateo County – $99,621
  7. Newport Coast, California – Orange County – $98,770
  8. Hillsborough, California – San Mateo County – $98,643
  9. Diablo, California – Contra Costa County – $95,419
  10. Fairbanks Ranch, California – San Diego County – $94,150
  11. Hidden Hills, California – Los Angeles County – $94,096
  12. Los Altos Hills, California – Santa Clara County – $92,840
  13. Tiburon, California – Marin County – $85,966
  14. Sausalito, California – Marin County – $81,040
  15. Monte Sereno, California – Santa Clara County – $76,577
  16. Indian Wells, California – Riverside County $76,187
  17. Malibu, California – Los Angeles County – $74,336
  18. Del Monte Forest, California – Monterey County – $70,609
  19. Piedmont, California – Alameda County – $70,539
  20. Montecito, California – Santa Barbara County – $70,077
  21. Palos Verdes Estates, California – Los Angeles County – $69,040
  22. Emerald Lake Hills, California – San Mateo County – $68,966
  23. Loyola, California – Santa Clara County – $68,730
  24. Blackhawk-Camino Tassajara, California – Contra Costa County – $66,972
  25. Los Altos, California – Santa Clara County – $66,776

See complete list of California locations by per capita income

30 poorest places in California

Also, due to California's considerable and increasing wealth disparities, many communities are among the poorest in the western world. The following list is ranked by increasing per capita income, first number is state ranking:

1076 Tobin, California – Plumas County – $2,584
1075 Belden, California – Plumas County – $3,141
1074 East Orosi, California – Tulare County – $4,984
1073 London, California – Tulare County – $5,632
1072 Cantua Creek, California – Fresno County – $5,693
1071 Indian Falls, California – Plumas County – $5,936
1070 Westley, California – Stanislaus County – $6,137
1069 Cutler, California – Tulare County – $6,254
1068 Mecca, California – Riverside County – $6,389
1067 Richgrove, California – Tulare County – $6,415
1066 San Joaquin, California – Fresno County – $6,607
1065 Woodville, California – Tulare County – $6,824
1064 Kennedy, California – San Joaquin County $6,876
1063 Mettler, California – Kern County – $6,919
1062 Mendota, California – Fresno County – $6,967
1061 Terra Bella, California – Tulare County – $7,034
1060 Parlier, California – Fresno County -$7,078
1059 Orange Cove, California – Fresno County – $7,126
1058 Parksdale, California – Madera County – $7,129
1057 Earlimart, California – Tulare County – $7,169
1056 South Dos Palos, California – Merced County – $7,170
1055 Winterhaven, California – Imperial County – $7,220
1054 Shackelford, California – Stanislaus County – $7,250
1053 Palo Verde, California – Imperial County – $7,275
1052 Biola, California – Fresno County – $7,375
1051 Kettleman City, California Kings County – $7,389
1050 Arvin, California – Kern County – $7,408
1049 Coachella, California – Riverside County – $7,416
1048 Bret Harte, California – Stanislaus County – $7,481
1047 Traver, California – Tulare County – $7,642

References

  1. ^ California's Balance of Payments with Federal Treasury
  2. ^ U.S. Census Bureau: North American Industry Classification System (NAICS)
  3. ^ [1]
  4. ^ California Chamber of Commerce: All About International Trade and Investment
  5. ^ California Statistics & Trends: Economic Impact of Travel in California
  6. ^ "California Visitor Statistics and Trends - 2004 Highlights (.pdf)" (PDF). California Tourism. Retrieved 2005-08-02.
  7. ^ "California Agricultural Resource Directory 2006" (PDF). California Department of Food and Agriculture. Retrieved 2007-12-08.
  8. ^ California Department of Food and Agriculture front page, California Department of Food and Agriculture, accessed 30 January 2009
  9. ^ a b Agricultural Statistical Review, 2006 Overview, California Department of Food and Agriculture, accessed 30 January 2009
  10. ^ a b California Dairy Industry Facts | California Milk Advisory Board, accessed 30 January 2009
  11. ^ "Chronology of Significant Events". California Department of Finance. Retrieved 2005-08-02.
  12. ^ "Gross State Product, California (.xls)". California Department of Finance. Retrieved 2005-08-17.
  13. ^ "Regional Economic Accounts (interactive tables)". Bureau of Economic Analysis. Retrieved 2005-08-17.
  14. ^ a b c "Cal Facts 2004 Economy". California Legislative Analyst's Office. Retrieved 2005-08-17.
  15. ^ https://www.cia.gov/library/publications/the-world-factbook/rankorder/2001rank.html
  16. ^ https://www.cia.gov/library/publications/the-world-factbook/rankorder/2001rank.html
  17. ^ http://www.lao.ca.gov/2004/cal_facts/2004_calfacts_econ.htm
  18. ^ [2] "Worldranking"
  19. ^ "State Personal Income 2006". Bureau of Economic Analysis, U.S. Department of Commerce.
  20. ^ "Cal Facts 2006 California's Economy". California Legislative Analyst's Office. Retrieved 2007-06-19.
  21. ^ Enough said: Guess how Pennsylvania stacks up against other states on size of local/state tax burden, Pittsburgh Post-Gazette, August 17, 2008

See also

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