Economy of California

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The economy of California is the largest state economy in the United States. As of 2008, the gross state product (GSP) is about $1.846 trillion, the largest in the United States. California is responsible for 13 percent of the United States gross domestic product (GDP).

The San Francisco Bay Bridge.

Economic regions

California is home to several significant economic regions. These include:^{[citation needed]}

• Hollywood (entertainment)
• The California Central Valley (agriculture)
• Silicon Valley (computers and high tech)
• Wine producing regions such as the Napa Valley, Sonoma Valley, Shenandoah Valley Sierra Foothills, Southern California's Santa Barbara, and Paso Robles areas

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.^[1]

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.^[2][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 (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]} Airborne exports of perishable fruits and vegetables amounted to approximately $685 million in 2007.^[8] By way of comparison, California exported more agricultural products by air that year than 23 other states did by all modes of transport.^[9]

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."^[10] The state’s agricultural sales first exceeded $30 billion 2004^[11], making it more than twice the size of any other state's agriculture industry.

California is the leading dairy state.^[12] Milk is California's number one farm commodity.^[11] California's dairy industry generated $47 billion "in economic activity" in 2004 and employed over 400,000 people."^[12]

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 areas 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.^{[citation needed]}

Gross State Product (GSP)

According to the Bureau of Economic Analysis (BEA), California is responsible for 13% of the United States' gross domestic product (GDP). The BEA estimated the state's gross state product for 2008 to be $1.85 trillion.^[13]

The state's GDP growth rate slowed to 0.4% in 2008 after having grown 3.1% in 2006 and 1.8% in 2007.^[13]

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 were an independent nation. The statistic quoted varies widely (usually placing California between 3rd and 10th) depending on the source, but also depending on the year.^[14] 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

Per capita personal income

Per capita personal income was $38,956 as of 2006, ranking 11^th in the nation.^[17] Per capita income varies widely by geographic region and profession. 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.^{[citation needed]}

Tax burden

In 2006 California's overall state-level tax burden of $10.66 per $100 of personal income was slightly above the $10.43 average for the United States.^[18] In 2008, when measured as a percentage of GDP, California had the 6th highest tax burden of the fifty states.^[19]

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.^[20] The least expensive region is the Central Valley, with a median price of $290,000.^[20]

Various real estate markets in California experienced sharp increases in value in the early 2000s, 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

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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

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Also, due to California's considerable and increasing wealth disparities, many communities are among the poorest in the western world, and lower than many developing nations. The following list is ranked by increasing per capita income, first number is state ranking:^{[citation needed]}

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

See also

• California state budget
• California locations by per capita income
• California unemployment statistics
• California Budget Crisis
• World economy
• Category:Economies by country
• Category:Economies by region
• Comparison between U.S. states and countries by GDP (PPP)

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References

External links

• California's homepage
• California Department of Finance
  • Financial & Economic Data
  • Latest California Economic Data
• California Legislative Analyst's Office — California's Nonpartisan Fiscal and Policy Advisor
  • Cal Facts: California's Economy and Budget in Perspective
  • California's Fiscal Outlook: LAO Projections, 2004-05 Through 2009-10
• Bureau of Economic Analysis — an agency of the U.S. Department of Commerce
• California's Commerce & Economic Development Program
• Analyses of California's International Trade
• California Tourism
• California Commission for Jobs and Economic Growth
• Rancho de Los Arcos — a well cited political screed about agriculture & economy