California remained the world’s fourth-largest economy as 2025 started by a narrow margin.
This bragging-rights scorecard – a talking point among the state’s cheerleaders – has been filled with intrigue as the top of the chart changes along with global economic swings. The rankings involve comparing gross domestic product statistics for the states, as reported by the Bureau of Economic Analysis, and the globe’s giant economies, as compiled by the International Monetary Fund. GDP is a widely watched broad measure of business output.
My trusty spreadsheet shows that, domestically speaking, California ranked first with $4.198 trillion in GDP in this year’s first quarter. That business output is the fourth-largest on the global totem pole when using the IMF’s April estimates for national GDPs for all of 2025.
Only the overall U.S. economy, with $30.5 trillion in GDP, China’s $19.2 trillion and Germany’s $4.7 trillion were larger.
Yet it’s the No. 4 spot – that California rose to last year – where this vanity competition gets interesting. It’s three-decimal-place kind of statistical drama.
California has the thinnest of advantages over fast-growth India, with $4.187 trillion of business output. Now this $11 billion difference is real money, but it’s just a 0.2% gap.
And just a whisker behind is Japan – which until last year was No. 4 – at $4.186 trillion. Yup, just $1 billion less than India.
After this tight group comes the United Kingdom ($3.8 trillion), France ($3.2 trillion), Italy ($2.4 trillion) and Canada ($2.2 trillion).
Remember, despite all the criticisms of California’s business climate, its economy accounted for 14% of all U.S. business output in the first quarter. Something must be working in the Golden State. But it’s not the only state giant on this Earthly scale.
No. 2 nationwide for GDP is Texas at $2.8 trillion, which would rank No. 8 on this global yardstick. New York at $2.4 trillion would be No. 9 worldwide, Florida at $1.8 trillion, No. 12, and Illinois at $1.2 trillion, No. 19.
Caveat No. 1
The global GDP scorecard, however, doesn’t provide much insight into how the typical Californian is doing.
So, focus on the states and ponder the latest GDP measurements in terms of an after-inflation growth rate. What we find in early 2025 is shrinkage.
California business output was falling at a 0.2% annual rate to start 2025, sluggishness that helps explain why you may feel so glum, economically speaking. It was the worst result since 2022’s fourth quarter.
But before letting your mind wander to thoughts of California’s purportedly anti-business climate, please note that the state’s economy still outperformed the nation.
U.S. GDP shrank at a 0.5% annual rate in the first quarter, its first dip since 2022’s start. And California had the 15th best outcome among the states, with 39 states experiencing declining business output in early 2025.
Clearly, much of the national economy is struggling to grow amid the uncertainty surrounding the Trump administration’s new business-related policies.
The nation’s best-performing state economies, as measured by GDP for the first quarter, had a Southern accent. No. 1 was South Carolina at 1.7%, then Florida at 1.4%, Alabama at 1%, and Arkansas and North Carolina at 0.8%. By the way, Texas was No. 12, off 0.1%.
The economic weak spots were predominantly in Middle America: Iowa, down 6.1%, Nebraska, down 6.1%, Montana, down 4.4%, Kansas, down 3.3%, and Wyoming, down 3.1%.
And contrast 2025’s start to last year’s first quarter.
That’s when California GDP growth ranked No. 1 nationally at 6.2%, almost four-fold better than the 1.6% nationally.
Next came Massachusetts, up 5.5%, and Arkansas, up 5%. Meanwhile, 21 states had drops topped by Iowa, down 10.8%, North Dakota, down 9.2%, and Wyoming, down 7.4%. Texas was No. 26, up only 0.2%. Florida was No. 9 at 3.5%.
Caveat No. 2
Consider another slice of GDP calculations that give a window into how consumers are doing – a tally called “personal income.”
This tabulation includes a wide collection of cash that an individual receives from wages and benefits to investment dividends to government entitlements. Note that this calculation does not subtract inflation.
California’s personal income grew at a 5.2% annual rate in the first quarter, trailing the nationwide expansion of 6.7%. Slower growth was only found in Washington at 3.2%, Idaho at 4.7%, and Massachusetts at 4.9%.
Tops for personal income growth? North Dakota at 12.7%, then South Dakota at 11.4%, and Mississippi at 9.9%. Texas was No. 8 at 8.3% and Florida, No. 22 at 7%.
Caveat No. 3
A slice of the personal income math is another signal of a weak California job market.
The state’s earnings growth – combining both pay and job expansion – ranked No. 39 among the states at 3.8%, trailing the 5% national rate.
Tops was North Dakota at 13.5%, South Dakota at 10.5%, and Minnesota at 7.3%. Texas was No. 9 at 6.6% and Florida, No. 6 at 6.8%.
And the slowest for earnings? Washington at 0.1%, Idaho at 1.3%, Arizona at 2.6%, and Massachusetts at 2.7%.
Jonathan Lansner is the business columnist for the Southern California News Group. He can be reached at jlansner@scng.com