California has made history once again—this time by overtaking Japan to become the world’s fourth-largest economy, according to new data from the International Monetary Fund (IMF) and the U.S. Bureau of Economic Analysis (BEA). With a nominal GDP of $4.1 trillion, the Golden State now trails only the United States, China, and Germany.
California’s economy is not just big—it’s booming. The state saw GDP growth of 6% in 2024, outpacing all three of the world’s largest economies: the U.S. (5.3%), China (2.6%), and Germany (2.9%). Over the past four years, the state has maintained an impressive average growth rate of 7.5%, further solidifying its position as a global economic powerhouse.
Governor Gavin Newsom praised the state’s progress, saying, “California isn’t just keeping pace with the world—we’re setting the pace.” He credits the success to investment in people, sustainability, and innovation, pointing to California’s leadership in sectors such as clean energy, high tech, agriculture, and manufacturing.
With over 36,000 manufacturing firms employing more than 1.1 million workers, California continues to lead in producing everything from zero-emission vehicles to aerospace and electronics.
Economic Powerhouse with National Impact
California is more than just a regional leader—it’s the economic engine of the United States. It sends $83 billion more to the federal government than it receives in return and ranks first nationally in new business startups, venture capital, and agricultural output.
From Silicon Valley to the Central Valley, the state’s dynamic economy is driving national progress and shaping global markets.
Tariffs Threaten California’s Economic Momentum
Despite its success, California’s economy faces headwinds—most notably from federal trade policies and new tariffs imposed by President Donald Trump. The state, heavily reliant on imports, could face over $170 billion in import taxes in 2025, based on current tariff plans.
Governor Newsom has been vocal in opposing what he calls “reckless tariff policies,” warning that they threaten to reverse years of growth and innovation. California recently filed a federal lawsuit challenging the president’s use of emergency powers to impose tariffs, arguing the economic impact could shrink the U.S. economy by $100 billion annually.
California Looks to Global Partnerships
To offset potential losses, Newsom has pledged to expand California’s global trade relationships. The governor emphasized the importance of stable and open markets, saying, “On behalf of the 40 million Americans who call California home, we’re committed to building stronger partnerships worldwide.”
While California celebrates its milestone, early projections from the IMF suggest that India may surpass California’s GDP by 2026, adding a new layer of competition among the world’s top economies. But for now, California holds its place proudly as the fourth-largest economy on Earth—a reflection of its people, innovation, and relentless ambition.