In April 2025, the State of California officially surpassed Japan to become the fourth-largest economy in the world, according to official figures from the International Monetary Fund and the United States Bureau of Economic Analysis. It is also worth noting that its gross state product reached approximately 4.1 trillion U.S. dollars in 2024.
California Ascends: The State That Became a Global Economic Power
From State to Superpower
Measured in raw global currency, only the United States, China, and Germany now stand ahead. Everything beneath has California in its rearview mirror.
Governor Gavin Newsom publicly announced the milestone on 23 April 2025 to emphasize the scale of achievement of the state. California even grew faster than the U.S. average and the leading economies around the world. Japan, once ahead of California, reported about 4.02 trillion dollars in nominal gross domestic product during the same period.
This accomplishment is measured using nominal gross domestic product in current United States dollars. By this calculation, only the entire United States at 29.18 trillion dollars, China at 18.74 trillion dollars, and Germany at 4.65 trillion dollars produced larger economies. California ranked directly behind these three national economies.
Note that the economic performance of California comes from a large population of more than 39 million people with a diversified economic base. Leading sectors include technology, agriculture, entertainment, tourism, advanced manufacturing, and professional services. Each contributes to both domestic consumption and international export value.
Silicon, Citrus, and Cinema
The tech boom in San Jose and the pistachio harvest in Fresno may not share an industry code, but together they outweigh national output from several G7 economies.
Technology remains the most visible driver. Tech firms in Silicon Valley expanded dramatically in 2024 and generated employment. The entertainment industry, anchored in Los Angeles, continues to generate global cultural exports, while tourism and hospitality deliver steady growth across international and domestic visitor arrivals.
Agriculture also plays a significant role. California supplies over one-third or 30 percent of the vegetables and two-thirds or over 60 percent of the fruits and nuts consumed in the entire United States. Central Valley operations generated billions in export value. This reinforces the role of the state in food production and global agricultural supply chains.
Exchange rate movements partly explain the decline of Japan relative to California. The weakening of the Japanese yen reduced the dollar value of Japanese output, while growth accelerated in the state. The Japanese economy has also suffered from long-standing issues like a shrinking and aging population and prolonged periods of economic stagnation.
Ranking Reality Check
Numbers impress, but perspective matters. One must look beyond the headlines to the structural and comparative realities that shape global economics.
There are important caveats to the ranking. California is not a sovereign nation. It benefits from being part of the broader United States financial and regulatory structure, including a common currency, fiscal transfers, and defense provision. Comparisons provide perspective but cannot perfectly match national economic challenges.
Purchasing power parity, which adjusts for cost of living, produces different comparisons. Under this method, lower-priced economies such as India rank higher relative to nominal measures. The achievement of California in nominal terms reflects its innovation, productivity, and ability to attract global capital and talent in competitive sectors.
Looking ahead, experts forecast that India, with a rapidly growing population and gross domestic product growth exceeding 6 percent annually, may surpass California in the coming years. For now, however, California stands as the fourth-largest economy in the world, ahead of industrialized economies like Japan, France, and the United Kingdom.
FURTHER READINGS AND REFERENCES
- Bureau of Economic Analysis. 26 September 2025. GDP By State. Bureau of Economic Analysis, United States Department of Commerce. Available online
- Governor of California. 23 April 2025. “California is Now the 4th Largest Economy in the World.” Governor Gavin Newsom. Governor of California. Available online
- Organization for Economic Cooperation and Development. 2025. “Japan.” OECD Economic Outlook. 2025:1. DOI: 1787/83363382-en