Why don’t I feel California is the fourth largest state in the world? – The Mercury News
California has regained its bragging rights position as the fourth largest economy in the world.
Using gross domestic product as a scorecard, my spreadsheet compared new state-level data for the third quarter of 2025 from the Bureau of Economic Analysis with the International Monetary Fund’s October 2025 release of country business estimates.
In the third quarter, California’s economy produced goods and services at an annualized rate of $4.296 billion — a 4.5% increase over the previous year, according to the BEA. That was up from the second quarter’s estimate of $4.215 trillion.
Only the US ($31 trillion), China ($19 trillion), and Germany ($5 trillion) had a larger business output last year, according to the latest figures.
California’s revised GDP pace trails Japan’s $4.28 billion economy – but by $16 billion. Japan previously regained the No.
A complex number
GDP is a broad measure of the production of goods and services, often regarded as an indicator of economic health and a measure of economic comparison.
This somewhat complex economic number has become a political topic in the state. California’s business level appears high when its output is compared to other nations using GDP measured in US dollars.
But money is a wildcard in the ranking equation. The US dollar has been weak over the past year, which could help California’s global “rivals” on the scorecard when the next IMF update is released in April.
A strong race for the world’s number 4 economy. According to IMF data, just behind Japan and California is India, with an economy worth $4.125 trillion by 2025. Then there is the United Kingdom at $3.96 trillion.
So, about 300 billion – a 7% gap – separates these three states and California on this empty scoreboard. It is possible that India’s fastest growing economy, which is funded by the largest population in the world, will soon pass the 4th level.
California reached No. 5 globally in 2017 and rose to No. 4 in 2024 after Japan’s prolonged economic downturn.
As you read about these economic benefits, you may be thinking: “But isn’t my checkbook feeling this growth?”
Remember, GDP is like many business barometers. It measures the average temperature of the economy, although most health is far from the statistical average.
And your financial crisis is not uncommon. For example, California’s consumer confidence index hit a five-year low in January.
If we are talking nationally
California’s economic growth reached its fastest pace in a little more than two years — but on a national scale, it was a middling performance.
In the three months ending in September, California’s GDP grew at a 4.5% annualized pace. That was California’s fastest growth since the second quarter of 2023.
Nationally, GDP growth was 4.4%, the fastest pace since the fourth quarter of 2023.
Now, Golden State’s No. 25 among the states is not something to brag about, especially in an economy that often boasts of its superiority in the world.
But California outperformed its two main economic rivals: Texas, with growth of 4.2%, ranked No. 32, and Florida, with growth of 3.5%, ranked No. 42.
The best performers in the third quarter were in the middle of the state: Kansas at 6.5%, South Dakota at 6.3%, and Arkansas at 5.8%.
The worst states for GDP growth were a mixed bunch: North Dakota at 0.4%, the District of Columbia at 1.3%, and Minnesota at 2.7%.
A significant improvement
The third quarter saw a significant jump in GDP from previous growth patterns.
California’s GDP is projected to grow 2.9% over the two years to the second quarter of 2025. Still, that was the 15th best performance among the states and topped the national pace of 2.6%.
Those two years were great times for the California rivals. The economy of Texas grew by 3.6% (No. 4), and Florida increased by 3.4% (No. 5).
The best performers were South Carolina at 4.3%, Washington at 4%, and Idaho at 3.7%.
Even worse? Wyoming at 0.3%, the District of Columbia at 1.1%, and Nebraska at 1.2%.
Swing states
Consider the various speeds as measured by the change in score – the output of the third quarter of 2025 compared to the average speed of the previous two years.
California’s growth is up 1.6 percentage points for this figure. But that ranked a lowly 32nd among states and trailed a 1.8-point improvement nationwide. Rivals fared worse: Texas, up 0.6 points, ranked No. 42, while Florida rose 0.1 points to No. 48.
What are the most developed states? Kansas was up 5 points, South Dakota was up 4.9 points, and Connecticut and New Hampshire were up 3.9 points.
Even worse? Three states experienced declining growth: North Dakota, down 1.1 points; Washington, down 0.6 points; and South Carolina, down 0.1 points. Florida’s growth increased, but only by 0.1 point.
Jonathan Lansner is a business writer for the Southern California News Group. He can be reached at jlansner@scng.com
