California Ranks Among Top US Economies
From GDP growth to start-up activity, California’s economy ranks fourth in the country for economic growth.
California officially has the fifth largest economy in country—but that isn’t all. The massive state economy is also showing tremendous growth. According to a recent report from WalletHub, California has the fourth best economy in the country. GDP growth and start-up activity were among the leading characteristics for the state economy. Washington, Utah and Massachusetts nabbed the top spots on the list, which weighed economic activity, economic health and innovation potential. While California fared well in economic activity and innovation potential, it scored 32nd for economic health. We sat down with Jill Gonzalez of WalletHub for an exclusive interview to find out more about the ranking.
GlobeSt.com: What is fueling California’s strong economic growth?
Jill Gonzalez: California’s strong economic growth is fueled mainly by the business environment: 0.02% share of fast-growing firms places it first among the U.S. states, and its startup activity—the rate of newly established firms—puts it at 5. California has the 5th largest economy in the world. This occurred after an increase in high bracket income taxes, and after permit caps and fees were instituted. Despite these measures, people and companies still find California to be a good place to live, start a business and innovate.
GlobeSt.com: What does it mean that California’s economy is raked fourth overall, but only 32nd in economic health?
Gonzalez: California’s high overall rank is driven by its economic activity and innovation potential scores. It ranked poorly in the economic health section, mostly because of its high underemployment rate, 11.3%, rank 48, low median annual household income, $45,236, rank 47, and 43rd place according to fiscal health. Despite having a high underemployment rate and low median annual household income, California’s strengths outbalanced its weaknesses. It has a high share of fast growing firms, the most independent inventor patents in the country, and the highest amounts invested in industry research and development.
GlobeSt.com: What is your outlook for economic performance in California this year?
Gonzalez: Overall, California’s economic performance outlook is positive, especially if we consider its innovation potential. It has the highest number of independent inventor patterns, and the highest amounts invested in industry research and development. California’s economy is definitely in an expansionary phase, and it’s at a peak growth rate, especially in the business sector. That will create more jobs, further decreasing the unemployment rate. The growth of state GDP has accelerated, and it would seem California’s economy is expanding at a steady pace.
GlobeSt.com: How might these news impact real estate investment activity in the state?
Gonzalez: Currently, California’s real estate market is not in the best shape, considering its high foreclosure rate (0.0459%, 33rd), and low building permit activity (33rd). However, since the state’s overall economy performs so well, it could attract investors in all areas, including real estate. There is no way to forecast with real accuracy what the growth in real estate investments might be, but housing production and the overall real estate market will most likely continue to make gains during the rest of 2018.