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Measured in nominal dollar terms, California’s economy again ranked as the 5th largest in the world in 2019. On a preliminary basis, California appears to be ranked 5th in 2020 as well, although complete data for all countries in the top 20 is not yet available.
The full measure of an economy, however, is not just the size of its GDP, but also the goods and services available to the people within it. While California has steadily moved up the ranks since 2011 in nominal terms, state policies have acted to dissipate much of that growth through continuously rising costs of living. This situation is fully illustrated by the number of tech industry workers in the Bay Area who while making six-figure incomes, still struggle with the high costs of housing, commuting, taxes and fees, and everyday expenses. This burden is magnified throughout the state and felt even more keenly by households faced with the same high cost structure but without the same level of income.
Adjusting for comparative costs, California ranks substantially lower, falling just below Mexico as the 13th largest economy. State policies driving up costs of living in fact have largely offset GDP growth and kept California in this position since at least 2008.
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