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California Will Dethrone Germany as the 4th Largest Economy Soon
Gavin Newson is no stranger to adversity. Earthquakes, wildfires, droughts, homelessness, and a mass exodus of large companies are just a few of the issues the California governor has faced during his time in office. And yet, the governor claims that “the California dream is still alive and well.” He isn’t necessarily wrong. The California economy has proven to be resilient, first through the pandemic and now through rising inflation.
Out of the Ashes
The Golden State’s gross domestic product is set to take over Germany’s as the fourth largest in the world after the United States, China, and Japan. Although official current numbers won’t be published until 2023, estimates suggest that the state may have already overtaken Germany.
California’s trajectory is the most obvious in the growing divergence between its 379 companies that have a combined market value of at least $1 billion. The 155 publicly traded companies in Germany meet a similar benchmark.
Corporate revenues in California and market capitalization rose 147% and 117% in the last three years, while Germany only had slight gains of 41% and 34%.
“All this data continues to belie the dominant narrative and illusion” of California’s “best days being behind us,” Newsom said. “As somebody who’s grown up in California, I feel pride in California’s resilience, leadership, its entrepreneurs, its formula for success that goes back over half a century,” he said, highlighting the state’s “conveyor belt for talent.”
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California outperforms the U.S. and the rest of the world across many different industries. The renewable energy industry is a standout example. The market capitalization of California companies increased by 731% in the past three years, which is 1.74 times more than Germany.
The differences between California and Germany are most obvious in their top three industries. California technology hardware, media, and software experiences sales increases of 63%, 95%, and 115% in the last three years, which boosted market valuations by 184%, 54%, and 58%.
In Germany, health care, consumer discretionary, and industrial products were erratic, with a 43% increase and subsequent declines of 2% and 7% in the same periods. Market values only rose 40%, 8%, and 10%.
With just 40 million people, California’s economy is outperforming others on the world stage. Job creation is another particularly strong area, with unemployment falling to 3.9% in July.
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Business Is Booming
Contrary to the perception of business dysfunction and the exodus of people since the start of the pandemic, San Francisco accounts for 78% of the market capitalization of all publicly traded companies in California.
San Francisco has 42 listed companies, which are forecasted to see sales growth of 14% in 2023 and 2024. Oakland is home to the third-largest port in the state and the eighth-largest port in the U.S. The city has grown at a faster monthly rate (9.9%) than the number one, Los Angeles (0.3%), and the number two, Long Beach (8.7%).
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This article was produced and syndicated by Wealth of Geeks.