WE’RE NO. 4! WE’RE NO. 4! WHAT DOES THIS RANKING MEAN?

 

CALIFORNIA FOCUS
FOR RELEASE: FRIDAY, JUNE 27, 2025, OR THEREAFTER

BY THOMAS D. ELIAS
“WE’RE NO. 4! WE’RE NO. 4! WHAT DOES THIS RANKING MEAN?”

 

There were large headlines around California (but not in many Republican-led “red” states) in late spring, when the International Monetary Fund and the U.S. Bureau of Economic Analysis simultaneously found that this state’s economy had surpassed Japan’s to become the world’s fourth-largest, with a gross state product exceeding $4.1 trillion, about $800 billion better than Japan.

 

This had different meanings for different folks. For Gov. Gavin Newsom, it meant new ammunition for his putative 2028 presidential campaign, where he has been challenged lately by Minnesota Gov. Tim Walz and Illinois Gov. J.B. Pritzker. Pritzker has taken a page from Newsom’s 2024 manual, when the California governor blasted his Democratic Party mates for being too passive, before lapsing into months of his own political passivity after ex-President Biden handed the party’s 2024 nomination to Kamala Harris and not him.

 

But Newsom is going again on his effort to extend his political life beyond the early 2027 term-out he faces after eight years in office. His first new move was to become a named plaintiff on California’s lawsuit challenging President Trump’s unilaterally imposed tariffs, which vary greatly by country.

 

Now two big economic arbiters have given him some more juice. For sure, Pritzker cannot claim Illinois is even among the world’s top ten economies, let alone No. 4, behind only the rest of the USA, China and Germany.

 

It’s true that the IMF speculates India’s economy might ramp up enough to pass California sometime late next year, but that seems unlikely when California had the world’s highest economic growth rate last year at 6 percent, well above India’s.

 

It all means that Californians are not only more productive than residents of the United Kingdom or any other American state, but also that no matter what opposing politicians might say, Newsom has not mismanaged the economy. Yes, some businesses moved headquarters out of California, like Chevron, Toyota USA and Tesla, but other companies arose to eclipse the effect of those departures. One example might be Open AI, a leader in artificial intelligence and maker of ChatGPT.

 

Bragged Newsom, “California isn’t just keeping pace with the world – we’re setting the pace. Our economy is thriving because we invest in people, prioritize sustainability and believe in the power of innovation.”

 

Not even California’s relatively high sales and income taxes could stymie the state’s economic growth, as California seems to spawn one pioneering new industry after another.

 

But Newsom warned both in his lawsuit and otherwise that Trump’s tariffs could throw a monkey wrench into what California achieves.

 

“While we celebrate this success,” he said, “we recognize that our progress is threatened by the reckless tariff policies of the current federal administration.”

 

In short, California’s more than $675 billion in two-way trade with other countries last year could be brought up very short this year, allowing countries like India, France and Italy to surpass this state in a seesaw race for high ranking, prestige and bragging rights.

 

For the state’s high economic ranking, which far surpasses other states’ performances along with those of prosperous foreign provinces like Canada’s Ontario and the UK’s Wales and Scotland, is not static or guaranteed. It depends on trade and cooperation with other nations, states and provinces.

 

And it depends on California’s own responses to its admitted problems, things like high taxes, a sometimes questionable business climate, earthquakes, wildfires, expensive insurance and much more.

 

But those things can bring advantages, too. An example is residential construction, which will be a huge element in California’s gross state product once reconstruction from last January’s Los Angeles County firestorms ramps up.

 

All of which means the new No. 4 ranking confers little upon California except very ephemeral bragging rights, which can disappear quickly if economic conditions change a lot, something Trump appears determined to make happen.

 

So Newsom and anyone backing him would be wise not to become too smug – for today’s super-high rating is not necessarily a promise of things to come.

 

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Email Thomas Elias at tdelias@aol.com. His book, "The Burzynski Breakthrough, The Most Promising Cancer Treatment and the Government’s Campaign to Squelch It," is now available in a soft cover fourth edition. For more Elias columns, visit www.californiafocus.net