California's gross state product exceeds $1.2 trillion, making it one of the world's largest economies.
California accounts for 13 percent of the nation's output and trails only Japan, Germany, England, and France.
Our nation's next largest state economy--New York--is about 70 percent the size of California's.
California's Economy Is
Highly Diversified
Share of Gross State Product in 1999
Because of California's economic diversification, it is not overly dependent on any one industry.
The largest single industry sector in California is services. It accounts for nearly one-fourth of all output, and includes many high-paying jobs involving
computer and software design, motion picture production, engineering, and legal work. It also includes many low-paying positions involving personal
services, child care, landscaping, and restaurant and hotel services.
Its next largest sectors--finance, trade, and manufacturing--reflect such elements as banking activities, venture capital financing, and the manufacturing and
sale of high-tech goods.
California Regains Growth Margin Over Nation
Annual Percent Change in Wage and Salary Jobs
The early 1990s' recession hit California especially hard, with employment, output, and incomes falling more than the nation.
California also lagged behind the nation in the early stages of the subsequent recovery, as declines in aerospace, banking, and certain other industries dominant
in the state held California's growth down through the middle the decade.
Thereafter, however, the pace of the state's economy accelerated, with job growth exceeding the nation in each of the past five years. Economic growth was
particularly strong in 2000, with jobs and incomes increasing at their strongest pace since the early 1980s.
Economic Activity Differs by Region
2000
California can be divided into five major regions, each having somewhat distinct economic and geographic characteristics. For example, the largest and most
diverse region is Southern California, with workers in virtually all industries; the Bay Area is known for high-tech activities and high average income; and the
Central Valley is highly agricultural, but becoming more diversified.
Recent Income Gains Largest at Top End
Percent Change in Average Real Income
Joint Returns By Quintile
1993 Through 1998
The current economic expansion has benefitted households at all income levels, but especially those at the top.
The rapid gains at the top reflect large returns to education and high investment earnings.
Foreign Trade Is an Important Element of California's Economy
Total California Exports (In Billions)
California has one of the world's largest trade sectors. Exports of California products topped $125 billion in 2000, accounting for over 11 percent of the
state's total economic output.
After pausing in 1998 and 1999, sales to foreign markets jumped by more than 20 percent in 2000, as demand from Asia's markets rebounded and trade with
Mexico soared. Mexico is now California's largest export market, having surpassed Japan in 1999.
High-tech goods account for the majority of California's exports, with electronics, computers, aerospace, and instruments accounting for over three-fourths of
shipments abroad.
