Special Report: California Becomes 4th Largest Economy as Japan’s Economy Slowed in 2024

In the latest data from International Monetary Fund (IMF), California—if it was treated as a separate economy—moved from 5th largest in the world to 4th largest as Japan’s economy contracted. However, Japan is projected to resume growth at 4% in 2025, while India is projected to continue moving up the ranks with 7% growth.

 

As we’ve noted before, while California enjoys a high GDP, it dissipates the effective purchasing power through high and increasing costs of living. Using the most current US Bureau of Economic Analysis Regional Price Parities to adjust California’s current GDP to an equivalent statistic, California barely edged ahead of Italy from 12th to 11th highest when GDP is measured by IMF’s purchasing power parity series. This shift in rank is a stark illustration of the extent to which the costs of living sap the economic reach of the state’s households.