California Surpasses Japan as Fourth-Largest Economy Globally

California's economic growth has propelled it beyond Japan, claiming the title of the fourth-largest economy worldwide, according to recent data from the International Monetary Fund (IMF) and the US Bureau of Economic Analysis.

California has officially surpassed Japan, claiming the title of the fourth-largest economy in the world with a gross domestic product (GDP) of $4.10 trillion in 2024. Governor Gavin Newsom heralded the state's accomplishment based on new data that shows California's economy outperforming Japan, which recorded a GDP of $4.01 trillion. The only economies that now surpass California's are the United States as a whole, China, and Germany.

Newsom expressed pride in California’s economic trajectory, emphasizing, "California isn't just keeping pace with the world - we're setting the pace." Despite this success, he voiced concerns about potential threats to the state's economy posed by President Donald Trump's tariff policies. California is a national leader in both manufacturing and agriculture and is recognized for its influence in technology and entertainment.

Newsom's critique comes in response to Trump’s imposition of tariffs and his lawsuit challenging the authority to levy these tariffs, which are designed to level trade with countries like China, Mexico, and Canada. Trump’s administration argued these tariffs are part of a broader strategy to revitalize American manufacturing, despite criticism over their broader economic implications.

As California celebrates its economic milestone, the challenges facing Japan's economy—such as aging demographics and rising social care costs—mirror broader global economic concerns. The IMF recently revised Japan's growth forecast, projecting slower interest rate hikes due to uncertainties created by ongoing trade tensions.

In terms of gross domestic product, California now trails only the US overall at $29.18 trillion, China at $18.74 trillion, and Germany at $4.65 trillion, with California noted as the fastest-growing among these economies. As the situation develops, the impacts of trade policies will remain of significant importance to California's ongoing economic vitality.