Falls to 11th Largest When Cost of Living Factored
Combined with the updated IMF country GDP reports, California was revised from 4th largest economy in 2024 to the 5th largest. The 2025 data also results in California remaining in 5th place. Note that IMF reports 2025 results for most countries, but fiscal year 2024/25 for India putting its total somewhat lower than what a full calendar year would show.
At this point, however, the differences are small and are affected by revisions in the country reports along with shifts in the value of the dollar and the fiscal year report base for India. Looking at the IMF projections and considering the current global economic volatility, California is likely to remain ahead of Great Britain in the next few years, but India’s growth is rapidly moving that country up in the rankings. California’s position relative to Japan likely will be dependent on conversion values, but the state is no position to overtake Germany as speculated in a previous Bloomberg editorial. The Bloomberg editorial remains just that—speculation with plenty of superlatives but little real analysis.
But as we have discussed in past postings on the issue, California dissipates much of its GDP value through high and growing costs. In real terms, a dollar of GDP in California buys less than a dollar of GDP in Texas or Indiana, and in this context a dollar of GDP in France or Indonesia. The IMF tracks cost-adjusted GDP through their Purchasing Power Parity GDP. A comparable value is constructed for California using the US Bureau of Economic Analysis Regional Price Parity series, using the most recent 2024 value for 2025 as well.
Looking at the real purchasing power of GDP as degraded by California’s high costs, California ranked as the 11th largest economy in both 2024 and 2025.
