Why don’t I feel California as world’s 4th largest economy?

California has regained its bragging-rights ranking as the world’s fourth-largest economy.

Using gross domestic product as the scorecard, my spreadsheet compared fresh state-level data for the third quarter of 2025 from the Bureau of Economic Analysis with the International Monetary Fund’s October release of 2025 business output estimates for countries.

In the third quarter, California’s economy produced goods and services at a nation-leading annual rate of $4.296 trillion – a 4.5% increase from the previous year, according to the BEA. That was up from the second quarter’s $4.215 trillion rate.

Only the U.S. ($31 trillion), China ($19 trillion), and Germany ($5 trillion) had larger business output last year, according to the latest tallies.

California’s revised GDP pace pushed it ahead of Japan’s $4.28 trillion economy – but by just $16 billion. Japan had previously reclaimed the world’s No. 4 spot, surpassing California, according to the IMF’s October update of GDP results.

Complex number

GDP is a broad measure of the production of goods and services, often treated as a sign of economic health and a yardstick for comparing economies.

This somewhat complex economic number has become a political buzz topic in the state. California’s business stature appears lofty when its output is compared to other nations using GDP measured in U.S. dollars.

But currency is a wildcard in the ranking math. The U.S. dollar has been weak for the past year, which may help California’s global “rivals” on this scorecard when the IMF’s next update is released in April.

It’s a tight race for the world’s No. 4 economy. According to IMF data, just behind Japan and California is India, with an economy worth $4.125 trillion in 2025. Then there’s the United Kingdom at $3.96 trillion.

So, roughly $300 billion – a 7% gap – separates these three countries from California on this vanity scoreboard. It’s likely that India’s fast-growing economy, powered by the world’s largest population, will soon overtake the No. 4 ranking.

California reached No. 5 globally in 2017 and moved up to No. 4 in 2024 after a long downturn in the Japanese economy.

While reading about this economic bounty, you might think: “But my checkbook doesn’t feel this growth?”

Remember, GDP is like most business barometers. It measures the economy’s typical temperature, though much of life is far from the statistical midpoint.

And your financial angst isn’t rare. For example, California’s consumer confidence index hit a five-year low in January.

Nationally speaking

California’s economic growth hit its fastest pace in a little more than two years – but on a national scale, it was just a middle-of-the-pack performance.

In the three months ended in September, California’s GDP grew at a 4.5% annualized pace. That was California’s fastest growth since 2023’s second quarter.

Nationally, GDP growth was 4.4%, the fastest pace since the fourth quarter of 2023.

Now, the Golden State’s No. 25 ranking among the states is nothing to brag about, especially for an economy that often boasts about its global heft.

But California outpaced its two main economic rivals: Texas, with 4.2% growth, ranked No. 32, and Florida, at 3.5% growth, ranked No. 42.

The best performers for the third quarter were in the middle of the nation: Kansas at 6.5%, South Dakota at 6.3%, and Arkansas at 5.8%.

The worst states for GDP growth were a mixed group: North Dakota at 0.4%, the District of Columbia at 1.3%, and Minnesota at 2.7%.

Noteworthy improvement

The third quarter saw a notable jump in GDP from previous growth patterns.

California’s GDP only averaged 2.9% growth over the two years through the second quarter of 2025. Still, that was the 15th-best performance among the states and topped the nation’s 2.6% pace.

Those two years were good times for California’s rivals. The Texas economy averaged 3.6% growth (No. 4), and Florida was up 3.4% (No. 5).

The best performers were South Carolina at 4.3%, Washington at 4%, and Idaho at 3.7%.

Worst? Wyoming at 0.3%, the District of Columbia at 1.1%, and Nebraska at 1.2%.

Swing states

Contemplate the varied pace as measured by percentage-point change – 2025’s third-quarter output vs. the average pace of the previous two years.

California’s growth surged by 1.6 points by this math. But that ranked a lowly 32nd among the states and trailed the nationwide 1.8-point improvement. Rivals did worse: Texas, up 0.6 points, ranked No. 42, while Florida’s 0.1-point increase was No. 48.

What states improved the most? Kansas was up 5 points, South Dakota up 4.9 points, and Connecticut and New Hampshire grew by 3.9 points.

Worst? Three states had declining growth: North Dakota, down 1.1 points; Washington, down 0.6 points; and South Carolina, down 0.1 points. Florida’s growth was up, but only by a mere 0.1 point.

Jonathan Lansner is the business columnist for the Southern California News Group. He can be reached at jlansner@scng.com