California could overtake Germany to have 4th highest GDP in the world by 2023

While the economic news in the United States discusses which is the least worse forecast for the country’s economy next year – whether there will be a mild or more intense recession -, a state on the west coast has been less concerned.

If it were a country, California would be the fifth largest economy in the world. And it could soon overtake Germany, taking fourth place, behind only the US, China and Japan.

That’s according to data analysis by Bloomberg News, which examined the balance sheets of 379 companies in the state with capital above US$ 1 billion and compared them with 155 German companies of similar size.

Revenues for US companies have grown 147% over the past three years, according to the analysis, while those for German companies have risen 41%. In the same period, companies from California saw their market value increase by 117%, while those from Germany, 34%. Projections suggest that California’s GDP next year could be $72 billion greater than Germany’s.

It is in the state where some of the largest companies in the world are headquartered, such as Apple, Alphabet (Google) and Meta (Facebook), and where Silicon Valley is located, the birthplace of billionaire technology startups.

But it’s not just big tech that explains California’s economic boom. “California’s economy is a very diverse one. One of the reasons it’s been growing so fast is that it’s an entrepreneurial economy and one where technological innovation is important. It’s not just technology companies per se, but technological innovation,” says economist Jerry Nickelsburg, a professor at the University of California at Los Angeles.

For technological innovation, he cites the presence of some of the best universities in the world and a highly educated workforce. This includes development in the agricultural and aerospace industries. In addition, Los Angeles has the busiest port in the Western Hemisphere, through which most trade with China passes.

Nickelsburg is the author of the state’s main economic outlook report, the UCLA Anderson Forecast, which this year brings two scenarios, depending on the economic policies adopted by the Fed, the US Central Bank, next year.

“The good news is that, unlike the last four downturns in economic growth, we expect a milder impact on the California economy whichever path the Fed takes,” it says.

Even in the number of jobs, the situation should not be as bad as the mass layoffs that occurred recently in technology companies point out, according to the study. 🇧🇷[O setor de] technology is what had the most increase in vacancies in the last three months. Announcements of layoffs at major tech companies like Twitter, Google and Salesforce could be an indicator of contraction in the sector, but the data does not yet point to that.”

In a scenario of recession in the American economy, the expectation of economists at the University of California is that the state will have a drop in GDP smaller than the national average, and even so with an increase of 0.5% in the offer of jobs next year , even with a 1% reduction in average income.

In a scenario without national recession, the study predicts that the country’s economy will continue to grow at a faster pace, led mainly by the civil construction sector, with an increase in the offer of jobs by 2.4%. Average income, however, may drop 0.2% as a result of the end of payment of benefits due to Covid-19.

The wide offer of vacancies is noticed by the Brazilian Analice Paes, 43, who has been in the state for almost ten years. Everywhere she goes in her hometown of Riverside, in the south of the state, she sees signs announcing hiring, she says. “It’s not just in restaurants or services like that. I’m a nurse and in my area there are job offers”, she says.

This does not mean, however, that the state does not have problems, and two factors are most cited in opinion polls: crime and the housing crisis. Homicides increased by 7.2% between 2020 and 2021, reaching a rate of 6 murders per 100,000 inhabitants. The number of violent crimes, which also include robberies and other infractions of the type, grew 6.7% between one year and the other.

Two months ago, they broke the window of Gabriel Batista’s car, 23, parked in front of his house and took a cell phone that he uses to work as a delivery man. “It’s the most common thing in the world. You don’t even notify the police, because it’s no use. Just call the insurance and for them it’s also normal. cases of tourists who had all their luggage stolen from parked cars.

Videos went viral on networks of thieves stealing iPhones, iPads and Macbooks available at an Apple store in Palo Alto in broad daylight during Black Friday, wearing masks and putting all objects on display inside backpacks, without embarrassment.

Police estimate the damage to be $35,000. The same store had been robbed other times in the same way. In 2018, according to the local press, there were two robberies in the same store in less than 24 hours, involving products worth more than US$ 100,000.

In addition, the state has 161,500 homeless people, 28% of the total homeless in the country, according to data from the National Alliance to End Homelessness. Most are concentrated in Los Angeles County, with 63,700 homeless people. It’s even in the city in the south of the state that the biggest cracolândia in the country is located, the Skid Row neighborhood, where thousands of people consume crack and heroin in the open.

Despite the problems, the Brazilians there do not intend to leave soon. “It’s complicated, you can’t leave a bottle of water in the car because the glass breaks. Even so, I wouldn’t trade it for anything”, says Joyce Fernanda, 25, who works as an au pair (type of exchange in which young people work as nannies while studying).

“It’s the best climate in the US. While in other parts of the country it’s already snowing, here it’s between 15º C and 18º C. It’s a state with a lot of immigrants, so there’s also the human warmth that makes me feel in Brazil. I live a life great and I don’t intend to leave for now.”