Economy of California - AbsoluteAstronomy.com

California's economy is the eighth largest economy in the world

World economy

The world economy, or global economy, generally refers to the economy, which is based on economies of all of the world's countries, national economies. Also global economy can be seen as the economy of global society and national economies – as economies of local societies, making the global one....

, if the states of the U.S. were compared with other countries. As of 2010, the gross state product

Gross state product

Gross state product is a measurement of the economic output of a state or province...

(GSP) is about $1.9 trillion, which is 13% of the United States gross domestic product

Gross domestic product

Gross domestic product refers to the market value of all final goods and services produced within a country in a given period. GDP per capita is often considered an indicator of a country's standard of living....

(GDP). The state's GDP growth rate slowed to 0.4% in 2008 after having grown 3.1% in 2006 and 1.8% in 2007.

History

California

California is a state located on the West Coast of the United States. It is by far the most populous U.S. state, and the third-largest by land area...

, as a microcosm of the nation, experienced waves of internal and international

Immigration

Immigration is the act of foreigners passing or coming into a country for the purpose of permanent residence...

migration. The state was also a leader in the high school movement

High school movement

The high school movement is a term used in educational history literature to describe the era from 1910 to 1940 during which secondary schools sprouted across the United States...

and mass college education. California has a diverse economic base including agriculture

Agriculture

Agriculture is the cultivation of animals, plants, fungi and other life forms for food, fiber, and other products used to sustain life. Agriculture was the key implement in the rise of sedentary human civilization, whereby farming of domesticated species created food surpluses that nurtured the...

, natural resources, World War II

World War II

World War II, or the Second World War , was a global conflict lasting from 1939 to 1945, involving most of the world's nations—including all of the great powers—eventually forming two opposing military alliances: the Allies and the Axis...

industries such as aerospace and aviation, shipping, and knowledge work such as the film and computer industries

Silicon Valley

Silicon Valley is a term which refers to the southern part of the San Francisco Bay Area in Northern California in the United States. The region is home to many of the world's largest technology corporations...

.

Once the state became a territory of the United States

Treaty of Guadalupe Hidalgo

The Treaty of Guadalupe Hidalgo is the peace treaty, largely dictated by the United States to the interim government of a militarily occupied Mexico City, that ended the Mexican-American War on February 2, 1848...

after being part of Mexico, the early settlers on the frontier of this land encountered uncertainty over property rights, namely gold and water. The search for gold in California led to the California gold rush

California Gold Rush

The California Gold Rush began on January 24, 1848, when gold was found by James W. Marshall at Sutter's Mill in Coloma, California. The first to hear confirmed information of the gold rush were the people in Oregon, the Sandwich Islands , and Latin America, who were the first to start flocking to...

which started in 1848 and ended in 1855. Prior to, and following statehood, commerce and economic activity mainly centered around the Spanish settlements and California Missions established by Father Junípero Serra

Junípero Serra

Blessed Junípero Serra, O.F.M., , known as Fra Juníper Serra in Catalan, his mother tongue was a Majorcan Franciscan friar who founded the mission chain in Alta California of the Las Californias Province in New Spain—present day California, United States. Fr...

.

With Thomas Edison's

Thomas Edison

Thomas Alva Edison was an American inventor and businessman. He developed many devices that greatly influenced life around the world, including the phonograph, the motion picture camera, and a long-lasting, practical electric light bulb. In addition, he created the world’s first industrial...

invention of the Kinetoscope

Kinetoscope

The Kinetoscope is an early motion picture exhibition device. Though not a movie projector—it was designed for films to be viewed individually through the window of a cabinet housing its components—the Kinetoscope introduced the basic approach that would become the standard for all cinematic...

in 1894, California would be a leader in sound film

Sound film

A sound film is a motion picture with synchronized sound, or sound technologically coupled to image, as opposed to a silent film. The first known public exhibition of projected sound films took place in Paris in 1900, but decades would pass before sound motion pictures were made commercially...

development in the following decades. Cheap land, good year-round climate and large natural spaces prompted the growing film industry

Cinema of the United States

The cinema of the United States, also known as Hollywood, has had a profound effect on cinema across the world since the early 20th century. Its history is sometimes separated into four main periods: the silent film era, classical Hollywood cinema, New Hollywood, and the contemporary period...

to begin migrating to Southern California

Southern California

Southern California is a megaregion, or megapolitan area, in the southern area of the U.S. state of California. Large urban areas include Greater Los Angeles and Greater San Diego. The urban area stretches along the coast from Ventura through the Southland and Inland Empire to San Diego...

in the early part of the 20th century. The film patents wars of the early 20th century actually led to the spread of film companies across the US, however, many worked with equipment for which they did not own the rights, and thus filming in New York was dangerous; it was close to Edison's Company headquarters, and to agents the company set out to seize cameras. By 1912, most major film companies had set up production facilities in Southern California

Southern California

near or in Los Angeles

Los Ángeles

Los Ángeles is the capital of the province of Biobío, in the commune of the same name, in Region VIII , in the center-south of Chile. It is located between the Laja and Biobío rivers. The population is 123,445 inhabitants...

because of the location's proximity to Mexico

Mexico

The United Mexican States , commonly known as Mexico , is a federal constitutional republic in North America. It is bordered on the north by the United States; on the south and west by the Pacific Ocean; on the southeast by Guatemala, Belize, and the Caribbean Sea; and on the east by the Gulf of...

, as well as the region's favorable year-round weather.

Sectors

In 2002, the U.S government began to use the North American Industry Classification System (NAICS) system of classifying economic activities, to better reflect today's economy.

Agriculture is California's largest industry, organized on a near-feudal basis since the first Spanish settlement there.

International trade and tourism

California has historically derived significant revenue from international P.I.E. and tourism

Tourism

Tourism is travel for recreational, leisure or business purposes. The World Tourism Organization defines tourists as people "traveling to and staying in places outside their usual environment for not more than one consecutive year for leisure, business and other purposes".Tourism has become a...

. However, the state's share of America's merchandise export trade has been steadily shrinking since 2000, from 15.4% to 11.1% in 2008. The exports of goods made in California totaled $134 billion in 2007. $48 billion of that total was computers and electronics, followed by transportation, non-electrical machinery, agriculture, and chemicals. California trade and exports translate into high-paying jobs for over one million Californians. According to the US Bureau of Economic Analysis

Bureau of Economic Analysis

The Bureau of Economic Analysis is an agency in the United States Department of Commerce that provides important economic statistics including the gross domestic product of the United States. Its stated mission is to "promote a better understanding of the U.S...

(BEA), in 2005, foreign-controlled companies employed 542,600 California workers, the most of any state. Major sources of foreign investment in California in 2005 were Japan, the United Kingdom, Switzerland, France, and Germany. Foreign investment in California was responsible for 4.2 percent of the state's total private-industry employment in 2005. Total direct travel spending in California reached $96.7 billion in 2008, a 0.8% increase over the preceding year. Los Angeles County

Los Angeles County, California

Los Angeles County is a county in the U.S. state of California. As of 2010 U.S. Census, the county had a population of 9,818,605, making it the most populous county in the United States. Los Angeles County alone is more populous than 42 individual U.S. states...

receives the most tourism in the state.

Agriculture

Agriculture

(including fruit

Fruit

In broad terms, a fruit is a structure of a plant that contains its seeds.The term has different meanings dependent on context. In non-technical usage, such as food preparation, fruit normally means the fleshy seed-associated structures of certain plants that are sweet and edible in the raw state,...

, vegetable

Vegetable

The noun vegetable usually means an edible plant or part of a plant other than a sweet fruit or seed. This typically means the leaf, stem, or root of a plant....

s, dairy

Dairy

A dairy is a business enterprise established for the harvesting of animal milk—mostly from cows or goats, but also from buffalo, sheep, horses or camels —for human consumption. A dairy is typically located on a dedicated dairy farm or section of a multi-purpose farm that is concerned...

, and wine

Wine

Wine is an alcoholic beverage, made of fermented fruit juice, usually from grapes. The natural chemical balance of grapes lets them ferment without the addition of sugars, acids, enzymes, or other nutrients. Grape wine is produced by fermenting crushed grapes using various types of yeast. Yeast...

production) is a major California industry. In fact, California is the world's fifth largest supplier of food and agriculture commodities. Agriculture accounts for just slightly over 2% of California's $1.85 trillion gross state product. Airborne exports of perishable fruits and vegetables amounted to approximately $685 million in 2007. By way of comparison, California exported more agricultural products by air that year than 23 other states did by all modes of transport.

According to the California Department of Food and Agriculture

California Department of Food and Agriculture

The California Department of Food and Agriculture , is a cabinet-level agency in the government of California. Established in 1919 by the California State Legislature and signed into law by Governor William Stephens, the Department of Food and Agriculture is responsible for ensuring the state's...

, "California agriculture is nearly a $36.6 billion dollar industry that generates $100 billion in related economic activity." The state’s agricultural sales first exceeded $30 billion in 2004, making it more than twice the size of any other state's agriculture industry.

California is the leading dairy state. Milk is California's number one farm commodity. California's dairy industry generated $47 billion "in economic activity" in 2004 and employed over 400,000 people."

Oil and electricity

Oil drilling has played a significant role in the development of the state. There have been major strikes in the Bakersfield

Bakersfield, California

Bakersfield is a city near the southern end of the San Joaquin Valley in Kern County, California. It is roughly equidistant between Fresno and Los Angeles, to the north and south respectively....

, Long Beach

Long Beach, California

Long Beach is a city situated in Los Angeles County in Southern California, on the Pacific coast of the United States. The city is the 36th-largest city in the nation and the seventh-largest in California. As of 2010, its population was 462,257...

, Los Angeles

Los Angeles, California

Los Angeles , with a population at the 2010 United States Census of 3,792,621, is the most populous city in California, USA and the second most populous in the United States, after New York City. It has an area of , and is located in Southern California...

areas and off the California coast

Coastal California

Coastal California refers to the coastal regions of the US state of California. The term is not primarily geographical as it also describes an area distinguished by sociological, economical and political attributes...

Personal income

Per capita income

Per capita income or income per person is a measure of mean income within an economic aggregate, such as a country or city. It is calculated by taking a measure of all sources of income in the aggregate and dividing it by the total population...

was $38,956 as of 2006, ranking 11th in the nation, but varies widely by geographic region and profession. Some coastal cities include some of the wealthiest per-capita areas in the U.S., notably La Jolla

La Jolla, San Diego, California

La Jolla is an affluent, hilly seaside resort community, occupying of curving coastline along the Pacific Ocean in Southern California within the northern city limits of San Diego. La Jolla had the highest home prices in the nation in 2008 and 2009; the average price of a standardized...

in San Diego, Beverly Hills

Beverly Hills, California

Beverly Hills is an affluent city located in Los Angeles County, California, United States. With a population of 34,109 at the 2010 census, up from 33,784 as of the 2000 census, it is home to numerous Hollywood celebrities. Beverly Hills and the neighboring city of West Hollywood are together...

, in Los Angeles County, Newport Beach

Newport Beach, California

Newport Beach, incorporated in 1906, is a city in Orange County, California, south of downtown Santa Ana. The population was 85,186 at the 2010 census.The city's median family income and property values consistently place high in national rankings...

in Orange County in Southern California, San Francisco

San Francisco, California

San Francisco , officially the City and County of San Francisco, is the financial, cultural, and transportation center of the San Francisco Bay Area, a region of 7.15 million people which includes San Jose and Oakland...

, Silicon Valley

Silicon Valley

and Marin County

Marin County, California

Marin County is a county located in the North San Francisco Bay Area of the U.S. state of California, across the Golden Gate Bridge from San Francisco. As of 2010, the population was 252,409. The county seat is San Rafael and the largest employer is the county government. Marin County is well...

. The most expensive and largest housing markets in the U.S. are in the state of California, so there are a number of communities where average housing prices hover between US$1–2 million. Generally, the Central Valley in northern California is the least expensive area, as is the Inland Empire in Southern California, though prices in these regions are still much more expensive than most other areas of the country, to the point that there are also communities in these areas where housing prices average around the $1 million mark. The agricultural central counties have some of the highest poverty rates in the state. The high-technology sectors in Northern California, specifically Silicon Valley

Silicon Valley

, in Santa Clara

Santa Clara County, California

Santa Clara County is a county located at the southern end of the San Francisco Bay Area in the U.S. state of California. As of 2010 it had a population of 1,781,642. The county seat is San Jose. The highly urbanized Santa Clara Valley within Santa Clara County is also known as Silicon Valley...

and San Mateo counties

San Mateo County, California

San Mateo County is a county located in the San Francisco Bay Area of the U.S. state of California. It covers most of the San Francisco Peninsula just south of San Francisco, and north of Santa Clara County. San Francisco International Airport is located at the northern end of the county, and...

, are currently emerging from the economic downturn caused by the dot-com bust, which caused the loss of over 250,000 jobs in Northern California alone. As of spring 2005, data from UCLA Anderson indicates that economic growth has resumed in California, although still slightly below the national annualized forecast of 3.9%.

Taxes

In 2006 California's overall state-level tax burden of $10.66 per $100 of personal income was slightly above the $10.43 average for the United States. In 2008, when measured as a percentage of GDP

Gross domestic product

, California had the 6th highest tax burden of the fifty states and has contributed on average well over 3.65 billion dollars per year for the last twenty years into the federal treasury than it has received in Federal services in return.

Housing

The international boom in housing prices has been most pronounced in California, with the median property price in the state rising to about the half-million dollar mark in April 2005. Orange County

Orange County, California

Orange County is a county in the U.S. state of California. Its county seat is Santa Ana. As of the 2010 census, its population was 3,010,232, up from 2,846,293 at the 2000 census, making it the third most populous county in California, behind Los Angeles County and San Diego County...

, Ventura County and the San Francisco Bay Area

San Francisco Bay Area

The San Francisco Bay Area, commonly known as the Bay Area, is a populated region that surrounds the San Francisco and San Pablo estuaries in Northern California. The region encompasses metropolitan areas of San Francisco, Oakland, and San Jose, along with smaller urban and rural areas...

have the highest median prices, each approaching $650,000. The least expensive region is the Central Valley, with a median price of $290,000.

Various real estate markets in California experienced sharp increases in value in the early 2000s, followed by declines in 2007 and 2008, as a housing bubble

United States housing bubble

The United States housing bubble is an economic bubble affecting many parts of the United States housing market in over half of American states. Housing prices peaked in early 2006, started to decline in 2006 and 2007, and may not yet have hit bottom as of 2011. On December 30, 2008 the...

burst.

However, beginning in 2007 with the Credit Crunch

Credit crunch

A credit crunch is a reduction in the general availability of loans or a sudden tightening of the conditions required to obtain a loan from the banks. A credit crunch generally involves a reduction in the availability of credit independent of a rise in official interest rates...

in the banking system, thousands of homes have been foreclosed statewide, thereby leading to plummeting home prices.

External links

The source of this article is wikipedia, the free encyclopedia. The text of this article is licensed under the GFDL.

History

Sectors

International trade and tourism

Oil and electricity

Personal income

Taxes

Housing

See also

External links