California has overtaken Japan to become the world’s fourth-largest economy, following only the United States, China, and Germany in global rankings. Governor Gavin Newsom announced the milestone, citing the latest data from the International Monetary Fund and the U.S. Bureau of Economic Analysis.

California’s nominal GDP reached $4.1 trillion in 2024, surpassing Japan’s $4.02 trillion. “California isn’t just keeping pace with the world, we’re setting the pace,” Newsom said, noting the state’s investment in sustainability and innovation as key drivers of economic growth.

From 2021 to 2024, California’s economy grew at an average nominal GDP growth rate of 7.5%, reaching 6% in 2024. The state leads the U.S. in new business startups, access to venture capital, and industries like high-tech, manufacturing, and agriculture. California remains the country’s top agricultural producer and is a major manufacturing hub, with over 36,000 firms employing more than 1.1 million Californians.

Despite the achievement, Newsom voiced concerns about federal trade policies, particularly the tariffs imposed by the Trump administration. California has filed a lawsuit against the federal government, arguing that these tariffs threaten the state’s economy and harm businesses and consumers. Research firm Trade Partnership Worldwide estimates that California could face over $170 billion in import taxes in 2025 due to the new tariff structure.