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Thursday 15 September 2011

Economy of California

As of 2010, the gross state product (GSP) is about $1.9 trillion, the largest in the United States. California is responsible for 13 percent of the United States gross domestic product (GDP). As of 2006, California's GDP is larger than all but eight countries in the world (all but eleven countries by Purchasing Power Parity).
In terms of jobs, the five largest sectors in California are trade, transportation, and utilities; government; professional and business services; education and health services; and leisure and hospitality. In terms of output, the five largest sectors are financial services, followed by trade, transportation, and utilities; education and health services; government; and manufacturing.
California currently has the 5th highest unemployment rate in the nation at 12.5% as of January 2010 and had continued to rise, up significantly from 5.9% in 2007.
California's economy is very dependent on trade and international related commerce accounts for approximately one-quarter of the state’s economy. In 2008, California exported $144 billion worth of goods, up from $134 billion in 2007 and $127 billion in 2006. Computers and electronic products are California's top export, accounting for 42 percent of all the state's exports in 2008.
Agriculture is an important sector in California's economy. Farming-related sales more than quadrupled over the past three decades, from $7.3 billion in 1974 to nearly $31 billion in 2004. This increase has occurred despite a 15 percent decline in acreage devoted to farming during the period, and water supply suffering from chronic instability. Factors contributing to the growth in sales-per-acre include more intensive use of active farmlands and technological improvements in crop production. In 2008, California's 81,500 farms and ranches generated $36.2 billion products revenue.
Per capita GDP in 2007 was $38,956, ranking eleventh in the nation. Per capita income varies widely by geographic region and profession. The Central Valley is the most impoverished, with migrant farm workers making less than minimum wage. Recently, the San Joaquin Valley was characterized as one of the most economically depressed regions in the U.S., on par with the region of Appalachia. Many coastal cities include some of the wealthiest per-capita areas in the U.S. The high-technology sectors in Northern California, specifically Silicon Valley, in Santa Clara and San Mateo counties, have emerged from the economic downturn caused by the dot-com bust.
In 2010, there were more than 663,000 millionaires in the state, more than any other state in the nation.






History


California, as a microcosm of the nation, experienced waves of internal and international migration. The state was also a leader in the high school movement and mass college education. California has a diverse economic base including agriculture, natural resources, World War II industries such as aerospace and aviation, shipping, and knowledge work such as the film and computer industries.
Once the state became a territory of the United States 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 starting in the late 1840s. Prior to, and following statehood, commerce and economic activity mainly centered around the Spanish settlements and California Missions established by Father Junípero Serra.
With Thomas Edison's invention of the Kinetoscope in 1894, California would be a leader in sound film development in the following decades. Cheap land, good year-round climate and large natural spaces prompted the growing film industry to begin migrating to Southern California 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 near or in Los Angeles because of the location's proximity to Mexico, 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.




International trade and tourism


California has historically derived significant revenue from international P.I.E. and tourism. 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 (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 receives the most tourism in the state.
Agriculture (including fruit, vegetables, dairy, and wine 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 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, Long Beach, Los Angeles areas and off the California coast.




Personal income


Per capita income 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 in San Diego, Beverly Hills, in Los Angeles County, Newport Beach in Orange County in Southern California, San Francisco, Silicon Valley and Marin County. 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, in Santa Clara and San Mateo counties, 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, 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, Ventura County and the San Francisco Bay Area 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 burst.
However, beginning in 2007 with the Credit Crunch in the banking system, thousands of homes have been foreclosed statewide, thereby leading to plummeting home prices.



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