State economy fifth in world

The Associated Press
Saturday June 16, 2001

LOS ANGELES — California has leapfrogged past France, becoming the world’s fifth-largest economy. 

Last year, California was only surpassed in economic muscle by the United States as a whole, Japan, Germany and the United Kingdom, according to figures released Wednesday by the Los Angeles Economic Development Corp. 

While many have worried about the economic impact of the state’s energy crisis, the group’s chief economist Jack Kyser said the annual economic survey is a good barometer of California’s strength. 

“It makes a very solid statement, and it’s an interesting statement to make at the present time because you have a lot of people who are pessimistic about what’s going on in California because of the energy crisis,” Kyser said. 

Last year, California had a gross domestic product of $1.330 trillion while France had a gross domestic product of $1.281 trillion. 

The change has as much to do with the European Union’s weak currency as the state’s financial clout. 

The Los Angeles business research group converted the economic output of foreign countries into U.S. dollars. Since the dollar is much stronger than the Euro, the conversion translated into a lower gross domestic product for France. 

“We had kind of a one-two punch working in our favor – tremendous economic growth in California and a weak currency in Europe,” Kyser said. 

California’s No. 5 ranking may be short-lived if the Euro recovers this year, the group says. Its economy is slowing already because a downturn in the technology industry is rippling into other key sectors, such as real estate. 

“We were still growing during the first five months of this year, but my guess is that before this is all over we will slip below the U.S. growth rate,” said Gary Schlossberg, a senior economist for Wells Fargo Capital Management.