California is the world’s fifth-largest economy — larger than all of the United Kingdom.
The world’s four largest economies are all countries: the United States, China, Japan, and Germany. Next on the list, at No. 5, however, is the state of California, whose economy is larger than that of the entire United Kingdom. The Golden State’s status as an economic superpower — thanks to Hollywood, Silicon Valley, agriculture, and more — is all the more impressive given its population: California is home to 39 million people, whereas 67 million live in the U.K. And while the top 10 list is rounded out by other countries — India, France, Brazil, and Italy — Texas (No. 11) and New York (No. 13) both make the top 15, at least in direct comparisons between U.S. states and other entire countries.
Such lists of economic strength are based on gross domestic product, or the total value of all goods and services produced within a country (or state, in this case) over the course of one year. Though not without its limitations, GDP remains a useful shorthand for assessing economic strength. There’s currently a significant divide between the GDPs of the United States ($20.93 trillion) and China ($14.7 trillion), but China is projected to overtake the U.S. as the world's largest economy by the end of the decade.
Evaluating the relative strength of different currencies isn’t exactly easy, and there are many ways of approaching it. One of them is an informal measurement called the Big Mac Index, which The Economist magazine introduced (somewhat humorously, at first) in 1986 to determine whether currencies are properly valued. Perhaps the easiest way to understand it is to ask a simple question: How much does a Big Mac cost right now? As of this writing, the answer is $5.81 in the United States and £3.59 in Britain. This suggests an exchange rate of 0.62, but the actual exchange rate is 0.75 — meaning that, according to Burgernomics, the British pound is undervalued by 17.1%. Despite being an informal measurement, the Big Mac Index remains widely used today.
