A Bloomberg analysis that predicted California would soon pass Germany as the world’s fourth-biggest economy is attracting widespread attention.
But all that glitters is not gold, says Dr. Sanjay Varshney, a highly respected finance professor at Sacramento State and the founder of a wealth management firm.
Varshney told CBS News Sacramento that while economic growth is good news, it is misleading to glorify California’s gains without pointing out its clear problems.
“Look at everything that we have to pay for, and you’re gonna find the answer that California is increasingly becoming less and less affordable for the ordinary people, and we are creating this huge gap between the ‘haves’ and the ‘have nots,'” Varshney said.
Tech Billionaires Mask the Realities of State’s Economy
The professor also says that while Silicon Valley’s high-tech industries flourish other components of the economy sputter.
“Those are the multimillionaires and billionaires in the Bay Area who skew the numbers. The rest of us in California, we are all struggling to make ends meet,” said Varshney.
According to the California Poverty Measure, 28.7% of the state’s residents are poor or near poor. That’s down from 34.0% in 2019.
In addition, CalMatters reported earlier this month that the number of homeless people in California increased by at least 22,500 over the past three years to a nation-leading 173,800.
Newsom Promotes Glowing Bloomberg Analysis
California Gov. Gavin Newsom, who faces challenger state Sen. Brian Dahle in the Nov. 8 election, quickly touted the Bloomberg prediction on social media Monday.
BREAKING: California is poised to now become the 4th largest economy in the WORLD.
Our growth continues to outpace other states and nations as we overtake Germany’s spot on the global stage.
Despite the nay sayers — CA’s best days are ahead of us. https://t.co/fTPXsd40hj.
— Gavin Newsom (@GavinNewsom) October 24, 2022
Economists calculated the state’s gross domestic product at $3.357 trillion last year. Although California’s new GDP won’t be known until 2023, estimates suggest it may have already caught Germany. Soaring energy costs related to the Ukraine war are ravaging the German economy.