Thursday, June 21, 2018
Business

PolitiFact: Checking in on California's economy

The statement

Although California has "the sixth-largest economy in the world, we also have one of the highest poverty rates" in the nation.

Gubernatorial candidate Antonio Villaraigosa, the former mayor of Los Angeles, June 6 in a speech

The ruling

We'll start by checking the first part: that California has the "sixth-largest economy in the world."

This is a talking point California leaders love to make on national and international stages.

We fact-checked this hypothetical comparison of the state's economy against that of nations in July 2016 when California Senate Leader Kevin de León made the same assertion at the Democratic National Convention.

We rated it Mostly True based on California's $2.4 trillion GDP in 2015, which ranked sixth behind the United States, China, Japan, Germany and the United Kingdom and slightly above France and Brazil. The rankings came from Gov. Jerry Brown's administration, which analyzed figures from the International Monetary Fund's World Economic Outlook Database.

The claim ignored California's sky-high cost of living and Silicon Valley's outsized role in the state's economic growth, which speaks to Villaraigosa's description of unequal economies across the state.

In a separate set of rankings, the California Legislative Analyst's Office, adjusting for the state's high cost of living, reported in 2016 that the state's GDP ranking dropped to 11th in the world. That placed it just below France and just above Mexico.

The Brown administration, not including cost of living, recently updated the GDP rankings for 2016. California's now $2.60 trillion GDP remained in the sixth spot, though it was just a tick behind the United Kingdom's $2.62 trillion economy.

Villaraigosa's statement on this point is accurate, but needs the same clarification about the state's high cost of living.

The second part of Villaraigosa's claim is that California has one of the "highest poverty rates." We interpreted this to mean compared with other states in the nation.

We know the state has struggled mightily with poverty. As an example, we rated True a claim by Republican Assembly Leader Chad Mayes in January that California has "the highest poverty rate in the nation" when comparing states and considering cost of living.

At 20.6 percent, California's poverty rate in 2015 was well above the national average of 15.1 percent, according to a U.S. Census Bureau report that factors in cost of living. Florida's 19 percent poverty rate ranked second.

Unlike Mayes' statement on poverty, however, Villaraigosa's claim makes no mention of cost-of-living. Ignoring this factor, California would have the 17th-highest poverty rate, not the first, according to the census bureau.

Villaraigosa's statement needs this key clarification.

Overall, we rate Villaraigosa's claim Mostly True.

Read more rulings at PolitiFact.com.

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