UCLA Anderson Forecast: California’s Economy Expected to Slow

(TNS) — California’s economy is mired in “economic doldrums” this year, with a recovery not expected until next year, a new report Wednesday by the UCLA Anderson Forecast said.

“The data now indicate slow to negative economic growth and a further decline in jobs for 2025,” the forecast said.

“Though there is no firm definition of a recession, particularly at the state level, this decline in payroll employment does represent a mild contraction this year,” it found..

The state’s unemployment rate, which for some time has been among the highest in the nation, would peak at 6.1% in the first quarter of next year, then average 5.8% for the entire year. The forecast saw trouble in area after area.

“The sectors that have historically driven California’s superior growth — technology, durable goods manufacturing, entertainment and logistics — are either stagnant or contracting,” it found. Other areas, such as health care, education and government, which helped drive growth last year, “have likely reached their peak,” the forecast said.

Housing’s outlook was also glum. The forecast found it “under pressure, with deportations reducing the construction workforce, rising input costs owing to tariffs and high interest rates constraining new home development.”

Overall, the forecast saw California’s economy growing more slowly than the nation’s this year, “with several quarters of negative job growth.”

A bounce back could start next year, and economic growth is expected to increase in 2027.

The national forecast also sees slowing, largely due to “a volatile policy environment.”

One of the concerns is tariffs. “Tariffs are increasing costs across manufacturing and trade-related sectors, contributing to inflation and weakening the competitiveness of U.S. goods,” the forecast said.

© 2025 the Merced Sun-Star (Merced, Calif.). Visit www.mercedsunstar.com. Distributed by Tribune Content Agency, LLC.