President Trump’s trade war and recent immigration attacks are expected to bring a punch or two to California’s economy.
A new report from UCLA Anderson forecasts predicts that the state’s economy could sign up later this year due to global tariffs and immigration attacks, Los Angeles and other cities that have already rocked key sectors, including construction, hotels and agriculture.
The quarterly forecast released on Wednesday described the second quarter of the year as a “time of huge volatility and uncertainty” driven by “sharp policy changes and huge changes in financial markets (over) reactions.” The report shows that California’s economic growth will be slower than the country this year.
Jerry Nickelsburg, director of Anderson’s forecast and author of the California report, said there was “confusion and uncertainty” about the introduction of immigration and trade policies that “negatively impact California.”
“Because people are afraid to go to work, because companies don’t know what their cost structure is, because consumers or families who may be considering buying a home are not sure about their future or near future employment,” Knicksburg said in an interview. “You have extensive decision paralysis in investing in consumer and labor decisions, which will be resolved [once] It is more clear about what the long-term policy of the U.S. government is. ”
The report details sectors that will be affected by deportation, including food processing, agriculture, health care, social services, retail, leisure and hospitality.
Demand has increased an industry and demand has increased due to efforts to restore fires and reconstruction and mitigate the housing crisis in the state.
The report outlines that the source of building materials, including large imports from China, Mexico and Canada, will also be valued by tariffs.
Traffic at the state’s ports is often seen as an indicator of California’s economic condition but has soared this year, but forecasters say the collision reflects an attempt to bring goods into the country before higher tariffs are imposed.
Forecasters also predict that the state will see negative job growth in several quarters, while California’s unemployment rate will reach 6.1% this year.
While jobs in key sectors such as construction and manufacturing may meet demand if immigration raids continue to reduce the number of workers in these areas, Knicksburg said that may not help many people facing unemployment.
“The fact that unemployment in California is rising doesn’t mean that these people can work in construction right now,” he said. “They may not have the right skills, they may not have the physical strength and endurance. They may not be able to do it, otherwise they may really be uninterested in this kind of work.”
Some factors that contribute to the unemployment rate include a decrease in employment in the entertainment industry and a reduction in Big Tech, the report said.
The average unemployment rate in 2025 is expected to be 5.8%, and is expected to fall to 5.6% in 2026 and 4.4% in 2027.
California lost 50,000 wage jobs in the first four months of the year, and the unemployment rate remains above 5%.
