Friday, December 5, 2025

Weak CA Job Market Likely to Continue, Researchers Say

By Lynn La, CALMATTERS

An employee with the California Department of Developmental Services (left) talks with a job-seeker at a job fair at the Mark Sanders AJCC in Sacramento on Dec. 1, 2025. Photo by Fred Greaves for CalMatters

California, whose unemployment rate has been at 5% and above for the past couple of years, is likely to see a weak job market through at least early next year, according to the winter UCLA Anderson forecast published this week.

Authors of the longtime economic forecast cited continued uncertainty around tariffs, deportations and federal funding as factors.

Based on year-over-year data through August, the economists said weak or declining jobs growth affected construction, nondurable goods manufacturing, retail, and leisure and hospitality. Business services jobs, which include professionals in the tech industry, lawyers, accountants and architects, fell in the following major regions: Silicon Valley, San Joaquin Valley, Sacramento and the Delta, San Diego and the Inland Empire.

The sectors that showed job growth in the past year — state and local government, education, health care and social services, and farms — could shrink in 2026 because of budget constraints, federal funding cuts or deportations, the economists said.

Possible bright spots include aerospace and artificial intelligence. But “for the California economy to grow faster than the U.S. economy, as it is accustomed to doing, durable goods manufacturing, including aerospace and technology-laden sectors, will have to rebound strongly,” the economists wrote. They added that the state and nation have seen a decline in manufacturing jobs, and “the timing of a turnaround in this sector remains uncertain.”

Based on what happened after mass deportations from 2008 to 2014, the forecast’s authors said they expect continued deportations to have a negative effect on the California economy both in terms of decreased local consumption and a drop in other employment. That’s because jobs of immigrants lacking permanent legal status and those of U.S.-born workers can be complementary.

“For example, home building could be delayed because of a reduction in skilled roofers,” the economists wrote.

CalMatters.org is a nonprofit, nonpartisan media venture explaining California policies and politics.