LOS ANGELES, Dec. 5 (Xinhua) -- California will face continued economic pressure into 2026, with federal tariffs and stepped-up immigration enforcement keeping unemployment elevated, according to a major economic outlook released Wednesday.
The December 2025 UCLA Anderson Forecast projected the state's jobless rate will hold at around 5.5 percent through early 2026 -- more than a full percentage point higher than the projected 4.5 percent national average by year's end, itself an increase from earlier in 2025.
California, the largest state economy in the United States with a GDP of roughly 4.1 trillion U.S. dollars, currently has more than one million residents out of work, the report said.
Economists described the situation as an "employment recession," despite ongoing investment by California-based companies in artificial intelligence and other advanced technologies. Labor-intensive sectors continue to face mounting challenges.
"California faces significant headwinds" in construction, manufacturing, leisure, hospitality and government-funded services, the UCLA Anderson Forecast stated. These industries employ millions across the state.
Tariffs imposed by President Donald Trump throughout 2025 are "continuing to move through supply chains, raising goods prices and placing pressure on consumers and small businesses," the report said.
The trade restrictions have had an outsized impact on California's major gateways -- the ports of Los Angeles and Long Beach -- which handle a substantial share of U.S. imports from Asia, it said, adding that stepped-up immigration enforcement has compounded the strain.
Deportations and the prospect of workplace raids have disrupted industries that rely heavily on immigrant labor, including agriculture, construction and hospitality, the report said. It noted that the One Big Beautiful Bill Act, signed by Trump on July 4, authorizes substantial increases in immigration enforcement funding in the coming years.
Drawing on historical patterns, the forecast argued that immigration crackdowns tend to raise unemployment among U.S.-born and documented workers by reducing household spending and disrupting "complementary occupations" in sectors where foreign-born and local workers work alongside one another.
Early county-level data show this trend emerging in California's agriculture- and blue-collar-dependent regions. Counties such as Imperial and Tulare recorded double-digit unemployment in August, far above the statewide average, the report said.
The report predicted that both California and the broader United States will "muddle through early 2026 before experiencing stronger growth in 2026 and 2027," while noting that the outlook will depend heavily on whether Trump administration policies stabilize. ■