The respected UCLA Anderson Forecast sees economic growth slowing across the country and in California amid “unprecedented levels of economic and geopolitical uncertainty.”
The forecast, released Wednesday, found that the state lost 50,000 jobs in the first four months of 2025, pushing the unemployment rate to 5.3%.
The California economy is expected to grow slower than the U.S. for the remainder of the year, with several quarters of negative job growth, and unemployment peaking at 6.1%.
Nationwide, GDP growth, which contracted slightly in the first quarter, is expected to slow to near zero in the second half of the year, with only modest recovery anticipated through 2027.
“High tariffs, particularly on intermediate inputs such as steel and aluminum, are expected to weaken the manufacturing sector.” the UCLA economists said in their forecast. “The elevated level of general economic uncertainty and the rise in long-term U.S. interest rates dampens hiring and investment activity.”
The economists warn of labor market turmoil as deportations increase, and see the deficit rising from the Trump administration’s “One Big, Beautiful Bill,” with the U.S. needing to borrow “increasingly larger amounts” resulting in rising strain on the financial system.
Meanwhile, there are ongoing conflicts around the world, including in Ukraine, Iran and Gaza with concerns about a broader conflict in the Middle East.
The economists expect average tariffs to reach 15%, with the cost “passed through into prices and propagate through supply chains over the summer, fall and winter” resulting in an inflation rate of 4% in the second half of the year.
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