Business

UCLA forecast sees California growth outpacing U.S. as hiring stays weak

AI, aerospace and defense investment are supporting the state economy, but UCLA economists expect California’s employment recession to continue through 2026.

Image credit: Simon Cobb / Wikimedia Commons, CC0; archival February 2020 photograph of the UCLA Anderson School of Management, not the current economy or forecast

California’s economy is expected to keep growing faster than the nation even as job creation remains weak, the Los Angeles Times reported October 2, citing the UCLA Anderson Forecast released September 30. UCLA said the state’s economy expanded at a 3.7% annual rate in the first quarter of 2026, compared with 2.1% nationally.

What it means locally

The forecast points to investment in artificial intelligence infrastructure, a stronger aerospace sector and higher defense spending as important sources of growth. It also identifies tariffs, deportations and elevated energy costs as headwinds. California added 138,500 jobs in the 12 months ending in August, according to the Times, while the state unemployment rate reached 5.1% that month — the highest of any state. UCLA expects the state’s employment recession to persist through the end of 2026, with hiring in technology, aerospace and other industries helping a recovery begin in early 2027. The accompanying photograph shows the UCLA Anderson School of Management in February 2020 and is archival; it does not depict the current economy or forecast.

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