The latest UCLA Anderson Forecast released Wednesday warns that tariffs and deportation of immigrant workers will create uncertainty for the California economy and slow growth, but are unlikely to cause a recession.
The forecast, released just hours after President Trump’s address to Congress, said “uncertainty related to trade, fiscal policy and geopolitical risk have all surged to new heights.”
“As President Donald Trump and his team commence implementation of the economic policies they described during election — including mass deportation of undocumented workers and tariffs on major international trading partners — the outlook for the U.S. and California economies is rife with uncertainties,” according to the UCLA economists.
The national economic growth rate is expected to decline by one percentage point, but recover by the end of 2026, with the unemployment rate rising to 4.5% and inflation hovering around 3%.
The California economy is expected to grow as fast as the national economy over the next two years, with unemployment rising to 5.7% this year, but dropping to 5.2% in 2026 and and 4.8% and 2027.
Forecast Director Jerry Nickelsburg noted that deportations would reverberate through California industries such as agriculture, construction, hospitality, health care, day care and other service sectors.
He said previous efforts at mass deportations, such as under the Eisenhower administration in the 1950s, have led to drops in employment rates among the remaining population, with many jobs generally held by immigrants simply going unfilled and tasks no longer being performed.
He also added that tariffs and deportations could also prove detrimental to the housing construction industry at a time when it is desperately needed following the Los Angeles-area wildfires.
City News Service contributed to this article.
