With increasing national defense spending and a growing number of homeported warships, the military now accounts for a full one-fifth of San Diego’s economy and its impact is growing.
That was the conclusion of an annual economic report released Thursday by the San Diego Military Advisory Council, which has tracked the military’s impact on the community since 2008.
This year’s report identified $28.1 billion in direct spending that supports 109,000 active duty personnel, 26,000 civilians and 7,000 reserves. The ripple effect on the local economy creates over 210,000 more jobs and a total impact of $51 billion.
“This year’s report again shows that the defense sector and all its related activities is San Diego’s most important economic driver,” said Dr. Lynn Reaser, chief economist at Point Loma Nazerene University’s Fermanian Business & Economic Institute, which conducted the study.
The report forecasts that growing defense spending in the coming fiscal year will increase the military’s local economic contribution by 7%, making it a “key growth catalyst” for the region.
Reaser was joined by San Diego Mayor Kevin Faulconer and top Navy, Marine and Coast Guard officers in delivering the report at Navy’s Mine & Anti-Submarine Warfare Base in Point Loma.
“America’s finest city thrives in most part because of our men and women in uniform,” said Faulconer. “The relationship between the military and San Diego is the best in the nation.”
Reaser said a major driver of the continued growth of the military economy is the steady movement of ships to the Pacific amid increasing tensions with China.
“In San Diego, we continue to see the re-balancing of the Navy’s fleet toward the Indo-Pacific region,” Reaser said.
She said the number of ships based here has grown from 49 in 2015 to 60 today and is forecast to increase to 65 in 2020. That future growth could include a third aircraft carrier, which would be worth as much as $800 million to the local economy.
Other highlights of the report:
- The Naval Information Warfare Systems Command, formerly known as SPAWAR, supports 5,200 military and civilian jobs and has a $3.2 billion economic impact
- Coast Guard operations in the region support 1,745 personnel and generate $290 million in economic benefits
- Because it spans a number of the region’s major sectors, including technology, health care, shipbuilding, manufacturing, and tourism, the military amounts to a regional “mega cluster”
- Total local spending by the Defense Department, Coast Guard and Veterans Administration is expected to increase by 6% in the next fiscal year
- Marine Corps camps and training ranges in the San Diego area, combined with the proximity
to Navy installations, are essential to military readiness and are irreplaceable anywhere else in the nation
Brig. Gen. Daniel B. Conley, commander of Marine Corps Installations West, said the military investment in the San Diego region reflects weather and terrain that create among “the best ranges and training areas” along with an especially welcoming community.