SAN DIEGO / LONDON (IT BOLTWISE) – The Trump administration’s recent policy decisions are having a significant impact on the military economy in San Diego. A new report shows the defense industry, once a cornerstone of the regional economy, is suffering from federal workforce reductions and reduced government spending.
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The defense industry has traditionally played a central role in San Diego’s economy. But according to the latest San Diego Military Economic Impact Report released by the San Diego Military Advisory Council (SDMAC), the industry’s economic impact is declining for the first time in years. The report, prepared by researchers at the UC San Diego Rady School of Management, shows that reductions in the federal workforce and reduced government spending are having a negative impact on the region.
Compared to the previous year, the share of the defense industry in the regional economy fell from 25% to 22%. This corresponds to a loss of over 16,000 jobs. Michael Meyer, a professor at the UC San Diego Rady School of Management, attributes this decline to President Donald Trump’s policies of cutting federal jobs. These measures are already having a noticeable impact on the region as many federal employees retire or leave their positions.
Another factor exacerbating the economic situation is the continued resolution freezing government spending at 2024 levels. This resulted in a 3% decrease in direct federal spending in the region. Compiling the report was particularly challenging this year because of delays in obtaining data from the Pentagon. David Boone, president and CEO of SDMAC, said the data is typically available in March or April but was not made available until August this year.
Meyer expressed concerns about the quality of data coming from the federal government. He stressed that it is difficult to make informed decisions when there is a lack of clarity on spending. Despite these challenges, he hopes future reports will provide better data, particularly regarding contracts with local defense startups.
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