UCLA Anderson’s latest economic forecast doesn’t anticipate either an immediate downturn or an immediate resurgence for either California or the U.S. Instead, “both the nation and the state are poised to muddle through early 2026 before experiencing stronger growth in 2026 and 2027,” UCLA Anderson said Wednesday.
For California in particular, the year ahead will be marked by what UCLA Anderson termed “a two-speed recovery,” with different sectors of the economy running at different speeds. While the state continues to outpace the nation in high-productivity sectors such as AI, aerospace and advanced manufacturing, other segments such as construction, nondurable goods manufacturing, retail, and leisure and hospitality face “significant headwinds,” according to the December 2025 UCLA Anderson Forecast.
The forecast anticipates noticeable improvement coming in 2027 for metrics such as unemployment, employment growth, non-farm payroll jobs, real personal income growth and residential permits.
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