For the first time in years an annual report shows the defense industry's impact on the region's economy declined since 2024 with more than 16,000 fewer jobs.
This year's San Diego Military Economic Impact Report was released Wednesday by the nonprofit San Diego Military Advisory Council (SDMAC).
Researchers from the UC San Diego Rady School of Management compiled the report.
The defense industry is still a cornerstone of the region's economy, the report says, but reductions in the federal workforce and less government spending are having a negative impact.
Last year the report showed the defense sector was about 25% of the region's economy. This year, it's dropped to 22%.
There are also 16,524 fewer jobs, the report says.
Michael Meyer is a professor at the UC San Diego Rady School of Management. He said President Donald Trump's efforts to reduce federal jobs is having a quantifiable effect.
"The retirements and the separations of these federal employees — we already started to see that have an impact," Meyer said.
The other major factor, Meyer said, is the continuing resolution that funded the government during 2025. It leaves spending at 2024 levels.
This is reflected in the 3% drop in direct federal spending in the region, he said.
The annual report comes a month late this year, according to SDMAC, due to a months-long delay in getting data from the Pentagon.
"Producing the report this year was, I'll say, difficult," said David Boone, the president and CEO of SDMAC. "Difficult because we normally get the data from the Department of Defense in March (or) April — we didn't get it until August."
Meyer attributes the delay — again — to Trump's cuts to the federal workforce.
"We rely on a large collection of data through largely federal government sources and the difficulties of the past year — specifically, the reductions in federal employees — has made that data even more difficult to collate," Meyer said.
He said he's concerned about the quality of data coming out of the federal government.
"You can't manage what you're not able to measure, so if we don't have clarity in how and where and how much is being spent through the various channels, it's very difficult for federal, state and local leadership to make well-informed decisions," Meyer said.
Meyer said he thinks there's some federal investment not reflected in this year's report — contracts to local defense start-ups. He hopes they'll get better data next year.
