A statue stands at the Cabrillo National Monument across the bay from downtown San Diego on Mar. 20, 2008.
San Diego, California – San Diego’s long-standing role as one of America’s military powerhouses took a modest hit this year, with new data showing that defense spending now makes up a smaller share of the region’s overall economy. But even with that decline, the military remains one of the city’s most important economic anchors — employing hundreds of thousands and generating billions of dollars in economic activity.
The 2025 Military Economic Impact Report, released Wednesday by the San Diego Military Advisory Council (SDMAC) and UC San Diego’s Rady School of Management, found that defense spending now accounts for 22.2 percent of the region’s gross regional product, down 3 percent from 2024. The drop, researchers say, stems largely from federal budget cuts and slower growth in defense contracting.
Still, the numbers are staggering. The military supports nearly 357,000 local jobs and represents $61.3 billion of San Diego County’s economy — a figure that dwarfs tourism, biotech, and even higher education. Last year, that number was $63.2 billion, meaning the region saw a loss of roughly $2 billion and more than 16,000 jobs tied to defense spending.
“San Diego’s defense community continues to be one of the most dynamic and stabilizing forces in our economy,” said Lisa Ordóñez, dean of the Rady School. “Our collaboration with SDMAC reflects Rady’s ongoing commitment to generating insights that strengthen our region while supporting the service members, veterans, and families who call it home.”
According to the report, $39.3 billion came in the form of direct defense spending, including $19.8 billion in defense contracts awarded to more than 2,000 companies across the county. Payroll for active-duty, reserve, and civilian employees totaled $15.1 billion, while retirement and veterans’ benefits reached $4.3 billion.
Those dollars ripple throughout the region — fueling local businesses, supporting housing demand, and powering San Diego’s tech and research sectors, which often benefit from military partnerships. In all, one in every five jobs in the county depends directly or indirectly on defense.
“Even with modest shifts and uncertainties in federal budgets, the data show how resilient and deeply connected the defense sector is to our region’s workforce and technology ecosystem,” said Michael Meyer, a UCSD associate teaching professor who has led the report since 2021.
For SDMAC president and retired Navy Rear Admiral David Boone, the findings reaffirm the region’s reliance on — and resilience through — defense spending. “This collaboration helps decision-makers in San Diego, Sacramento, and Washington understand how critical the defense sector is, not only to national security but to local innovation, workforce development, and quality of life,” Boone said.
Boone added that the report underscores how San Diego’s economy continues to weather shifts in Washington. “Even amid evolving federal spending patterns, the defense sector remains one of San Diego’s most stable and forward-looking engines of growth,” he said.
