San Diego's Economy: Durable at the Core, Stressed at the Edges
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San Diego's post-summer economic picture resists simple characterization. The unadjusted unemployment rate held at 4.7 percent in July — tied for the year's high and up from 4.5 percent in June — while the seasonally adjusted figure of 4.3 percent trails Orange County at 4.2 percent and San Francisco at 3.9 percent. The regional labor force fell to 1.63 million workers in July, the lowest in three years and nearly 50,000 below the March 2025 peak.
Against that softening headline, the region's defense and research anchors are holding firm. Northrop Grumman's $3 billion Department of Defense agreement provides multi-year economic visibility for a major local employer. General Atomics secured a $20 million California Competes tax credit for fusion expansion at the DIII-D National Fusion Facility — the only fusion research device operating as a Department of Energy national user facility in the western United States. UC San Diego landed an $18 million NSF grant for a quantum materials research center, part of a six-center, $108 million national initiative led through the Jacobs School of Engineering under Professor Michael Sailor. In biotech, Khartis Therapeutics closed a $50 million Series B, and Japan's Craif established a $33 million R&D fund in San Diego focused on pancreatic cancer diagnostics.
The contraction is visible in other sectors. ServiceNow is eliminating 133 San Diego positions by September 28th, with reductions concentrated at the senior and director level — described as strategic rather than driven by financial distress, but significant in scale. Stone Brewing's WARN notice covering 220 positions, with an initial layoff phase scheduled for October 19th, reflects broader structural pressures in craft brewing nationally: consolidation, shifting consumer preferences, and production capacity that outpaced demand.
The housing market presents its own contradictions. The county median for existing single-family homes reached $1.099 million in July — up 5.7 percent year-over-year — while sales volume fell 6.7 percent month-over-month, though it remained approximately 4.5 percent above the prior July. The condo picture is more distressed: older condos and townhomes are down 10 to 15 percent from 2022 peaks in some submarkets, with HOA fees surging 60 to 70 percent in some buildings and documented special assessments reaching as high as $100,000 per unit. Industrial real estate vacancy rose to 7.06 percent from 6.91 percent the prior quarter, with net absorption turning negative at minus 236,000 square feet — a reversal from the positive 1.1 million square feet absorbed in the preceding quarter.