The annual report, released by the San Diego Military Advisory Council and the UC San Diego Rady School of Management, found that defense spending accounts for 22.2% of the region’s gross regional product, a decline of 3% from 2024, owing in part to federal budget cuts.
In 2025, the military supports nearly 357,000 local jobs and represents $61.3 billion of San Diego County’s economy, according to the 2025 Military Economic Impact Report released Wednesday. Last year, though, that economic impact was $63.2 billion, a loss of nearly $2 billion and north of 16,000 jobs.
“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.”
The 2025 report records $39.3 billion in direct defense spending, including $19.8 billion in defense contracts awarded to more than 2,000 companies. Payroll for active-duty, reserve, and civilian employees totaled $15.1 billion, while retirement and veterans’ benefits rose to $4.3 billion.
“San Diego’s military presence remains a key driver of economic growth, innovation, and collaboration,” said Michael Meyer, associate teaching professor at the Rady School and faculty lead for the report since 2021. “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.”
In whole, defense supports more than one in five jobs locally — 143,000 active-duty, reserve, as well as civilian personnel, and indirectly supporting 214,000 jobs through contracting, logistics and local business activity.
SDMAC has partnered with the Rady School to produce the annual report for nearly two decades.
“This collaboration helps decision-makers in San Diego, Sacramento, and Washington, D.C. understand how critical the defense sector is — not only to national security but also to local innovation, workforce development, and quality of life,” said David Boone, SDMAC president, CEO and a retired Navy rear admiral. “Our report concludes that even amid evolving federal spending patterns, the defense sector remains one of San Diego’s most stable and forward-looking engines of growth.”
The full report is available at SDMAC.org.
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