California's unemployment rate reached 5.3 percent in April 2026, exceeding the national rate by approximately one percentage point. This occurred during ongoing job cuts in technology and other sectors, even as the state's economy grew faster than the national economy in the fourth quarter of 2025.
The UCLA Anderson Forecast projects that California's unemployment rate will peak at 5.6 percent later in 2026. Jerry Nickelsburg, senior economist at UCLA Anderson Forecast, said, "Income and output will continue to grow faster than the U.S. even as employment growth is tepid." Nickelsburg added, "Once past the current weakness, expected by the middle of next year, a tech, durable goods manufacturing, and construction resurgence should lead to superior growth in both employment and income in the Golden State once again."
Between January and May 2026, U.S. technology employers announced 123,653 job cuts, a 66 percent increase compared to the same period in 2025, according to a Challenger, Gray & Christmas report. California recorded approximately 77,000 job cuts across all sectors during this period, doubling the number reported by any other state. Companies like Meta and Coinbase have laid off employees, citing artificial intelligence restructuring work as a reason.
Andy Challenger, chief revenue officer of Challenger, Gray & Christmas, said, "AI isn't yet the jobpocalypse some predicted." He noted, "Like spreadsheets and email before it, the technology will ultimately make workers more productive." While California's entertainment, technology, and manufacturing sectors have reduced their workforces, the healthcare and social services sectors have added workers.
Local California companies have attracted and spent hundreds of billions of dollars developing artificial intelligence software and infrastructure. Economist William Yu stated that economic outcomes depend on whether artificial intelligence replaces workers or assists existing workers. National real gross domestic product growth was approximately 2 percent in 2025, with California's real gross domestic product growth at approximately 2.5 percent in the same year. UCLA projects national real gross domestic product growth will decrease from approximately 2.3 percent in 2026 to 1.8 percent in 2027. The forecast projected the national unemployment rate was 4.3 percent in April 2026 and expects it to increase to 4.5 percent by the end of 2026.
The aerospace sector in California has benefited from increased production at Boeing and Airbus. Annual housing permits in California remain stable at approximately 110,000 units. Deportation policies are expected to decrease the available construction workforce in the state, and tariffs have increased the cost of imported building materials. The sales volume for single-family detached housing in California remains low, while median prices continue to increase.