Chapman University predicts virtually zero job growth in Orange County for 2026, here’s what economists say about tariffs

Chapman University’s economists released their 48th annual economic forecast on December 11, 2025, painting a cautious picture for 2026 as tariffs loom and economic growth slows. The report predicts virtually no job growth in Orange County, with the broader U.S. economy expected to expand at a sluggish 2.0% rate.

Chapman’s Pessimistic View: No “Gangbuster Year” Ahead

Dr. Jim Doti, President Emeritus of Chapman University, characterized 2026 as showing no signs of a strong economic rebound. The forecast suggests that without the drag from tariffs, economic conditions would be considerably stronger. California’s weak job growth looks set to persist throughout 2026 as businesses reassess expansion plans.

The A. Gary Anderson Center for Economic Research at Chapman highlighted that high taxes and tariff uncertainty are pushing some businesses and higher-earning residents to lower-cost states. This brain drain threatens long-term competitiveness in the region.

Orange County Facing Minimal Job Creation

The forecast delivers particularly sobering news for Orange County. With only a 0.3% job growth rate projected, the region will add just 62,000 new jobs throughout 2026. This represents a continuation of the weak labor market that plagued California in 2025. For context, typical years see more robust employment gains.

The stagnant job growth reflects broader concerns about business confidence. Tariff policies, combined with high state and local taxes, create headwinds for hiring. Sectors that rely heavily on imported goods face particular pressure.

Economic Indicator	2025 Actual / Expected	2026 Forecast
U.S. Real GDP Growth	1.8%	2.0%
Orange County Job Growth	0.38%	0.3%
Mortgage Rates	6.6% (avg)	5.6% (projected)
California Job Growth	Weak / Negative	Continues to Weaken

Tariffs: The Biggest Threat to Economic Recovery

The Chapman forecast identifies Trump tariffs as a critical headwind for 2026. Described as “the highest in nearly a century,” these tariffs could substantially weigh on businesses that depend on overseas supply chains and imports. Consumer prices may rise, reducing purchasing power and dampening economic activity.

If tariffs remain in place or expand further, the forecast suggests the economy could perform even worse than the modest 2.0% growth projection. Doti specifically noted that without tariff impacts, economic growth would be “much stronger.”

Housing Market Shows Mixed Signals Despite Rate Improvements

One bright spot in the Chapman forecast centers on residential real estate. Declining mortgage rates offer hope for a housing recovery in 2026. The average rate is expected to drop from 6.6% in 2025 to 5.6% in 2026, potentially unlocking demand from buyers priced out at higher rates. This rate decline could spur meaningful increases in home sales volumes.

However, housing affordability remains challenged in expensive markets like Orange County, where property prices remain elevated. Lower rates help, but don’t fully solve the affordability crisis for first-time homebuyers.

“Our forecast calls for California’s weak job growth to continue into 2026, with the overall economic environment remaining constrained by tariff uncertainty and state tax policies.”

— Dr. Jim Doti, President Emeritus, Chapman University

What Does This Mean for Southern California Businesses and Workers?

For Southern California workers and business leaders, the Chapman forecast signals caution. Limited job creation means tighter labor markets where candidates have fewer choices. Wage pressure could ease, and unemployment may drift higher as companies prioritize cost containment over expansion.

Businesses should prepare for a lower-growth environment. Companies heavily dependent on imports will face cost pressures from tariffs, making operational efficiency critical. Real estate developers may see modest housing demand recovery, but employment constraints could limit overall transaction volumes and appreciation rates.

The Chapman Economic Forecast, celebrated for its historically accurate projections on GDP growth, unemployment, and housing trends, has guided Southern California business planning for nearly five decades. This year’s pessimistic outlook underscores the need for business leaders to adjust expectations and strategies accordingly.

Sources

• Orange County Register – Chapman economist sees ‘no gangbuster year’ in 2026
• Los Angeles Times – California unemployment rises in September as forecast predicts slow jobs growth
• Yahoo Finance – Chapman University Economic Forecast Reveals What’s Ahead in 2026