Los Angeles Grows Toward Recovery

California’s largest city is once again demonstrating its capacity to grow and evolve, despite devastating wildfires, adverse federal policies, and unexpected economic upheavals. The year 2025 was unique for Los Angeles:

• The early wildfires wiped out decades of growth and millions of dollars of value in some of its most advantaged communities;
• Emerging immigration rules and activities disrupted hundreds of businesses and interrupted the agricultural workforce up and down its fertile valleys, and
• Federal tariffs created havoc for many of its industries, causing costs to soar and markets to shrink.

Despite these woes, the City continued to thrive, as its economic growth expanded to encompass losses and pursue emerging opportunities. The Los Angeles Economic Development Corporation (LAEDC) was watching these evolutions, and, in its 2026 Economic Forecast report, reports how success continues to follow innovation and how a strong civic spirit can overcome almost any barrier.

Three Unanticipated Challenges

The wildfires of January 2025 were the most apparent challenge. More than 50,000 acres were burned; thousands of buildings were destroyed; 29 people died; and residents and businesses suffered billions of dollars in losses and damages, much of which may not be recoverable. According to the LAEDC report, two major industries (retail and hospitality) lost almost 60% of their workers when those businesses burned or lost their utilities and services. When combined with losses in other, less affected sectors, economic losses could tally up to between $4.6 and $8.9 billion by the end of 2029.

The incoming federal administration was not particularly helpful in easing the pain of the fire losses. By June 2025, the new federal administration had begun its crackdown on what it was contending was out-of-control illegal immigration. Sending in thousands of National Guard and active-duty Marines, the federal forces patrolled city streets to collect, arrest, and ‘remove’ as many ‘illegals’ as they could find. Their methods weren’t subtle (armed and masked soldiers bullied anyone in their path), and their procedures (in some cases) failed to follow constitutional mandates, leaving immigrant communities fearful of even leaving their homes. The economic impact on their employers – and the customers who frequented their businesses – has been high and devastating.

Not least disruptive were the federally mandated tariffs imposed on goods and products from around the world. Tariffs are taxes paid by the buyers – in this case, American buyers – and businesses that needed supplies, parts, and other internationally sourced wares had no choice but to pay those tariffs to receive their goods. The situation then forced the companies to pass those added tariff costs on to their customers and clients. Eighteen months into the ‘tariffed’ economy, the average effective tariff rate sits at 16.9%, which is the highest rate of tariffed trade tax since the 1930’s. Fortunately, regional importers were able to offset many losses by overbuying inventory before the tariffs went into effect. That buying boom in the first half of 2025 resulted in the Port of Los Angeles’s third-best year ever, handling over 10.2 million container units over the course of that six-month period. The second six months, however, showed the impact of the buyer’s tax: both the Port of Los Angeles and the Port of Long Beach experienced shipping declines of up to ~15% by the end of December.

Many Roads to Recovery

Despite these concerns, California, Los Angeles County, and Los Angeles City continue to find ways to build new economic foundations. Most impressive: the State of California added more jobs – 131,534 – between April 2025 and March 2026 than any other state, despite the impediments listed above.

Also impressive: how LA County and LA City have leveraged their transportation sectors to retain workers and investments in these otherwise fraught political times. Los Angeles City was ready to roll when the FIFA World Cup Soccer tournament opened on June 11, 2026. Of the 104 scheduled games, eight (8) were played in Los Angeles, and the City had been prepared for that onslaught of soccer spectators for several years. One major project that proved invaluable for FIFA fans was the completion of the LAX/Metro Transit Center, which offered easier access to and from LAX via a free shuttle service. Travelers arriving at the Center itself (located at 9225 Aviation Boulevard) were then able to connect with several transit companies to reach their final LA destination.

The Transit Center is just one element of a larger LA Metro project, ‘Twenty Eight by 28.’ In preparation for the 2028 Summer Olympics, hosted by Los Angeles from July 14 through July 30, 2028, the City’s primary transportation system is expanding its lines to include enhanced travel opportunities throughout the LA basin. (The 2028 Paralympic Games follow shortly thereafter, from August 15th through the 27th.) By the end of 2026, 11 of its 28 projects will be complete, including the LAX connector. Seventeen additional projects are already in progress, including dedicated transit lines to Pasadena and the North San Fernando Valley, as well as speed, reliability, and mobility upgrades to several existing stations and communities.

At LAX, the building continues, with the City approving a $5 billion contract to modernize the international transportation hub. In April 2026, LAX handled more than 46,800 aircraft and over 5,871,000 passengers. Upgrades to be completed before the 2028 Olympics launch include moving sidewalks within the terminals, an “Automated People Mover” elevated electric train that will connect together the terminals, parking lots, and (eventually) the regional train network.

The City will also see upgrades and new builds in several of its entertainment sectors:

• The LA Convention Center is being renovated at a cost of $2.6 billion.
• The Kroenke Organization is developing a 52-acre “Rams Village” at Warner Center, the future home and training center for the Los Angeles Rams football team.
• The Hollywood Park Studios, a 12-acre multi-structure production compound, is expected to be complete in time for the 2028 Games, with its first tenant being an international broadcast center for both sets of Olympics.

Not least significant, Los Angeles County is investing $32 million in the Fire Recovery and Resilience Workforce Program, which covers the cost of 1,000 construction and related workers. The investment is part of a $2.5 billion allocation from the State to help those neighborhoods that are still face-down in the fire recovery process.

Despite the challenges that emerged in 2025 and early 2026, Los Angeles continues to press forward, developing fire recovery processes while also expanding and enhancing its assets in preparation for the 2028 Olympics.