A report released Tuesday shows that while there is a decline in defense dollars coming into San Diego, the military spending cuts did not have as large of an impact on the local economy as expected in 2014.
The 6th Annual Military Economic Impact Study was released by the San Diego Military Advisory Council (SDMAC), showing the economic impacts the military and defense community contribute to the San Diego region.
The report shows the military brought about $25.2 billion dollars in defense spending to San Diego this fiscal year – down just a bit from previous years.
Still, defense-related activities and spending will generate an estimated $38.7 billion of gross regional product (GRP) for the county, which represents about 20 percent of the total local economy.
The report also states the military sector accounts for 317,000 of the region’s total jobs in 2014 – or approximately 22 percent of all jobs in San Diego County.
The jobs created as a result of defense spending span a wide range, including engineering, food services, information technology, cyber security, construction, shipbuilding, health care, real estate and retailing.
However, due to budget cuts, defense contracts did drop sharply, and those effects continue to ripple into 2014.
In fiscal 2014, the 56 military ships home-ported in San Diego will see direct spending of about $2.8 billion that will equate to a total economic impact of $4.5 billion in GRP. The two aircraft carriers based here will each add about $500 million to the economy.
The two Navy hospitals in San Diego employ about 8,000 individuals and bring in nearly $1 billion of defense dollars directly into the region. After accounting for all of the ripple effects, this translates into a $1.86 billion contribution to the region’s GRP, according to the SDMAC report.
With the Navy concentrating on the Pacific Rim, the report said more military spending should come our way. In 2015, San Diego is poised to benefit from the needs of the military.
“The impact of the military through its bases and personnel located here, defense contracts awarded to local firms, and the income and other benefits accruing to retirees and veterans will continue to play a major role in San Diego’s economy in the period ahead,” the report states. “Nevertheless, the region can be expected to see effects of the military’s downsizing and spending cutbacks going forward.”
Kelly Cunningham, senior fellow and economist with the National University System Institute for Policy Research, said the military will continue to play a major role in the local economy.
“The military is still a very vital big part of our economy. It makes well over 20 to 25 percent of our economy directly and we think it helped our economy stay stronger that it would have been through the recession,” Cunningham explained.
“The combination of San Diego’s military community and defense cluster remains San Diego’s most important economic driver. In fact, new data in the study reinforces even more that San Diego’s military community and defense cluster is vital to our region’s economy,” said Jamie Moraga, president of SDMAC.
“Our region benefits considerably from defense-related spending and military presence. It means billions of dollars in direct spending right here in San Diego -- and hundreds of thousands of jobs for San Diegans. We must never take this for granted,” Moraga added.