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Military's Economic Impact on San Diego Helps to Offset Recession

New Data Shows 1 in 4 jobs in Region Tied to Military and Veterans Affairs Spending

Erik Bruvold

Tuesday, July 28, 2009

July 28, 2009: SAN DIEGO, CA – The recession’s impact on the region would be much worse without the large military presence that calls San Diego home, according to analysis released today by the National University System Institute for Policy Research (NUSIPR).

Analyzing a variety of federal sources, NUSIPR estimates that in 2007 spending by the Departments of Defense and Veterans Affairs totaled nearly $14.7, accounting for nearly 1 out of every 7 dollars of regional economic activity. When accounting for indirect and induced economic activity, the Institute further estimated that nearly 475,000 jobs in the region are directly or indirectly tied to military spending.

Moreover, this spending has been growing. Between 2006 and 2007, military expenditures in the region increased by 8.9% or more than $1.2 billion. NUSIPR’s analysis of DoD contracting data indicated that 2008 increased another 22% and 2009 spending will either match or likely exceed 2008’s record breaking number of $11.1 billion.

“The region’s economy has definitely become more diversified but the military remains a core foundation of what drives our prosperity,” says National University System Institute for Policy Research economist and Senior Fellow Kelly Cunningham. “San Diego’s ‘stimulus’ has been the uptick of DoD spending. Absent that increase, the recession’s impact would be much worse, with thousands of additional San Diegans out of work.”

NUSIPR’s analysis of more than 106,000 procurement contracts allowed the Institute to break down where procurement dollars are spent by Congressional district and which companies are doing the work. For example, DoD contracts show the spending flowing to just three San Diego defense contractors, SAIC, General Dynamics/NASSCO, and General Atomics, account for 7% of total economic activity in the region and that the 53rd Congressional District, represented by Congresswoman Susan Davis, in 2008 received nearly 40% of DoD spending for contracted work.

NUSIPR was also able to estimate the impact of deployments on military payroll. By comparing data from the Department of Defense and the Bureau of Economic Analysis, NUSIPR estimates that in 2007 at least $3.4 billion in payroll spending went to sailors, marines and soldiers based in San Diego but deployed out of the region.

Mr. Cunningham concluded, “The bottom line of the report is that it underscores just how important the military is to our region and how it would be dangerous to take its presence for granted. If one includes dependents, two out of every five San Diegans have a close tie to the military. The Navy and Marines may not play the same dominant role they did 40 years ago, but they remain critical to San Diego’s future.”
To read the entire report, go to

About National University System Institute for Policy Research
National University System Institute for Policy Research (NUSIPR) is a non-partisan organization whose goal is to improve the efficiency and effectiveness of the public sector throughout San Diego County. The San Diego Institute for Policy Research became part of the National University System, a network of affiliated institutions committed to meeting the emerging demands of education in the 21st century. NUSIPR produces high quality policy research papers, economic bulletins, and public opinion polls, and holds major events and symposiums to help generate debate and discussion among San Diego’s decision makers and citizens alike.