California’s economy has split between higher-growth areas such as Los Angeles benefiting from venture capital spending — and other areas hard hit by tariffs, uncertainty and the government crackdown on immigrant labor.

That’s the finding of the winter UCLA Anderson Forecast released Wednesday, which predicts the state’s economy as a whole will muddle through the coming months before growth picks up in the latter half of next year.

“California has now entered another bifurcated economy phase, not one between East and West, but one between AI, Aerospace, and the like, and the rest of the economy,” wrote Jerry Nickelsburg, senior economist with the forecast.

The report notes that in the first half of this year, nearly 70% of all U.S. venture capital spending came to California, while in the third quarter seven of the top 10 investments nationwide were here.

Los Angeles and Orange counties in particular are benefiting from investment in aerospace and defense firms, while the Bay Area has been the recipient of artificial intelligence investments, Nickelsburg said in an interview.

However, Silicon Valley itself has experienced job losses, the report notes, amid a weakening demand for software engineers who code — a dynamic The Times has reported on as big tech firms cut payroll while they sharply raise their investments in AI.

It was initially estimated that AI-related capital expenditures would total $250 billion this year, but already the amount has topped $400 billion, the report noted.

Another positive indicator has been an increase in air cargo at state airports, reversing a decline that began early in the pandemic, the report said.

At the same time, the Trump administration’s immigration policies have begun to dampen employment in California counties with a higher concentration of jobs in agriculture, construction as well as leisure and hospitality — with the San Joaquin Valley experiencing the largest number of job losses.

This is consistent with past episodes of restrictive immigration policies — deportations in 1930s under President Franklin Delano Roosevelt, in the 1950s under President Eisenhower and last decade through the Secure Communities program under President Obama, the report said.

“So what we do know from past data is that communities that see a significant loss of population due to immigration policy are communities where the unemployment rate of those who are left tend to go up, housing prices go down, income goes down,” Nickelsburg said.

Another drag on the state’s economy has been the housing market, which has been buffeted by deportations that will reduce the number of workers skilled in drywall, flooring, roofing and other specialities. At the same time, tariffs have raised the cost of building supplies from China, Mexico and Canada.

“That the home construction sector is in the doldrums is evidenced by the continuation of depression level sales volume for single-family detached housing and continued increases in median prices,” the report said.

Overall, the state lost 21,200 payroll jobs in the first eight months of the year, the first sustained decline since the pandemic. It left the state with a 5.5% unemployment rate in August, more than a percentage point higher than the nation. The rate has stayed above 5% for more than 19 consecutive months.

The forecast predicts that California’s unemployment rate will peak at 5.9% early next year but average at 5.5% before dropping to an average of 4.6% in 2027. Employment growth is expected to be 0.7% next year and 2% in 2027. Real personal income is similarly expected to rise just 1.1% next year before picking up to 2.6% in 2027.

The national forecast also notes that the economy is benefiting from investment in AI and rising income among wealthy households, even as tariffs, a weak jobs market and uncertain federal policies weigh on it.

That is expected to change early next year when Trump’s One Big Beautiful tax-and-spending bill stimulates growth — though the fluctuating policies and delays in economic data due to the federal shutdown make that uncertain.

“We continue to live in an era of elevated economic uncertainty regarding the economic trajectory,” the national report concludes.

Costco is suing the Trump administration, seeking a full refund of the import taxes it paid under President Trump’s executive orders earlier this year.

The discount retailer, a big importer, wants the U.S. government to stop imposing tariffs on goods Costco brings into the country until the Supreme Court weighs in on the legality of executive orders.

According to the lawsuit filed Friday with the United States Court of International Trade, Costco wants the court to declare that the president lacks authority under the International Emergency Economic Powers Act to set tariffs, and has challenged the tariff orders as unlawful.

Tariffs are taxes imposed on imported goods. Traditionally, tariffs are levied after getting congressional approval, but in February, Trump invoked a 1977 “national emergency” law — used for sanctions — to issue global tariff orders, bypassing the traditional process.

The Supreme Court is now deliberating the legality of the tariff orders.

“Whether Costco is successful through its lawsuit in getting compensated for the tariffs that it has already paid on its imports really depends on the Supreme Court’s decision on whether the president has the legal authority to impose tariffs,” said Devashish Mitra, a professor of economics and global affairs at Syracuse University.

Costco is the latest in a growing list of businesses, including motorcycle maker Kawasaki, beauty product maker Revlon and others that are suing the Trump administration for refunds if the Supreme Court strikes down Trump’s economic policy.

While there could be valid national security reasons under which the president has authority to set tariffs, tariffs on imports such as shirts or sheets are inappropriate and illegal, critics say.

“A blanket tariff on all types of imports from a country or several countries with a single stroke of the president’s pen will be very difficult, if not impossible, if other bases for tariffs are invoked,” Mitra said.

About a third of Costco’s U.S. sales come from imported goods, with major sources being China, Canada and Mexico.

In its suit, Costco highlighted that most imports from China faced a minimum 145% tariff, which has impacted its orders.

Trump has boasted that tariffs helped reduce the trade deficit, and as of October, brought in $205 billion in revenue for the federal government in 2025.

The policies have disrupted the retail sector and thrown every industry, from retailers to toymakers, into disarray.

Some have attempted to rework supply chains to source domestically or from countries not impacted by tariffs to keep costs low, while others are compelled to introduce products at cheaper price points for buyers to afford.

Companies are passing the costs onto consumers. Some are absorbing part of the additional costs and taking a hit to their profit to avoid raising retail prices too much.

Prices began rising immediately after the broader tariff measures were announced in early March and continued to increase gradually over subsequent months, with imported goods rising roughly twice as much as domestic ones, according to the National Bureau of Economic Research.

“We are going to do everything we can to mitigate tariff impacts,” Ron Vachris, CEO of Costco, said in a September earnings call. “The last effect would be we pass on price. If we do that, we are going to be the last one to go up and always [be] the first one to go down in any opportunities we have out there.”

President Trump wasted no time before turning the right wing’s cherished assault on transgender rights into government policy.

On the very day of his inauguration, he issued an executive order titled, “Defending Women from Gender Ideology Extremism and Restoring Biological Truth to the Federal Government.”

The order purported to “recognize two sexes, male and female,” as federal policy. “These sexes are not changeable,” it stated. It labeled “gender ideology” and “gender identity” as a “false claim.”

The order directed federal agencies to “remove all statements, policies, regulations, forms, communications, or other internal and external messages that promote or otherwise inculcate gender ideology.”

About a week later, Trump posted an order banning federal spending on gender-affirming therapies for children, which he defined as “mutilation” based on “junk science.”

Under Atty Gen. Pam Bondi, Trump’s Justice Department took action. On July 9, Bondi boasted of having sent “more than 20 subpoenas to doctors and clinics involved in performing transgender medical procedures on children.”

In her news release, Bondi said the subpoenas targeted “medical professionals and organizations that mutilated children in the service of a warped ideology.”

That’s when Trump’s campaign ran into a judicial brick wall. In recent weeks at least three federal judges blocked some of these subpoenas as flagrantly illicit overreach.

At least two questioned the DOJ’s actions in these cases, with one warning that a federal official’s inaccurate declaration could be interpreted as perjury. Another implied that a DOJ filing in his courtroom might have reflected “deliberate misuse … of court procedure.” (I am indebted to Chris Geidner of Lawdork.com for pulling these facts together.)

These cases raise questions about the professionalism of Trump’s DOJ that have been raised by other federal courts on other topics. Those include the invalidation of the appointments of three U.S. Attorneys put in place to pursue criminal charges against Trump’s political enemies, and the rejection by grand juries of indictments proposed by Trump-appointed prosecutors.

“The Department has defeated many of these lawsuits all the way up to the Supreme Court and will continue to defend the President’s agenda with the utmost professionalism,” a DOJ spokeswoman told me by email.

The transgender cases may have a more personal effect on millions of struggling youths and families. As I’ve written, the Trumpian hand-wringing over the “mutilation” of children via gender-affirming therapy or surgery melds medical ignorance with fantasy.

Therapies such as puberty blockers or hormone treatments typically are administered to minors only after painstaking medical consultations, and actual surgeries aren’t commonly performed on minors by reputable medical providers.

Trump made an assault on transgender treatments a plank in his campaign platform, spinning a weird claim that schools had been subjecting innocent children to secret operations. “The school decides what’s gonna happen with your child,” he said. “And you know, many of these childs [sic] 15 years later say, ‘What the hell happened? Who did this to me?’” None of that happens in the real world.

After the Supreme Court invalidated bans on same-sex marriage in 2015, Republican strategists found “the struggle over trans rights” to be “an especially potent wedge issue,” observes political scientist Paisley Currah, a professor of women’s and gender studies at Brooklyn College, in a new report in the New York Review of Books.

Their target, Currah writes, is “a very small proportion of the population (roughly 2.8 million people above the age of thirteen), not well understood by most Americans, living in ways that confounded common assumptions about sex.”

For the most part, this war has unfolded at the state level. North Carolina passed its notorious “bathroom bill,” requiring residents to use only the bathrooms designated for the sex on their birth certificates, in 2016. The measure drew widespread threats of boycotts by sports leagues and corporations, prompting its repeal the following year.

Legislators soon found an approach more tolerable for the public: banning transgender women from participating in women’s sports. In 2015 there were 21 antitrans bills introduced in state legislatures; in 2025 there were more than 1,000.

In June the Supreme Court’s six-member conservative majority appeared to bless this approach by turning away a challenge to a Tennessee law that bans puberty blockers and hormones for trans youth, even when parents and physicians prescribe them. With this ruling, Justice Sonia Sotomayor wrote in a ringing dissent, “the Court abandons transgender patients and their families to political whims.”

She might have added that Trump’s intimidation works. Medical providers coast-to-coast, including Children’s National Hospital in Washington, D.C., and Kaiser Permanente, ended gender-affirming care for minors to avoid legal hassles; some institutions even ended such care for adults, although that care isn’t targeted by the government.

None of that means that there aren’t guardrails on the federal antitrans campaign, which brings us back to the judges placing a collar on the DOJ.

In the most recent ruling issued Nov. 21, federal Judge Mark Kearney of Philadelphia took aim at subpoenas Bondi served on Children’s Hospital of Philadelphia. Purporting to be investigating the mislabeling and misuse of puberty blockers and hormones, the DOJ demanded the hospital’s “billing and insurance records, communications with manufacturers and sales representatives, and the names and complete medical and psychological records of children receiving gender-affirming care,” Kearney wrote.

The hospital acceded to most of this request, but did not provide the identities of its child patients and their families and their confidential medical files.

Kearney quashed those subpoenas, ruling that the privacy rights of the children and their families “substantially outweighs” the DOJ’s “need to know the children’s names, addresses, and treatment.”

Kearney noted that federal law left questions about medical care entirely to the states; policy disagreements such as those pitting the DOJ against the hospital are not federal crimes. “Congress never authorized a roving mandate to regulate and alter state-licensed medical care,” he wrote.

He also focused on a declaration filed in court on Oct. 6 by DOJ official Lisa K. Hsiao, stating that “the government is aware of a lawsuit filed just this year” with “allegations of a minor being put on puberty blockers after his first visit and cross-sex hormones after his second with no meaningful assessment.”

As it happens, there is no such lawsuit. The day after Hsaio’s declaration was filed “under penalty of perjury,” Kearney observed, it was withdrawn and replaced with one that removed the reference to a lawsuit and substituted the claim that the government was aware only of “concerning allegations” about the treatment.

The hospital said in court that it hadn’t been served with any such lawsuit. Kearney questioned “the veracity of Director Hsiao’s sworn statements” and noted that DOJ lawyers agreed with him that “false statements may be subject to a perjury investigation.”

Kearney’s ruling followed one issued Sept. 9 by federal Judge Myong Joun of Boston. Joun quashed the entire subpoena issued to Boston Children’s Hospital seeking extensive information about its personnel and medical records of patients, including their Social Security numbers and home addresses.

“It is abundantly clear,” he wrote, that the administration’s “true purpose” is to interfere with the state’s right to authorize gender-affirming care, “to harass and intimidate BCH to stop providing such care, and to dissuade patients from seeking such care.”

In the third case, federal Judge Jamal Whitehead of Seattle on Oct. 27 threw out a subpoena the government served on QueerDoc, a telehealth provider serving patients in the West. The subpoena demanded complete personnel files for all QueerDoc employees and all private information about patients for whom it prescribed puberty blockers or hormones.

Whitehead concluded that the subpoena — compounded by Bondi’s news release — was aimed “not to investigate legal violations but to intimidate and coerce providers into abandoning lawful medical care.” (Emphasis his.)

Whitehead also found that a legal filing in which the DOJ cited legal gounds for the subpoena “represents a fundamental misunderstanding — or deliberate misuse — of court procedure”: Filings of its kind generally were used to correct minor clerical errors in a previously filed document, he noted, not for making new legal arguments after the deadline. In this case the filing underscored that the government was targeting “the provision of gender-affirming care itself, not any legitimate federal violation.”

The government appealed the Joun and Whitehead rulings though not, as yet, Kearney’s action. The battle to protect treatment for transgender youths is plainly not over.