A new study released Thursday by the Los Angeles County Economic Development Corporation projects devastating economic consequences from the recent Palisades and Eaton fires, with potential losses ranging from $4.6 billion to $8.9 billion over the next five years.
The analysis, commissioned by the Southern California Leadership Council, examined three possible recovery scenarios extending through 2028, 2032, and 2034. The immediate impact in 2025 shows an estimated loss of $1.26 billion in sales revenue and approximately 8,200 jobs in the burned areas.
Property damage assessments covering 20,218 land parcels within the burn zones indicate potential losses between $28 billion and $53.8 billion, depending on recovery duration. The real estate and rental sector faces projected losses of $515.8 million to $1 billion.
Employment impacts could reach up to 49,110 job-years across Los Angeles County, with labor income losses estimated between $1.9 billion and $3.7 billion. Key affected industries include real estate, retail trade, and professional services.
Government entities stand to lose up to $1.4 billion in tax revenue from 2025 to 2029, with annual tax decreases of at least $61 million expected.
Former California Governor Gray Davis emphasized the importance of rapid rebuilding during Thursday's news conference. "Speed matters in the recovery process, particularly from an economic perspective," Davis stated.
L.A. County Supervisor Kathryn Barger echoed this sentiment, noting that expedited reconstruction of homes, businesses, and communities represents the strongest path forward.
The study's scope focused on direct burn area impacts, excluding broader economic effects on businesses that experienced utility disruptions or other fire-related setbacks, as clarified by the nonprofit's president Stephen Cheung.