CSUF Economists’ Forecast US, Southern California Economy Amid Uncertainty, Ongoing War in Iran
Newswise — As war in the Middle East rattles energy markets and tariffs reshape global trade, CSUF economists provide their 2026 Economic and International Trade Forecast, exploring a fast-changing economic landscape for communities and businesses in the U.S. and Southern California.
Cal State Fullerton Woods Center for Economic Analysis and Forecasting director Anil Puri and co-director Mira Farka’s analysis provides context and insight into areas like soaring gas prices, the housing market and AI’s impact on the labor market. The economists also explore what could come next for global supply chains as the war in Iran disrupts global energy supplies, raises oil and natural gas prices, and pushes inflation.
Our economists’ takeaways:
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Driven by geopolitical conflict, gas prices are currently high and volatile, and a major source of inflation pressure in the economy. Prices are expected to remain elevated in the short term unless the conflict de-escalates. However, the U.S. economy is a lot less sensitive to energy “shocks” like war than in past decades.
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The housing market in 2025 fell short of expectations, weighed down by weak consumer confidence and economic uncertainty. High home prices and mortgage rates have pushed affordability to extremely low levels. Home prices are slowing, but still high. Prices have cooled significantly after pandemic-era increases, with slower growth continuing into 2026.
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Artificial intelligence is reshaping employment and the economy. Farka and Puri expect AI investment to boost growth in the short term, at least for the next two years.
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Tariffs are a persistent feature of the global landscape and central to geopolitical strategy. “Peak tariff uncertainty” is behind us, and a more durable and institutionalized tariff architecture is now in place.
About Cal State Fullerton: The largest university in the CSU and the only campus in Orange County, Cal State Fullerton offers more than 100 academic degree programs and Division I athletics. Recognized as a national model for supporting student success, CSUF excels with innovative, high-impact educational practices, including faculty-student collaborative research, study abroad and competitive internships. CSUF is a top public university known for its success in supporting first-generation and underrepresented students and preparing all students to become leaders in the global marketplace. Our vibrant and diverse campus is a primary driver of workforce and economic development in the region. Visit fullerton.edu.
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