California’s hallmark economic sectors are confronting threats to their survival

California’s economy is not only one of the world’s largest at more than $4 trillion but one of its most diverse.

No single industry dominates. Rather, there are three hallmarks with global reach — film and TV production, technology and large-scale agriculture — and a variety of less famous sectors.

In terms of sheer financial and employment importance, healthcare is California’s biggest economic activity at something over $500 billion a year, most of which comes from federal and state governments.

Southern California’s logistics industry — the movement of goods through its ports and its vast warehousing and transportation complexes — dwarfs Hollywood in economic importance. And tourism is huge in both of California’s major urban centers.

These are uncertain times for California’s economy. It has not fully recovered from the economic shutdown during the COVID-19 pandemic, it still has more than a million unemployed workers, and its 5.1% unemployment rate is currently tied for the highest of any state.

Economic turbulence is especially strong in California’s three hallmark sectors and could have existential importance.

The recent kerfuffle over the merger of two Hollywood icons, Paramount and Warner Bros., underscored fears that Southern California is losing its dominance of film and TV production to other states and nations. The region has lost thousands of production jobs in recent years and the state government has attempted to stem the outflow with an array of subsidies.

Politico put it this way: “It all amounts to an existential crisis for the state’s leaders — one that this year’s candidates for governor and Los Angeles mayor confront as readily as those stumping in West Virginia grapple with questions over whether the coal mines will come back, or those in Michigan over whether the automotive assembly lines will ever roll again.

“Beneath the fight over tax incentives lies a larger question: whether the middle-class life that generations of Angelenos built working in Hollywood will soon become a thing of the past.”

Silicon Valley, some 340 miles north of Hollywood, is undergoing upheaval of a different kind. Artificial intelligence is a booming new product for high-tech firms, drawing countless billions of dollars in venture capital. It is also a target for federal and state politicians responding to public concerns about AI impacts.

The potential of societal harm from uncontrollable AI and physical harm from AI’s huge data centers have made the new technology the hottest issue in this year’s elections. It also has adversely affected the job picture as tech companies employ AI to trim their own payrolls. The San Jose Mercury News reported recently that Silicon Valley firms have laid off nearly 14,000 workers so far this year, more than 2025’s yearly total.

Finally, there’s trouble down on the farm.

State officials have been pushing farmers to reduce their use of water to irrigate crops, both surface water from streams and reservoirs and underground water. Farmers also face shortages of labor, due to the Trump administration’s crackdown on immigrants lacking permanent legal status.

The Public Policy Institute of California has estimated that the state’s farmers will see a 20% reduction in water and may have to take as many as 900,000 acres out of production.

The most famous California agricultural product, wine, not only must contend with water and labor issues but a sharp decline in demand, leading to winery closures and decreasing acreage of wine grapes.

“Wine sales have decreased by more than 20% over a five-year period, causing prices paid for grapes to drop and prompting California growers to take roughly a quarter of the state’s vineyards out of production,” the Associated Press recently reported.

While Gov. Gavin Newsom and legislators have pledged millions of dollars to support Hollywood, they’ve ignored agriculture’s problems — and even worsened them via water restrictions.