Job markets in the Bay Area and California shed thousands of jobs in February, a decline that followed losses in January in a dreary start for the statewide economy in 2025.

According to a new report from the state Employment Development Department, the Bay Area lost 5,200 jobs last month and California as a whole lost 7,500.

“Two consecutive months of net job loss in both the Bay Area and for California as a whole speaks to a new fragility in the region’s economy,” said Scott Anderson, chief economist for BMO Capital Markets.

California has lost 28,900 jobs so far in 2025. The state shed 21,400 positions in January.

“This is the first time since mid-2020 that we’ve had two months of job losses,” said Michael Bernick, an employment attorney with law firm Duane Morris and a former director of the state EDD.

The last time California suffered two consecutive months of job losses was in December 2020 and January 2021, as the state and nation navigated a global pandemic. Now, President Donald Trump’s trade policy decisions are making an impact.

“The main driver of these net job losses is the uncertainty linked to the tariffs and shifting tariff announcements,” Bernick said.

The statewide unemployment rate was unchanged in February at 5.4%.

Adjusted for seasonal volatility, the East Bay lost 1,700 jobs, the South Bay shed 1,300, and the San Francisco-San Mateo region saw 1,200 jobs eliminated last month, according to the EDD report.In total, the Bay Area has lost 9,900 jobs so far in 2025, with the San Francisco-San Mateo region leading the way with 4,500 cuts. The East Bay has lost 2,500 jobs so far in 2025 and the South Bay lost 2,200 positions, this news organization’s analysis of the state EDD figures shows.

Should Trump trim federal budgets and shed U.S. government employee positions, that could have a huge impact on the Bay Area job market, some analysts said.

“Loss of federal funding is a potential blow to a Bay Area economy struggling to find its footing after two years of disappointing growth,” Anderson said.

Jeff Bellisario, executive director of the Bay Area Council Economic Institute, suggested that the region’s current employment woes have been building for years.

“The job loss trend in the Bay Area stretches back two years and signals a clear need for state and local policymakers to ensure that job retention and attraction move to the top of their agendas,” Bellisario said.

Russell Hancock, president of San Jose-based think tank Joint Venture Silicon Valley, said efforts by the tech sector to streamline operations and trim staffing levels is also a factor.

“There’s so much turmoil and instability out there that is making our companies cautious and conservative,” Hancock said. “There’s also a new push for efficiency, which is a complete turnaround from the corporate life we saw before COVID. Then there comes the third strike, which is our high housing prices.”

The high cost of living in the Bay Area, along with the region’s regulatory structure, could be chasing away workers and companies.

“The lack of affordability is pushing Silicon Valley jobs to other places, which you can do now because everything is networked together,” Hancock said.

Numerous observers believe the Bay Area could begin to see an economic lift from the rush into artificial intelligence, a fledgling field that has enticed investors and fueled startup activity.

“It’s all paying off in terms of profitability for our driving industries, but it’s not going to translate into appreciable job growth unless or until artificial intelligence takes off,” Hancock said.

Some experts believe both California and the Bay Area face tough sledding ahead.

“The bad news is likely just beginning with tariffs, restrictions on immigration and rising inflation on the way,” said Steve Levy, director of the Palo Alto-based Center for Continuing Study of the California Economy.

A feeble job market could hound the Bay Area job market for some time, Bellisario said.

“We would anticipate that jobless rates begin to creep upward in the region and the state over the remainder of 2025,” Bellisario said.