Economic Fallout in Los Angeles: Military Deployment and Protests Strain Local Businesses

Los Angeles, June 11, 2025— The arrival of 700 U.S. Marines and over 4,000 National Guard troops in Los Angeles, alongside ongoing protests against immigration raids, has plunged the city’s economy into turmoil, with small businesses, tourism, and retail sectors bearing the brunt of curfews and unrest. As downtown streets remain under tight restrictions, local leaders warn that the economic fallout could exacerbate challenges posed by recent wildfires that scorched parts of Southern California.

Downtown Businesses Reel Under Curfews and Violence

Mayor Karen Bass announced an 8 p.m. to 6 a.m. curfew across a one-square-mile area of downtown Los Angeles on June 10, 2025, which has severely disrupted local commerce. The curfew, prompted by looting and violence during protests against federal immigration raids, has forced restaurants, bars, and retail shops to shutter early, slashing revenue during peak evening hours. According to the Los Angeles Chamber of Commerce, businesses in Little Tokyo and the Arts District reported a 40% drop in sales on June 9 and 10 compared to the previous week, with 23 establishments looted on Monday night alone.

Kazumi Tsuji, owner of a family-run sushi restaurant in Little Tokyo, described the impact: “We’re losing customers who are afraid to come downtown, and now we’re closing early because of the curfew. It’s a double hit after the wildfires already kept people away.” The California Retailers Association estimates that small businesses in the affected areas could face losses exceeding $10 million by the end of the week if the situation persists. The presence of federal troops, intended to protect federal property, has further deterred foot traffic, as armored vehicles and military personnel create an intimidating atmosphere for shoppers and tourists.

The economic strain comes at a precarious time for Los Angeles, which is still recovering from wildfires that destroyed hundreds of homes and businesses in late 2024. The city’s tourism industry, a $20 billion sector, is particularly vulnerable. Hotels near protest hotspots reported a 25% drop in bookings since June 6, when protests began, according to the Los Angeles Tourism & Convention Board. “Visitors see images of National Guard troops and tear gas on the news and cancel their trips,” said board spokesperson Maria Gonzalez. “It’s a devastating blow to an industry already hit hard by natural disasters.”

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Broader Economic and Political Ramifications

The deployment of federal troops, costing an estimated $134 million for 60 days, has sparked debate about its economic justification. California officials, including Governor Gavin Newsom, argue that the funds could be better spent on economic recovery efforts, such as rebuilding wildfire-damaged infrastructure or supporting small businesses. “This militarization is not only unlawful but a waste of resources that deepens our economic challenges,” Newsom said in a June 10 statement. The Pentagon, however, defends the cost, stating that protecting federal personnel and property is critical to maintaining order.

The protests, fueled by immigration raids conducted by President Donald Trump that target an average of 2,000 arrests per day, have also disrupted supply chains and labor-intensive industries. The Garment District, where the raids are centered, employs thousands of workers, many of whom are now avoiding work out of fear of detention. The Garment Worker Center reported that production at several factories declined by 30% since June 6, as workers stayed home or joined protests. “These are people who live paycheck to paycheck,” said center director Maria Nuncio. “The raids and protests are paralyzing their ability to earn a living.”

Economists warn that prolonged unrest could have ripple effects across California’s $4.1 trillion economy, the world’s fourth-largest. “Los Angeles is a global economic hub, and disruptions here impact trade, tourism, and consumer confidence statewide,” said Dr. Elena Martinez, an economist at UCLA. She noted that the combination of military presence, curfews, and protest-related violence could deter investment and delay recovery from the 2024 wildfires, which caused an estimated $5 billion in damages.

Did you know?
The 1992 Los Angeles riots, sparked by the acquittal of police officers in the Rodney King case, caused an estimated $1 billion in economic damages, with over 2,000 businesses destroyed or damaged, highlighting the long-term economic risks of civil unrest in the city.

Long-Term Risks to Los Angeles’ Economic Recovery

The ongoing unrest threatens to derail Los Angeles’ efforts to rebuild its economic stability following a series of setbacks. The 2024 wildfires, which forced evacuations and caused widespread power outages, had already strained municipal budgets and local businesses. The city’s Economic Development Department estimates that 15% of small businesses affected by the fires have yet to reopen, and the current protests risk pushing more toward permanent closure. “We’re seeing a compounding effect,” said department spokesperson Javier Ruiz. “Businesses that survived the fires are now struggling to survive the protests and curfews.”

The deployment of federal troops has also raised concerns among investors and developers, who view the militarized response as a sign of instability. A planned $1.2 billion redevelopment project in downtown Los Angeles, which includes new retail and housing units, has been put on hold, with developers citing “uncertain conditions” caused by the protests and military presence. The Los Angeles County Economic Development Corporation projects that a prolonged crisis could reduce the city’s GDP growth by 0.5% in 2025, a significant setback for a region aiming to rebound.

Community leaders are urging federal and state governments to prioritize economic relief over escalation. “We need grants, not guns,” said Maria Estrada, a board member of the Downtown Los Angeles Neighborhood Council. She emphasized that many businesses lack the reserves to weather prolonged disruptions, particularly those owned by immigrants who face additional fears of deportation.

Efforts to Mitigate Economic Damage

In response to the crisis, Mayor Bass announced a $5 million emergency fund on June 10, 2025, to assist businesses impacted by looting and curfew-related losses. The fund, drawn from city reserves, will provide low-interest loans and grants to affected retailers and restaurants. However, business owners argue that the amount is insufficient, with some calling for federal assistance similar to post-wildfire recovery programs. “Five million dollars is a drop in the bucket when you’re talking about hundreds of businesses,” said Tsuji, the restaurant owner.

State lawmakers are also exploring legislative measures to support the local economy. Assemblymember Miguel Santiago introduced a bill on June 9, 2025, that would allocate $50 million in state funds for small business recovery in Los Angeles and other protest-affected cities. The bill faces opposition from some Republicans, who argue that the state should focus on law enforcement to prevent further looting. Meanwhile, grassroots organizations have launched crowdfunding campaigns to support minority-owned businesses, raising $1.8 million by June 10, according to local nonprofit Inclusive Action for the City.

Despite these efforts, the path to recovery remains uncertain. Given the ongoing protests and the continued presence of federal troops in the city, Los Angeles must delicately strike a balance between restoring order and revitalizing its economy. “We’re resilient, but we can’t keep taking these hits,” said Ruiz. “The longer the situation goes on, the harder it will be to bounce back.”