Our Shared Economy | September 2025
Ripple effects: How federal research cuts are impacting our regional economy
By Heidi Young
The Bay Area’s research ecosystem is built on close connections between federal investment, academic institutions, and economic growth. Universities drive discovery and innovation while supporting a broader network of researchers, employees, and industries. As federal priorities shift, economic modeling shows that reduced research funding can create impacts far beyond individual projects.
Federal cuts to research funding are delivering an economic blow to higher education in the region, with Stanford University bearing the brunt of the reductions. The cuts represent a combined loss of $21.5 million in federal research support between March and September 2025, including $8 million in National Institutes of Health (NIH) funding and $13.5 million in National Science Foundation (NSF) grants.
In total, 33 research projects were terminated, including 17 NIH grants (all at Stanford’s School of Medicine) and 16 NSF grants. Several of these projects had been running since 2020, meaning the cuts not only halt active investigations but also sever the continuity of long-established programs. The disruption threatens scientific progress and undermines the region’s innovation ecosystem, where federally funded research plays a critical role in fueling discovery, training talent, and driving economic growth.
The economic consequences extend far beyond the immediate funding gap, creating cascading impacts across the regional economy. Economic modeling using IMPLAN (2023 data) indicates that the direct, indirect, and induced effects of these cuts will result in a reduction of total output by $32.2 million and will lead to the loss of over 70 jobs. These jobs span not only research-related roles, but also support staff and service industries that feel the downstream effects of reduced federal investment in scientific research and development.
The fiscal implications for local and state governments add another layer to the economic damage. With research activity curtailed, tax revenues that support public services and infrastructure also decline. Combined, city and county governments in Santa Clara and San Mateo counties face an estimated $312,000 decline in tax revenues, while the State of California stands to lose approximately $794,000 (IMPLAN, 2023 data). Beyond the immediate revenue shortfall, these funding cuts weaken the region’s standing as a global hub of research and innovation, and underscore how federal policies and funding decisions reverberate through institutions, communities, and local economies.
NOTES: Terminated NSF and NIH grant data are from Grant Witness, a project to track the termination of grants of scientific research agencies under the Trump administration in 2025. All termination, funding, and outlay data are verified on USAspending.gov. IMPLAN (2023 data) was used to conduct the economic impact analysis. All dollars are in 2025 dollars. This economic impact analysis does not include grants that have been terminated but are being challenged in court, and other grants that have been paused but not terminated.
