Business shutdowns outside the January fire burn zones may have cost Angelenos up to $500 million in lost income

New data is out that suggests the January fires in the L.A. region affected the local economy on a wider scale than just the burn zones.

The findings come from the  L.A. County Department of Economic Opportunity and the  L.A. County Economic Development Corporation (LAEDC), a nonprofit organization that measures growth in the region.

Research initially focused on the loss of housing and jobs in the burn zones of the Palisades and Eaton fires. It’s now been expanded to include “secondary areas” — the periphery sections that were under mandatory evacuation but didn’t burn.

What happened to the local economy next to the burn zones?

While businesses in the burn zones were damaged or completely destroyed, those in the nearby areas were still significantly affected, said Dan Wei, an economist at LAEDC.

“ Even they did not experience any property damages, many of those businesses face cleanup, safety checks and challenges, such as staffing shortages and slower return of customer demand,” she said.

To see the financial effects, researchers modeled two scenarios for the evacuation zones where business was completely disrupted for two lengths of time. The first scenario was a shorter one where business was disrupted for about 20 days, while the second was a longer one that ended at around 45 days. Here’s what they found:

• Loss of sales for all goods and services: $625 million to $1.2 billion
• Employment losses: 3,250 to 6,140 job-years (this measures jobs for one calendar year)
• Labor income losses: $250 million to $473 million
• Loss of federal, state and local taxes: $119 million to $234 million

Factoring in the burn and evacuation zones, between $5 billion and $10 billion may have been lost in total economic output, and up to $1.6 billion in taxes.

The county has launched a campaign called "Shop Local. Dine Local. Recover Local." to help small businesses get back on their feet. Residents have also started restaurant crawls and dining clubs.

How was housing affected?

The flames destroyed or affected more than 18,000 structures, according to  CalFire damage inspection data, which doesn’t count smoke and ash damage.

“ While Eaton’s losses were concentrated in larger single family development, the Palisades experienced more diverse impacts across housing types, schools and community structures,” said Matthew Skyberg, a  senior GIS research analyst with LAEDC.

Single-family homes took the hardest hit between both fires, making up 68% of all destroyed structures.  

Rent and home sales

Fears of rent gouging were commonplace just after the fires. But when rental prices from last year were compared to current data from ZORI, Zillow’s rent index, the data only showed a slight short-term increase in the median rent for L.A. County after the fires started.

“ However, by six months from the end of the wildfire in June, the middle rent in the county had cooled below’s 2024 trend,” LAEDC’s Max Chomas said.

The increase was more pronounced in ZIP codes closer to the fires, but prices also dropped six months out.

The surge decreases the farther you get away from the fires.

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Courtesy LAEDC Institute for Applied Economics

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The median amount doesn’t include high and low  rents. As LAist has reported, some rents did spike above California’s 10% limit on price gouging after disasters.

Comparing the fires’ effects

The two fires had different effects on Altadena and Pacific Palisades communities.

In the burn zones, nearly 1,900 businesses and 10,000 workers were affected. Most of those were concentrated in the Palisades Fire.

For evacuation areas, that jumps to about 5,000 businesses and nearly 37,500 employees. The Eaton Fire takes the lion's share there.

Justin Adams, a senior economist with LAEDC, said  this is consistent with their overall findings.

“This suggests that while the Palisades experienced more concentrated direct damage, the Eaton fire potentially created wider reaching business disruptions,” he said.

“ While these businesses may recover more quickly, their temporary closure during the crisis did contribute significantly to economic losses and supply chains disruptions throughout the region,” Adams added.

Recovery metrics

Chomas said  there doesn’t appear to be evidence of a long-term flight of residents from the area. According to the data, house listings and sales in the burn areas have aligned with historical trends so far.

But there’s still much to be done to keep people in their communities. As of Sept. 9, officials have approved 798 permits, which represents 3% of destroyed residential buildings. Compared to other recent fires,  L.A. County is in the middle here on recovery.

Some rebuild permits for the L.A. fires have taken longer than expected to issue.

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Courtesy LAEDC Institute for Applied Economics

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“However, every wildfire seems to have its own recovery path,” Chomas said.

As of May 2025, 94% of filed insurance claims have been paid, which are mostly for residential properties. Nearly two thirds of those claims are for lots in the Palisades Fire.

Debris has also been cleared for nearly all parcels that signed up for federal removal.