Although the Inland Empire’s economy is expected to continue growing in 2018 and 2019, a growing labor force shortage and its effects on business profits and worker wages is the latest trend to watch.
Additionally, taking care of the supply-side of California’s housing shortage and building more single and multi-family units in locations such as the Inland Empire is critical to the long-term health of the state’s economy according to economists from UC Riverside’s “Center for Economic Forecasting and Development.”
The center’s following highlights from this week’s local economic forecast spotlight some intriguing viewpoints, trends and projections so your credit union can plan appropriately (click here to search for and view the full report that will be posted after Oct. 30):
Inland Empire Forecast Highlights
- Economy—The Inland Empire’s economy will continue growing from 2017 – 2019, but at a slower rate than the past few years. Also, U.S. Gross Domestic Product (GDP) growth will average somewhere between 2 – 2.5 percent annually as the economy “downshifts into cruise control.”
- Jobs—The Inland Empire’s recent robust job growth will ratchet down to the 2 to 2.5 percent growth range from 2018 – 2019 as the availability of workers increasingly diminishes.
- The top-growth job sectors from 2017 – 2019 will be in construction, health care, social assistance, scientific/technical services, and distribution/transportation (logistics).
- Over the past couple of years, many local businesses are finally hiring at a faster pace than in neighboring counties, giving local residents a better opportunity of working closer to home rather than commuting. This small trend, although slow in the making, will continue.
- Wages—The tightening labor market is finally giving way to wage increases. Local average annual wages grew 6.5 percent from first-quarter 2016 to first-quarter 2017.
- Residential Real Estate—Home prices in the Inland Empire are forecast to appreciate between 5 – 6 percent over the next two years, driven by a limited home supply and a renter population that is consuming a greater share of single-family dwellings.
- The region has experienced an inflow of households into the rental market, a shift from younger to older householders, and a low level of residential permitting activity (despite an uptick in economic activity). “The key to reversing these trends lies in rolling back certain national and state regulations while increasing building activity at the local level,” the forecast report states.
- Also, local wage increases have failed to keep up with increasing housing costs, which has led to affordability issues. Without significant new residential construction, this pattern will only get worse.
- The region is in a unique position that will allow it to create hybrid mixed-use urban nodes offering housing, entertainment, retail, offices, and nearby freeways. It is not held back by established “city cores” that have been losing population elsewhere in California. As long as costs are relatively low and there are few building deterrents such as high fees barring entry, development can continue at a strong pace.
- Densification—A general trend toward population densification has enabled the development of a more diverse and self-sustaining local economy via mechanisms of agglomeration. Better linkages between local industries will lead to greater diversification, a key prerequisite to economic resiliency. Expanding employment opportunities in the area will also mean that more residents will choose to work in the Inland Empire rather than commute to coastal job centers.
Click here to search for and view the full report that will be posted after Oct. 30. Topics include:
Inland Empire Trends and Data (pages 9 – 48)
- Employment growth by geography
- Jobs added/lost by industry
- Housing outlook
- “Urban Empire” and population density
- Challenges and opportunities of urban job “cores”
- Employment overview/labor market performance
- Commuting characteristics
- Industry highlights
- City highlights
- Business activity
- Local spending and taxable sales
- Production output
- Coastal ports and tourism
- The rise of the single-family rental
- Residential real estate market performance/breakdown
- Price-to-income ratios, rental vacancy rates, and rents
- Homeowner rates
- Construction permit activities
- Commercial real estate
- Densification breakdown
- Population and commute demographics
United States and California (pages 1 – 8)
- Business investing
- Disaster economics
- Consumer rebalancing
- “Beware the Labor Shortage”
- “The Trump Effect”
- “Yellen’s Choice”
- Limits to California growth
- “Build It? They’re Already Here…”
Demographic Profile and Projections: Inland Empire*
- Total population: 4.5 million (and will hit 5 million by 2025).
- Working-age individuals (15 to 64 years old): 66 percent of total population in 2015 (and will drop to 64 percent by 2025).
- Labor force (at least 16 years old who are working/looking for a job): 2 million out of 3.5 million adult population.
- Labor force participation rate (adults who “want” to work): 57 percent (or 2 million individuals).
- Unemployment rate: 5.4 percent in Inland Empire (versus 4.7 in CA and 4.1 in U.S.)
- Unemployed workers: 110,000.
- Median household income: $56,000 as of 2016 (compared to $66,600 for CA and $59,000 for U.S.)
- Poverty rate: 17.5 percent (versus 15.4 in CA and 14.7 in U.S.)
- Education of population: 20 percent have a college degree; 33 percent some college; 26 percent high school diploma; and 21 percent no high school diploma.
- Employment sector growth: click here for a local future growth breakdown (2014 – 2024) of nonfarm job projections by industry, occupation, education, and fastest-versus-largest areas of importance in the Ontario-San Bernardino-Riverside metropolitan area.