John Husing, Ph.D. Economics & Politics, Inc. Chief Economist, IEEP Inland Empire Prosperity . . . John Husing, Ph.D. Economics & Politics, Inc. Chief Economist, IEEP
Now What? After Losing 8.71 Million Jobs … Now At A Record Level of Jobs U.S. Jobs Long Slow Growth - Not Over-Heating
Unemployment Rates: Full Employment 18.0% 10.6% 9.1% 4.4%
Cut Taxes … Increase Spending Lower Taxes Massive Increase in Spending on Infrastructure Result: Increased Deficit Spending Increased Upward Pressure on Employment Increased Pressure On Prices FED Rate Increase Needed to Slow Economy
California Job Gains/Losses Up 1,064,038 6.7% Up 2007 15,844,325 2016 16,908,363 Recovery 2,243,097 Great Recession -1,179,058
Inland Empire Population Greater Than 25 of 50 States 2010-2016 Growth: 6.2%
Inland Empire Economy Gaining Strength!
Job Quality
Inland Empire Growth was the 2nd Largest Absolute Job Gain in California in 2015!
Unemployment Rates
The Issue: Poverty
Gold Mine Theory Secondary Tier Primary Tier
Health Care
Repeal & Replace Affordable Care Act Repeal Without Replacement Could Unsettle Insurance Market Impact of Repeal & Replace Together Depends Upon Conditions Remove Penalty For Not Having Insurance Previous Medical Conditions Use Subsidized High Risk Pool Children Stay on Parents Insurance Until 26 Eliminate Mandated Maternity & Mental Health Coverage End Subsidies & Give Refundable Tax Credits For Coverage If No Employer Coverage End Federal Subsidies for Medicaid, Use State Block Grants Create Multi-State Insurance Markets
Potential Impact On Health Care Demand & Quality of Life -51.0% Drop in Uninsured -53.8% Drop in Share Uninsured
Health Care Jobs: Continuous Growth 2011-2016 11.6% of Job Growth Median Pay $59,494 Inland Empire’s Best Sector for Higher End Jobs
Sophisticated Warehousing Operations
Value of the Dollar: Helps Imports & Hurts Exports 100.0 2012-2016 25.6%
Port Container Volumes On Pace To Tie 2nd Highest Import Level
Place Tariffs on Imports Imports More Expensive Lower Foreign Imports & Hurts the Inland Empire Reduced U.S. Jobs Handling Imports Improve U.S. Manufacturing Jobs except for Automation Losses Higher Prices At Retail Stores
Corporate Taxes Based on U.S. Sales not Income Retailer Buy Imports for $80 … Sell in U.S. For $100 … Pay Tax on $100 Firm Makes U.S. Goods for $80 … Sells Abroad for $100 … Pay No Taxes Removes Incentive to Put HQ Abroad to Avoid U.S. Taxes Discourages Imports & Hurts the Inland Empire Encourages Exports Could Bring Billions of Dollars Back to the U.S.
E-Commerce Growth Rates Year Over Year by Quarter 1.1% 8.4%
Industrial Overwhelmingly In The Inland Empire
Industrial Asking Lease Rates Soaring Up 19.8% Up 73.3%
Logistics Powerful Job Growth 2011-2016 23.1% of New Jobs Median Pay $45,456
PM 2.5: Diesel Pollution -91.4%
Manufacturing: Should Be A Major Growth Source
California Manufacturing Job Growth Just 4.8% of U.S. Growth
Inland Empire Manufacturing Jobs 2011-2016 5.5% of Job Growth Median Pay $50,106
Construction: Finally Coming Back
Massive Infrastructure Spending Tariffs Affect Imports Potential For Higher Interest Rates Privatize Fannie Mae & Freddie Mac But Leave FHA Alone Dollars For Freeways, Airports Transit, Harbors, Rail Lines Greater Union Construction Job Growth CA Opposition to Trump & CA Environmental Policies Reduced Construction of Logistics Facilities Lower Construction Job Growth Fed Already Discussing More Rate Rises In 2017 Due to Hot Economy Housing More Expensive Dampen Home Sales & Residential Construction Jobs All Mortgages Rates Act Like Jumbo Rates – Some Increase in Rates Housing More Expensive Still Have Lower Down Payments For Qualifying Homes Dampen Home Sales & Residential Construction Jobs
Home Price Trends -21.3% 92.3%
Long Term Competitive Price Advantage Still Exists
Inland Empire Homes Cheaper By $236,000 to $403,000 vs. Coastal Cos.
Little New Home Inventory Supply
Mortgage Market Has Stabilized … Low Numbers of Notices of Default
Some Increase in Single Family Homes Being Built
Building Permit Valuation Back to 1999
Apartment Rental Rates & Vacancies. Riverside $1,367 4.6% San Bernardino $1,418 3.9% Orange $1,637 3.4% Santa Barbara $1,682 2.7% San Diego $1,873 3.2% Ventura $1,890 3.9% Los Angeles $2,180 4.0% Source: CB Richard Ellis
Inland Empire Construction Jobs 2011-2016 12.8% of Job Growth Median Pay $51,915
High Paying Sectors Jack Dangermond Ahmad Adel Al-Khatib
BA or Higher
Office Market Net Space Absorption
Office Market Still Heavy in Vacancies 24.2% 13.8%
Office Asking Lease Rates Down -8.7% Up 2.9%
Professionals & Mgmt. , Higher Ed Professionals & Mgmt., Higher Ed., Mining Utilities, Information Group Slowly Adding Jobs 2011-2016 0.4% of Growth Median Pay $71,206
Shrink Government Expand Military Continued Decline in Non-Defense Government Jobs Increase in Civilians & Military Defense Positions Twenty-Nine Palms Marine Corps, 29 Palms Fort Irwin, San Bernardino Co. March Air Reserve Base, Riverside Co. Naval Surface Warfare Center, Corona
Assessed Valuation Finally, Purchasing Power Growth! 14.1% FY 2009-2018 Inflation: 11.7%
Assessed Valuation Change
Federal, State, Local Government 2011-2016 -2.7% of Job Growth Median Pay $59,587
Change In Corporate Tax Code Hurt Retailers, Who Will Be Taxed on Domestic Sales Not Just Income Reduced Retail Job Growth Already hurt by E-Commerce
Retail Vacancy Rate Inland Empire 8.9% San Diego 5.7% Los Angeles 4.6% Orange 4.0% Ventura 3.5% Source: CB Richard Ellis
Retail Asking Rate Per Sq. Ft./Month Inland Empire $1.95 San Diego $2.21 Orange $2.25 Ventura $2.30 Los Angeles $2.47 Source: CB Richard Ellis
Low Paying Job Growth Retail, Consumer & Bus Low Paying Job Growth Retail, Consumer & Bus. Services, Hotel, Eat & Drink Amusement, Agriculture, Employment Agency 2011-2016 39.6% of Job Growth Median Pay $29,169
Summary: Look Ahead Trump Impacts Hit Mostly in 2018 Health Care Strong But Under ACA Repeal Threat Logistics Strong But Under Tariff Threat Manufacturing Encouraging Except For CA Environment Infrastructure Construction Helped By More Spending Except For CA Environment Residential Market Stabilized But Possibly Hurt By Rates Industrial Construction Strong But Under Tariff Threat Office Market Weak Due to E-Commerce & Vacancy Levels Retailers Modest Growth But Under Threat from Tariffs & E-Commerce Forecast: 39,600 Jobs … 2.8% Unemployment 6.3%
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