John Husing, Ph.D. Economics & Politics, Inc. Chief Economist, IEEP Inland Empire Forecast . . . John Husing, Ph.D. Economics & Politics, Inc. Chief Economist, IEEP

U.S. Jobs At A Record Level

Add Potential Workers: Given Up Or Part Time 18.0% Add Potential Workers: Given Up Or Part Time 10.6% 8.0% 4.1%

Inflation Worry 3.9% 2.9%

Q3 Balance Sheet … Raise Long Term Rates Interest Rates: 3-4 Short Term Rate Increases Fed Selling Off Q3 Balance Sheet … Raise Long Term Rates 5.0%?? 4.60% 2.91%

Yield Curve: Potential Recession Predictor 2 Year to 10 Year 0.41%

California Job Gains/Losses

Inland Empire Population Greater Than 25 of 50 States

Inland Empire’s Powerful Job Growth! Percent 2017 above 2007 I.E. CA US 12.2% v. 8.8% v. 6.4% Confession Forecast: 46,600 jobs 3.3% 5.5% Unemployment Actual: 49,433 Jobs 3.5% 5.1% Unemployment

Job Quality

Job Growth by Region 2nd Largest 2017 Absolute Job Gain in CA!

Inland Empire Growth Fastest 2017 Job Growth Rate in CA!

Unemployment Rates

Poverty 25.0% 17.5% 19.3% 14.5%

Educational Challenge 47.1% 45.7% 27.8% 29.8%

$ Payroll Spent $ Payroll Spent Moon Mining Corp. $ Payroll Paid

ACA Impact Health Care Demand & Quality of Life -60% Drop in Uninsured

Residents Per Health Care Worker +26.0% More People 33.5 26.6 Sources: Department of Finance, Demographic Research Unit; CA Employment Development Department

Health Care Job Growth Strongest High Paying Sector 2011-2017 10.3% of Job Growth

Median Health Care Pay: 2017 $60,768

2018 Forecast: ACA Unknowns

E-Commerce 1.1% 9.1% 15.5%

Port Container Volumes Record Levels

Net Industrial Absorption 21.9 million

Industrial Vacancy Rate 3.9%

Industrial Rates & Vacancies Lease Rates Per Square Foot Per Month Inland Empire $0.53 3.9% Ventura $0.70 2.5% Los Angeles $0.89 1.1% Orange $0.91 1.5% San Diego $0.90 4.1% Source: CB Richard Ellis

Construction Locations

Industrial Lease Rates Up 22.1% Up 76.7%

ONT Airport Cargo Record Volume 18.6%

Logistics Job Growth Without Logistics growth, IE would still be in Recession 2011-2017 23.3% of Job Growth

Disappearing Available Space For Facilities Market  500,000+ 1,000,000+ High Desert 206 42 Coachella Valley 92 21 Moreno Valley/Perris 117 59 West SB Valley 45 12 Central SB Valley 49 9 East SB Valley 16 1 Southwest 15 Pass Area 23 7 Western RivCo Edge 13 3 Riverside 5 Total Remaining  581 157 Without Deserts, Moreno Valley/Parris 166 35

Median Logistics Pay: 2017 $46,708

Educational Requirement for Position Skill Ladders Based on Education for Position Median Pay Warehousing, Inland Empire 2017 Educational Requirement for Position  Experienced All Workers Entry Level Share of Jobs Work Experience, Plus Bachelor's or Higher $65.84 $47.81 $32.96 7.7% Bachelor's Degree $36.54 $28.98 $23.04 6.3% Work Experience $30.56 $24.02 $18.88 4.8% Associates Degree $33.66 $26.16 $20.62 1.2% Post-Secondary Vocational Education $40.83 $28.45 $22.64 4.7% Long-Term On-the-Job Training $32.21 $24.78 $18.97 5.7% Moderate-Term On-the-Job Training $34.25 $24.49 $17.72 26.9% Short-Term On-the-Job Training $19.65 $15.12 $12.21 42.8% Wholesale Trade Sector $30.59 $22.75 $17.26 100.0% No Schooling After High School $26.09 $19.47 $14.94 80.1% Trade or Community College $39.39 $27.99 $22.24 5.9% Bachelor's Or More $52.69 $39.36 $28.51 14.0%

2018 Forecast: Space v. Regulators

U.S./CA Manufacturing Job Growth

CA Electrical Cost +71.3% +123.4% +147.6%

Marijuana?

Manufacturing Job Growth 2011-2017 4.5% of Job Growth

Median Manufacturing Pay $51,385

2018 Forecast: Tariffs & CA Policy

Home Volume

Home Prices FHA Conforming Loan Limit: $405,950 LA/OC is $679,650 +3.7% -10.2%

Price Competition Highest Price Gaps In History

New Home Inventory

Notices of Default

Apartment Rates/Vacancy, 2018 Inland Empire $1,239 7.0% Los Angeles $1,416 4.1% San Diego $1,577 4.8% Orange $1,736 3.8% Source: USC Lusk Center For Real Estate

Construction Job Growth 2011-2017 12.4% Of Job Growth

Median Construction Pay: 2017 Best Paying Blue Collar Sector $52,604

2018 Forecast: Supply v. Demand

BA or Higher 21.4%

14 Inland Cities Better Educated Than At Least One Coastal Counties

Office Market Absorption 461,093

Office Market Vacancies E-Commerce Hurts Market 24.2% 9.7%

Office Lease Rates Down -4.2% Up 17.4%

ONT Airport Passengers 1988-9 Level 12.4%

Professionals & Mgmt, Higher Education Mining, Utilities, Information 2011-2017 1.4% of Job Growth

Median High-End Pay $73,279

2018 Forecast: Competitive Disadvantage

Federal, State, Local Government 2011-2017 -1.2% of Job Growth

Median Government Pay: 2017 $61,185

2018 Forecast: E-Commerce v. Pop. Growth

Retail Rate/Vacancy Jun-2018 Inland Empire $2.03 8.3% San Diego $2.39 4.7% Ventura $2.63 6.3% Orange $2.42 3.5% Los Angeles $2.49 4.7% Source: CB Richard Ellis

Population Serving & Tourism Sectors 2011-2017 41.2% of Job Growth

Median Modest Pay $30,652

2018 Low Paying Forecast: E-Commerce v. Pop. Growth

Forecast

2018 Forecast By Sector: 45,000 New Jobs

Inland Empire’s Job Growth Still Strong! YTD 2018 = 50,380 3.1%

2018 Look Ahead Trump Impacts Hit This Year – Tariffs, Tax Cut, ACA Health Care Strong But Still Facing ACA Assaults Other High-Paying Sectors Remain Weak Logistics Continued Strength Due To Record Imports and E-Commerce Manufacturing Strong U.S. Environment Not in CA, Tariff Impact? Construction Strengthening Residential Market Growing But Hurt By FHA Rules Industrial Construction Strong With Logistics Office Market Weak Due to E-Commerce & Vacancy Levels Brick & Mortar Retailers Under Threat from E-Commerce 45,000 New Jobs 3.1% Growth 4.7% Unemployment Rate

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