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 Still Setting Records

Add Potential Workers: Given Up Or Part Time 17.9% Add Potential Workers: Given Up Or Part Time 10.1% 7.5% 3.9%

Inflation Worry 3.6% 1.9%

2 Short Term Rate Increases Interest Rates: 2 Short Term Rate Increases 4.48% 2.69%

Yield Curve: Potential Recession Predictor Recession: 2020 Likelihood Rising 2 Year to 10 Year 0.18%

California Job Gains/Losses

Inland Empire Population Greater Than 25 of 50 States

Population Forecast, 2018-2045 2045: 6,119,497 1,111,783

Median Household Income

Median Household Income, 2017 Deducting Housing Costs Above IE

Inland Empire’s Powerful Job Growth! Percent 2018e above 2007 I.E. CA US 15.8% v. 11.0% v. 8.6% Confession Forecast: 45,000 jobs 3.1% 4.7% Unemployment Actual: 46,110 Jobs 3.1% 4.2% Unemployment

Job Quality

Job Growth by Region 2nd Largest 2018 Absolute Job Gain in So. CA!

Local Job Growth,2018

Unemployment Rates 3.9% 3.5%

Poverty Falling With Job Creation 23.5% 16.4%

Educational Challenge 46.3% 29.2%

Payroll Headed for the Moon

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

Health Care Job Growth Strongest High Paying Sector 2011-2018 9.6% of Job Growth

Median Health Care Pay: 2018 $62,363

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

2018 Forecast: ACA Unknowns 2019 Prospect: Slightly Stronger

Logistics Job Growth Without Logistics growth, IE would still be in Recession 2011-2018 23.6% of Job Growth

Median Logistics Pay: 2018 $47,946

Educational Requirement for Position Skill Ladders Based on Education for Position Median Pay Warehousing, Inland Empire 2018 Educational Requirement for Position  Experienced All Workers Entry Level Share of Jobs Work Experience, Plus Bachelor's or Higher $62.14 $49.98 $34.58 7.7% Bachelor's Degree $38.02 $29.94 $24.10 6.3% Work Experience $28.17 $21.88 $17.22 4.8% Associates Degree $34.70 $27.89 $22.47 1.2% Post-Secondary Vocational Education $42.63 $30.46 $22.77 4.7% Long-Term On-the-Job Training $33.11 $25.63 $19.64 5.7% Moderate-Term On-the-Job Training $34.37 $24.94 $18.04 26.9% Short-Term On-the-Job Training $20.02 $15.67 $12.84 42.8% Wholesale Trade Sector $30.62 $23.41 $17.79 100.0% No Schooling After High School All OJT $26.25 $19.86 $15.33 80.1% Trade or Community College All OJT $41.03 $22.71 5.9% Bachelor's Or More All OJT $51.32 $40.99 $29.88 14.0%

E-Commerce 14.5%

Port Container Volumes Record Levels

Net Industrial Absorption 20.2 million

Industrial Vacancy Rate 3.6%

Construction Locations

Industrial Lease Rates Up 29.0%

ONT Airport Cargo Record Volume 16.1%

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

2018 Forecast: Space v. Regulators 2019 Prospect: Somewhat Weaker

Manufacturing Job Growth 2011-2018 4.0% of Job Growth

2018 Median Manufacturing Pay $54,800

U.S./CA Manufacturing Job Growth

CA Electrical Cost +74.6% +83.5% +135.4%

Marijuana?

2018 Forecast: Tariffs & CA Policy 2019 Prospect: Weaker

Construction Job Growth 2011-2018 12.4% Of Job Growth

Median Construction Pay: 2018 Best Paying Blue Collar Sector $53,322

Home Volume

Home Prices FHA Conforming Loan Limit: $431,250 LA/OC is $726,525 +3.7% -10.2%

Price Competition Highest Price Gaps In History

Apartment Rates/Vacancy, 2018 Inland Empire $1,487 3.8% San Diego $1,978 3.9% Ventura $1,983 3.9% Orange $2,035 4.1% Los Angeles $2,267 4.0% Source: USC Lusk Center For Real Estate

2018 Forecast: Supply v. Demand 2019 Prospect: A Little Weaker

Professionals & Mgmt, Higher Education Mining, Utilities, Information 2011-2018 8.6% of Job Growth

Median Moderate Paying Financial & Education Jobs: 2018 $57,109

Moderate Paying Office/Education 2019 Prospect: About The Same

Professionals & Mgmt, Higher Education Mining, Utilities, Information 2011-2018 1.9% of Job Growth

Median High-End Pay: 2018 $76,202

BA or Higher 21.4%

14 Inland Cities Better Educated Than At Least One Coastal County

Office Market Absorption 588,181

Office Market Vacancies E-Commerce Hurts Market 24.2% 9.1%

Office Lease Rates Down -2.5%

ONT Airport Passengers 1988-9 Level 12.9%

2018 Forecast: Competitive Disadvantage 2019 Prospect: Slightly Weaker

Federal, State, Local Government 2011-2018 -0.4% of Job Growth

Median Government Pay: 2018 $63,499

2018 Forecast: E-Commerce v. Pop. Growth 2019 Prospect: Somewhat Less

Retail Market

Population Serving & Tourism Sectors 2011-2017 40.6% of Job Growth

Median Modest Pay: 2018 $32,177

Median Household Income, 2017 Deducting Housing Costs Above IE

Retail Vacancy Rates 3rd Quarter 2018 Orange 3.3% San Diego 4.4% Los Angeles 5.1% Ventura 6.9% Inland Empire 8.5%

Retail Rates Per Sq. Ft. Sept-2018 Inland Empire $2.05 Orange $2.40 San Diego $2.44 Los Angeles $2.48 Ventura $2.53

2018 Low Paying Forecast: E-Commerce v. Pop. Growth 2019 Prospect: Weaker

Look Ahead

Inland Empire’s Job Growth Still Strong! YTD 2018 = 46,100 2019e = Down -5,000 to -8,000 2020 = Recession?

www.johnhusing.com