John Husing, Ph.D. Economics & Politics, Inc. Chief Economist, IEEP So. California Prosperity . . . 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 More Short Term Rate Increases Interest Rates: 2 More 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

Southern California

9 Southern County Economy Gaining Strength! 2008-2010 Lost -759,000 Jobs 2011-2018e Add +1,540,210 Jobs 8.4% Above 2007 Level

Job Quality: Split

Unemployment Rates

Gold Mine Theory Secondary Tier Primary Tier

Industrial Market

Logistics

E-Commerce 14.5%

Port Container Volumes Record Levels

Logistics Powerful Job Growth 2011-2017 11.7% of New Jobs

Manufacturing

U.S./CA Manufacturing Job Growth

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

Natural Gas A Bargain

Marijuana?

Manufacturing Jobs 2011-2017 0.4% of Job Growth

Construction Locations

Net Industrial Absorption 20.2 million

Industrial Rates & Vacancies Lease Rates Per Square Foot Per Month, Sep-2018 Central Valley $0.42 5.3% Inland Empire $0.56 3.6% Ventura $0.72 3.0% Los Angeles $0.84 1.1% Orange $0.92 1.5% San Diego $0.94 4.1% Source: CB Richard Ellis

Residential Market

Sales Volumes, First Nine Months New Homes Resale Total 15,709 123,772 139,481 14,641 131,443 146,084 1,068 -7,671 -6,093 7.3% -5.8% -4.5% 2018 2017 Change % Chg.

Residential Prices

Share of Local Population Can Afford the Median SFR Home

Construction Jobs 2011-2017 10.3% of Job Growth

Office Market

Health Care

Health Care Jobs: Continuous Growth 2011-2017 10.8% of Job Growth

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

High Paying Sectors

Professionals & Mgmt. , Higher Ed Professionals & Mgmt., Higher Ed., Mining Utilities, Information & Government Group Slowly Adding Jobs 2011-2016 12.6% of Growth

BA or Higher, 2017

Net Office Space Absorption, 2018 ytd

Office Rates & Vacancies Lease Rates Per Square Foot Per Month, Sep-2018 Central Valley $1.45 8.3% Inland Empire $1.96 9.3% Ventura $2.09 13.5% Orange $2.94 10.9% San Diego $2.96 10.2% Los Angeles $3.58 13.3% Source: CB Richard Ellis

Office Space Construction, Sept.-2018 Market Hurt by E-Commerce, Low Govt Revenues

Retail Market

Low Paying Job Growth Retail, Consumer & Bus Low Paying Job Growth Retail, Consumer & Bus. Services, Hotel, Eat & Drink Amusement, Agriculture, Employment Agency 2011-2017 44.6% of Job Growth

Net Retail Space Absorption

Retail Lease Rates & Vacancies Lease Rates Per Square Foot Per Month, Sep-2018 Inland Empire $2.05 8.5% Ventura $2.53 6.2% Orange $2.40 3.3% San Diego $2.44 2.4% Los Angeles $2.48 4.7% Source: CB Richard Ellis

Retail Space Under Construction

Summary U.S. Economy Humming Recession in 2020 A Growing Possibility Southern California Economy 8.4% In Jobs Above 2007 Industrial Real Estate Soaring … Particularly Inland Resident Real Estate Restrained By Regulation Office Real Estate Moderate Performance E-Commerce an Issue Retail Real Estate Under Strain By E-Commerce Except Restaurants

www.johnhusing.com