Inland Empire’s Economy 2012 … Finally Recovery Underway! John Husing, Ph.D. Economics & Politics, Inc.

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Presentation transcript:

Inland Empire’s Economy 2012 … Finally Recovery Underway! John Husing, Ph.D. Economics & Politics, Inc.

After Losing 8.74 Million Jobs … U.S. Job Creation Is Crawling Back 30% of Jobs Regained

V Pattern of Likely Recovery U x x

Inland Empire Job Growth/Destruction (110,000) (100,000) (90,000) (80,000) (70,000) (60,000) (50,000) (40,000) (30,000) (20,000) (10,000) 0 10,000 20,000 30,000 Source: CA Employment Development Department Wage & Salary Job Creation/Destruction Inland Empire,

Job Growth Comparison: December 237, ,700 92,500 CaliforniaNo. CaliforniaSo. California 26,900 24,800 22,700 12,100 San Diego Co.Orange Co.Inland EmpireLos Angeles Co. Source: CA Employment Development Department Average Job Change, California Markets California Markets, December, Finally!

12.2% In Dec-2011, Inland Empire’s Unemployment was 12.2%, CA was 10.9%, U.S. 8.3 %

Still Tough Unemployment Rate December

There is Some Good News Locally

Quarterly Industrial Absorption, million Sq.Ft.

Industrial Vacancy Rate 12.8% 6.3% 2.7%

Change In Container Flows -25.4% 15.3% ImportExport Source: Port Import Export Reporting Service (PIERS), collected from Vessel Imported & Exported Container Volume, Ports of Los Angeles & Long Beach (mil. teus)

Fourth Highest Total Container Volume

2. Ports On West Coast Nearest Asia Los AngelesLong Beach

8,000-Container Post-Panamax Ships 3. Deep Water Ports As Ships Draw Over 50 feet of Water

Issue: Panama Canal Diversion Suez

Strongest Job Growth Jan-10 Feb-10 Mar-10 Apr-10 May-10 Jun-10 Jul-10 Aug-10 Sep-10 Oct-10 Nov-10 Dec-10 Jan-11 Feb-11 Mar-11 Apr-11 May-11 Jun-11 Jul-11 Aug-11 Sep-11 Oct-11 Nov-11 Dec-11 (6,000) (4,000) (2,000) 0 2,000 4,000 6,000 (6,000) (4,000) (2,000) 0 2,000 4,000 6,000 LogisticsHealth Care Sourec: CA Employment Development Department Inland Empire Logistics & Health Care Job Changes January 2010 to December 2011 Health Care Logistics

International Trade % Dollar Down: U.S. Goods Cheaper 2002 $1, $2, $ $117

Manufacturing

Manufacturing Orders: Aggressive to Neutral to Growing

Inland Empire Mfg. Goes To Neutral

Export Container Volume 2011 YTD 6.8% All-Time Record

Inland Empire Manufacturing Coming to Life

Industrial Situation Goods Movement Strength As No Where Else To Build Facilities Strength Due To Long Term Growth of Trade Manufacturing Returning With U.S. Economy Aided By Low Value of the Dollar CA Regulation A Huge Issue

Blue Collar Job Losses Have Ended or Are Close to Ending ytd (26,000) (22,000) (18,000) (14,000) (10,000) (6,000) (2,000) 2,000 6,000 10,000 14,000 Manufacutring JobsLogistics JobsConstruction Jobs Source: CA Employment Development Department 2011=Jan.-November Average Blue Collar Job Changes Inland Empire, e

Two Sectors Are Dominating Inland Empire Job Growth of Late 25.6% 13.7% 60.8% 5,800 3,100 13,800 LogisticsHealth CareAll Other New JobsShare Sourec: CA Employment Development Department Inland Empire Job Creation December %

Why Blue Collar Jobs Important 13.2% 18.6% 20.3% 29.2% 29.0% 30.8% 36.5% 33.7% 58.4% 48.5% 46.2% 44.6% 41.9% 36.7% 34.6% 34.0% ImperialSan BernardinoRiversideLos AngelesSo. CaliforniaVenturaOrangeSan Diego High School or LessPercent Bachelors or Higher Source: 2010 Census Educational Levels, Adults 25 & Over Southern California Counties, 2010

Policy Conflict: Environment vs. Blue Collar Jobs

Public Health Asthma & Cancer Blue Collar Sectors Bring Rising Asthma & Cancer Risk From Airborne Toxics

California Solution Single Issue Regulatory Agencies CA Air Resources Board South Coast Air Quality Management District CA Environmental Protection Agency CA Water Resources Control Board & More

Two Results 1. Air Quality Is Improving

Blue Collar Blue Collar Work Is Much of Our Workforce’s Best Chance Middle Class To Reach The Middle Class 2. Downward Pressure On Blue Collar Jobs

Few Training Barriers Few Training Barriers To Beginning Employment Mining ($65,268)Blue Collar Wholesale Trade ($51,156) Blue Collar Manufacturing ($47,933)Blue Collar Logistics ($45,851)Blue Collar Construction ($41,076)Blue Collar Gaming($37,827) Retail Trade($28,824) Agriculture ($24,552) Hotel/Motel($16,026) Eating & Drinking($16,026) Alternative Jobs to Blue Collar

Results Of Job Suppression Unemployment Higher Than It Needs To Be Underemployment A Constant Difficulty Leading to the Middle ClassLack of Access to Jobs Leading to the Middle Class Health Issues of Poverty Divorce Spousal Abuse Drug & Alcohol Abuse Suicide Lack of Timely Medical Care Public Health Issues!

Clean Air, Asthma & Cancer Are Health & Social Justice Justice Issues Health & Social Lack of Blue Collar Jobs & Poverty Are Health & Social Justice Justice Issues Public Policy Dilemma

Concentrating Solely On The Environment After Years Of Focus on Concentrating Solely On The Environment Forgotten Priority! Blue Collar Job Creation Is Our Forgotten Priority!

Housing Is Still An Issue Inland economy

Foreclosures Issue 1,012,594 Homes In Inland Empire 36.6% All Homes

When Does Mortgage Difficulty End? If Rate of Decline of 15,241 Underwater Homes per Quarter Persists

Seasonally Adjusted Home Volumes Lack of Foreclosure Sales Has Been An Issue

Construction Job Depression , %

Is There Any Good Housing News? Last Foreclosure Sold!

Demand > Supply & Price Above Lows 9.7%

Long Term Price Competitive Advantage Still Exists $41,000 $162,000 $199,000 $306,000 $156,000 $197,000 $318,000 $355,000 $462,000 San Bernardino Co.Riverside Co.Los Angeles Co.San Diego Co.Orange Co. Median All Home PriceSan Bernardino Source: Dataquick & Zillow.com Exhibit 28.-Home Prices, So. California Markets Median Priced New & Existing Home, 4th Quarter 2011

Competitive Home Price Gap Over Time $0 $50,000 $100,000 $150,000 $200,000 $250,000 $300,000 $350,000 Los AngelesOrangeSan Diego Source: Dataquick Exhibit 4.-Gap Between Coastal & Inland County Prices Existing & New Homes,

Soaring Housing Affordability Easily Remains At or Near Record Levels % 5% 10% 15% 20% 25% 30% 35% 40% 45% 50% 55% 60% 65% 70% 75% Source: CA Association of Realtors Housing Affordability, So. California Share of Families Afford Median Priced Home, % 69% 33% 10-11% 15% Inland Empire Los Angeles San Diego Orange

Why Home Buyers Aren’t Responding

BUT...

Oil Prices Soaring Again $0 $15 $30 $45 $60 $75 $90 $105 $120 $135 Source: Federal Reserve Bank of Dallas Exhibit 6.-West Texas Intermediate Crude Oil Prices Monthly Average

Congressional Madness

European Debt Crisis

Fear Caused Consumers Confidence It Has Recently Begun Rising

Office Market Housing Slowdown Hurts!

Office Absorption Absorption Fell With Housing Slowdown

Office Vacancy Rate Has Jumped Dramatically 7.0% 23.4%

Office Vacancy Rates Have Soared! 23.4% Inland Empire 7.3% 23.4% 17.8% Orange Co. 6.9% 17.8% 17.0% L.A. Co. 9.7% 17.0% 17.8% San Diego 9.4% 17.8%

Major Office Occupations Job Changes Jan-10 Feb-10 Mar-10 Apr-10 May-10 Jun-10 Jul-10 Aug-10 Sep-10 Oct-10 Nov-10 Dec-10 Jan-11 Feb-11 Mar-11 Apr-11 May-11 Jun-11 Jul-11 Aug-11 Sep-11 Oct-11 Nov-11 Dec-11 (10,000) (8,000) (6,000) (4,000) (2,000) 0 2,000 (10,000) (8,000) (6,000) (4,000) (2,000) 0 2,000 Sourec: CA Employment Development Department Finance, Insurance, Real Estate, Management, Professions January 2010 to December 2011

Office Forecast Now A Permanent Part of the Inland Empire Story Strength from Firms Needing to Serve IE Market 4.3 million people (More than 24 states) 1.3 million jobs Near Term: Weakness From Housing Slowdown Long Term: Housing Firms Will Add Great Strength

2012 Better than 2011 Foreclosures A Continuing Issue Complete Recovery ?? 2011 Forecast = 5,200 … Preliminary = 2,800