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

2. Now What?
After Losing 8.71 Million Jobs … Now At A Record Level of Jobs U.S. Jobs Long Slow Growth - Not Over-Heating

3. Unemployment Rates: Full Employment
18.0%
10.6%
9.1%
4.4%

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

6. California Job Gains/LossesUp
1,064,038
6.7% Up
2007
15,844,325
2016
16,908,363
Recovery
2,243,097
Great
Recession
-1,179,058

8. Inland Empire Population
Greater Than 25 of 50 States
Growth: 6.2%

9. Inland Empire Economy Gaining Strength!

10. Job Quality

11. Inland Empire Growth was the 2nd Largest Absolute Job Gain in California in 2015!

12. Unemployment Rates

13. The Issue: Poverty

14. Gold Mine Theory
Secondary Tier
Primary Tier

15. Health Care

16. 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

17. Potential Impact On Health Care Demand & Quality of Life
-51.0% Drop in Uninsured
-53.8% Drop in Share Uninsured

18. Health Care Jobs: Continuous Growth
11.6% of Job Growth
Median Pay $59,494
Inland Empire’s Best Sector for Higher End Jobs

19. Sophisticated Warehousing Operations

20. Value of the Dollar: Helps Imports & Hurts Exports
100.0 %

21. Port Container Volumes On Pace To Tie 2nd Highest Import Level

22. 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

23. 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.

24. E-Commerce Growth Rates Year Over Year by Quarter
1.1%
8.4%

25. Industrial Overwhelmingly In The Inland Empire

26. Industrial Asking Lease Rates Soaring
Up 19.8%
Up 73.3%

27. Logistics Powerful Job Growth
23.1% of New Jobs
Median Pay $45,456

28. PM 2.5: Diesel Pollution
-91.4%

29. Manufacturing: Should Be A Major Growth Source

30. California Manufacturing Job Growth Just 4.8% of U.S. Growth

32. Inland Empire Manufacturing Jobs
5.5% of Job Growth
Median Pay $50,106

33. Construction: Finally Coming Back

34. 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

35. Home Price Trends
-21.3%
92.3%

36. Long Term Competitive Price Advantage Still Exists

37. Inland Empire Homes Cheaper By $236,000 to $403,000 vs. Coastal Cos.

38. Little New Home Inventory Supply

39. Mortgage Market Has Stabilized … Low Numbers of Notices of Default

40. Some Increase in Single Family Homes Being Built

41. Building Permit Valuation Back to 1999

42. Apartment Rental Rates & Vacancies.
Riverside $1, %
San Bernardino $1, %
Orange $1, %
Santa Barbara $1, %
San Diego $1, %
Ventura $1, %
Los Angeles $2, %
Source: CB Richard Ellis

43. Inland Empire Construction Jobs
12.8% of Job Growth
Median Pay $51,915

44. High Paying Sectors
Jack Dangermond
Ahmad Adel Al-Khatib

45. BA or Higher

46. Office Market Net Space Absorption

47. Office Market Still Heavy in Vacancies
24.2%
13.8%

48. Office Asking Lease Rates
Down -8.7%
Up 2.9%

49. Professionals & Mgmt. , Higher Ed
Professionals & Mgmt., Higher Ed., Mining Utilities, Information Group Slowly Adding Jobs
0.4% of Growth
Median Pay $71,206

50. 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

51. Assessed Valuation Finally, Purchasing Power Growth!
14.1%
FY Inflation: 11.7%

52. Assessed Valuation Change

53. Federal, State, Local Government
-2.7% of Job Growth
Median Pay $59,587

54. 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

55. Retail Vacancy Rate Inland Empire 8.9% San Diego 5.7% Los Angeles 4.6%
Orange %
Ventura %
Source: CB Richard Ellis

56. 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

57. Low Paying Job Growth Retail, Consumer & Bus
Low Paying Job Growth Retail, Consumer & Bus. Services, Hotel, Eat & Drink Amusement, Agriculture, Employment Agency
39.6% of Job Growth
Median Pay $29,169

58. 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%