1. Southern California’s Economy 2012 … Finally Recovery Underway! John Husing, Ph.D. Economics & Politics, Inc.

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

3. V Pattern of Likely Recovery U x x

4. So. California Job Growth/Destruction

5. Inland Empire Job Growth/Destruction 200720082009201020112012 (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, 2007-2011

6. Job Growth Comparison: November 26,600 19,500 13,100 12,600 1,800 1,400 75,000 San Diego Co.Inland EmpireOrange Co.Los Angeles Co.Ventura Co.Imperial Co.So. California Source: CA Employment Development Department Average Job Change, California Markets California Markets, November, 2010-2011

7. Still Tough Unemployment Rate U.S. Unadjusted 8.2%

8. There is Some Good News Locally

9. Industrial Vacancy Rate Declining Again! 11.9% 6.8% Inland Empire 2.7% 11.9% 6.8% 7.0% 5.3% Orange Co. 5.4% 7.0% 5.3% 3.4% 3.1% L.A. Co. 2.1% 3.4% 3.1% 12.0% 10.7% San Diego 6.0% 12.0% 10.7% 500,000 sq. ft. + Facilities … Inland Empire Vacancy = 0.0% 20092011 2005/2006 20092011

10. Quarterly Industrial Absorption, 1991-2011 20 million Sq.Ft.

11. Change In Container Flows -25.4% 15.3% 1.6 1.7 1.8 2.1 2.3 2.7 3.1 2.8 3.1 3.3 4.8 5.0 5.7 6.0 6.8 7.2 8.2 8.0 7.2 6.0 6.9 200020012002200320042005200620072008200920102011e ImportExport Source: Port Import Export Reporting Service (PIERS), collected from Vessel Imported & Exported Container Volume, 2000-2011e Ports of Los Angeles & Long Beach (mil. teus)

12. Fourth Highest Total Container Volume

13. 2. Ports On West Coast Nearest Asia Los AngelesLong Beach

14. 8,000-Container Post-Panamax Ships 3. Deep Water Ports As Ships Draw Over 50 feet of Water

15. Issue: Panama Canal Diversion Suez

16. International Trade 112.2 84.0 72.8 -35.1% Dollar Down: U.S. Goods Cheaper 2002 $1,500 2012 $2,027 2002 $180 2012 $117

17. Manufacturing

18. Manufacturing Orders: Aggressive to Neutral to Growing

19. Export Container Volume 2011 YTD 6.8% All-Time Record

20. Manufacturing Decline Has Stopped

21. Blue Collar Job Losses Have Ended or Are Close to Ending 19911992199319941995199619971998199920002001200220032004200520062007200820092010 2011e (100,000) (75,000) (50,000) (25,000) 0 25,000 50,000 75,000 ManufacturingLOGISTICS Construction Source: CA Employment Development Department Blue Collar Employment Change Southern California, 1990-2011e

22. 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

23. Policy Conflict: Environment vs. Blue Collar Jobs

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

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

26. Two Results 1. Air Quality Is Improving

27. 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

28. 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

29. 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!

30. 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

31. 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!

32. Housing Is Still An Issue Economy

33. Share Underwater Mortgages 20% 19% 18% 17% 18% 27% 26% 25% 24% 23% 33% 32% 31% 30% 29% 28% 55% 54% 51% 49% 47% 45% 44% 4Q20091Q20102Q20103Q20104Q20101Q20112Q20113Q2011 Inland EmpireSan DiegoLos AngelesOrange Source: CoreLogic Exhibit 10.-Share of Mortgages Underwater So. California Markets, 4th 2009 - 3rd 2011

34. How Many Mortgages Underwater? 3rd-2011 Underwater Avg. Decline/Qtr.QuartersYearsYear Inland Empire370,96015,241246.12017 Los Angeles353,4279,430379.42020 San Diego167,1552,2207518.82030 Orange98,0694,227235.82017 How Much Potential Average Quarterly Competition for New Homes From Underwater Homes? When Will Underwater Homes Reach Zero At Current Rate of Decline?

35. Home Sales Volumes Lack of Foreclosure Sales Has Been An Issue 19881989199019911992199319941995199619971998199920002001200220032004200520062007200820092010 2011e 0 20,000 40,000 60,000 80,000 100,000 120,000 140,000 160,000 Los Angeles Orange San Diego Inland Empire Source: Dataquick All Home Sales Trends Southern California, 1988-2011e IE 63,497 LA 57,636 SD 25,605 OC 21,600

36. Is There Any Good Housing News? Last Foreclosure Sold!

37. Demand > Supply & Price Above Lows 198819891990199119921993199419951996199719981999 2000 2001 200220032004200520062007200820092010 $0 $100,000 $200,000 $300,000 $400,000 $500,000 $600,000 $700,000 Los Angeles Orange San Diego Inland Empire Source: Dataquick Price Trends by County Southern California, 1988-2011ytd OC $493,000 SD $363,000 LA $330,700 IE $185,600 2011

38. Long Term Price Competitive Advantage Still Exists

39. Soaring Housing Affordability Easily Remains At or Near Record Levels 198819891990199119921993199419951996199719981999200020012002200320042005200620072008 200920102011 0% 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, 1988-2011 42% 69% 33% 10-11% 15%

40. BUT...

41. Oil Prices Soaring Again 198519861987198819891990 1991 199219931994199519961997199819992000 2001 2002200320042005 20062007200820092010 2011 2012 $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. 1985-2012

42. Congressional Madness

43. European Debt Crisis

44. Fear Caused Consumers Confidence It Has Recently Begun Rising

45. Construction Job Depression -42.6% -216,122

46. Housing Slowdown Hurts! Office Market

47. Office Vacancy Rates Have Soared! 23.8% Inland Empire 7.3% 23.8% 18.3% Orange Co. 6.9% 18.3% 16.6% L.A. Co. 9.7% 16.6% 20.2% San Diego 9.4% 20.2% 2011 2006 2011

48. Forecast 2012 Better than 2011 Foreclosures A Major Continuing Issue Complete Recovery 2015-2016?? We Need A Housing Solution!

49. www.johnhusing.com