Key economic indicators suggest that the Inland Empire’s economy will continue to expand throughout the rest of 2018, building upon its recent growth, according to a report from the Center for Economic Forecasting and Development at the University of California Riverside’s School of Business. The region’s economic success mirrors many of the nation’s current trends.
The U.S. economy grew at a solid, steady pace throughout 2017, with overall output expanding by a reasonable 2.3 percent over 2016 levels, the report says. Additionally, the nation’s labor markets continued their steady improvement with more than two million jobs added even as unemployment rates dropped to near-record lows.
In the Inland Empire, employment continues to show strong growth, outpacing other areas of Southern California. The added jobs have also driven the region’s unemployment rate to new lows.
Moreover, newly released data shows that within the last year, the Inland Empire’s housing market has been robust with both rents and home prices increasing, the report continues. The region’s affordability advantage, relative to higher-cost markets in Los Angeles and Orange County, has made the Inland Empire an attractive destination for new residents. Overall, the economic outlook for the region appears healthy. Sustained growth is expected in the near-term future, although potential labor shortages related to a lack of available housing may be a future constraint.
Once again, the Inland Empire has outperformed both the state as a whole and the Southern California region in terms of key labor market statistics. Nonfarm employment in the Inland Empire rose 3.7 percent from January 2017 to January 2018. This is the second-fastest-growing nonfarm employment rate among California’s MSAs — following only Stockton. California as a whole had a 2.4 percent gain in nonfarm employment during this time, while the Inland Empire’s neighbor, Los Angeles County, experienced only a 1.7 percent change the Center reports.
Job growth in the Inland Empire has also improved the area’s unemployment rate, which fell to 4.5 percent in January 2018, a 1.3-percentage-point decrease from one year earlier. This drop in unemployment was one of the largest in the state and noticeably narrowed the gap between the Inland Empire’s unemployment rate and the rest of California. Historically, the Inland Empire’s economy has lagged both the state as a whole and other regions in Southern California in terms of job growth and unemployment. But years of growth driven by the area’s population-serving and logistics industries has transformed the region into one of California’s leading economies. As a result, the Inland Empire’s 4.5 percent unemployment rate is now in line with the state (4.4 percent) and neighboring Los Angeles County (4.5 percent), according to the report.
At the industry level, employment growth has been led by the construction sector in the latest numbers, which added 11,000 jobs from January 2017 to January 2018. The 12.1 percent increase in construction employment comes as real estate developers tap into the strong demand for real estate across Southern California. Second to construction has been the transport and warehouse sector (logistics), which added 10,600 jobs over the same period. This represents a 9.6 percent year-over-year increase in transport and warehouse employment. The sector continues to expand, with Amazon recently opening two fulfillment centers in Riverside and Eastvale.
In addition to more jobs, the Inland Empire has benefited from rising wages, the report concludes. Based on the latest data from the Quarterly Census of Employment and Wages, the average annual wage in the region grew by 1.7 percent in the third quarter of 2017, rising to $44,600. Wages in professional, white collar-related industries grew the most, led by the management (9.6 percent), administrative support (7.6 percent), and professional, scientific, and technical services (5.2%) sectors. These gains were offset, however, by stagnant wage growth in the Inland Empire’s largest industries, including the education/health (0.3 percent) and transport and warehouse sectors, the latter of which actually saw wages fall by 4 percent. Despite recent wage growth among many sectors, low wages remain a challenge for the Inland Empire; the region has the lowest annual private-sector average wage among the nation’s 50 largest metropolitan areas.