John Husing, Ph.D. Economics & Politics, Inc. Chief Economist, IEEP

1. Inland Empire 2017 Forecast . . . John Husing, Ph.D. Economics & Politics, Inc. Chief Economist, IEEP

2. After Losing -8.71 Million Jobs … Now At A Record Level

3. S & P 500 Stock Index Nearly 2,350 +17.2%

4. Consumer Confidence, 2009-2016 Happier Consumers & Maybe Home Buyers

5. Unemployment Rates: Full Employment 18.0% Add in Discouraged & Unwilling Part Time Workers 10.6% 9.1% 4.4%

6. Fiscal Stimulus • Lower Taxes • $1 TrillionIncrease in Infrastructure • Result: Increased Deficit Spending causing Upward Pressure on Employment • Faster Price Increases

7. FED Rate Forecast In 2017 Without Stimulus from 0.75% in January to 1.40% by year’s end. “We have not yet figured in the possible effect of any fiscal stimulus.”

8. Interest Rates Already Starting To RiseDiscourageHome Sales? 4.30% 3.44%

10. California Job Gains/Losses Up 1,056,100 6.7% Up 2007 15,844,300 2016 16,904,100 Recovery 2,237,700 Great Recession -1,178,600

12. Inland Empire = 4,508,660 People! 25 Smaller States

13. Inland Empire Economy Gaining Strength!

14. Confession

15. Job Quality vs. California

16. Inland Empire Growth was the 2nd LargestAbsolute Job Gain in California in 2016!

17. Unemployment vs. U.S.

18. Competitive Conditions

19. Educational Challenge For Adults & Their Children

20. Huge Growing Market4.5 million in 2016 to 5.9 Million in 2040

21. Modest Median Worker Pay Per Year

22. I.E. Industrial Space Costs: Rising But Still A Bargain

23. Office Asking Rate Per Sq. Ft./MonthA Bargain Central Valley $1.44 Inland Empire $1.87 Ventura $2.29 Orange $2.60 San Diego $2.81 Los Angeles $3.03 Source: CB Richard Ellis

24. Ontario Airport Air Passengers 8.54%

25. Ontario Airport Cargo Tonnage 8.57%

26. The Issue: Poverty

27. Gold Mine Theory Secondary Tier Primary Tier

28. Health Care Harris Koenig, President & CEO San Antonio Regional Hospital

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

30. Inland Empire Underserved by Health Care Workers 27.1% More People Per Health Care Worker in 2016

31. If No Affordable Care Act: Loss to Inland Empire Health Plan Total Dollars to Local Economy $1.23 Billion Total to Doctors $455.7 Million Total Paid to IEHP Providers $1.08 Billion Total to Facilities $443.0 Million Total to Pharmacies $182.1 Million

32. Repeal & Replace Affordable Care Act

33. American Healthcare Act • Eliminates coverage mandates • Individual and employers • Reduces Federal support • Subsidies and tax credits • Reforms Medicaid (Medi-Cal) • Eliminates other taxes and fees

34. American Healthcare Act • Reduces Federal Support • Eliminates subsidies for out of pocket expenses • Reduces tax credits to support premiums • Reduces Federal Medicaid match to states for expansion population (90% to 50% 2020)

35. American Healthcare Act • Reforms Medicaid (Medi-Cal) • Block grants - 2020 • Per capita formula - categorical • No adjustment for cost of patient mix • Reduces Federal match for expansion population • Expenditure caps – State refunds • Governor’s Office – will cost general fund $19 billion (15%) in 2027

36. American Healthcare Act • What is “untouched” – so far* • Pre-existing conditions • Coverage to age 26 • No lifetime limits • *Provisions in the AHCA are money related only as they are being addressed in the reconciliation process

37. American Healthcare Act • Impacts • Reduced coverage • Increased costs • Shift financial responsibility of Medicaid to states

38. American Healthcare Act • Decreased Coverage • USA (CBO) • 2018 – 14 million lose coverage • 2026 – 24 million lose coverage • California (CHA) • 3.1 million • Inland Empire • 200,000 – 250,000 lose coverage

39. American Healthcare Act • Increases cost of coverage (CBO)

40. American Healthcare Act

41. American Healthcare Act Region17 Riverside and San Bernardinocounties 40-YEAR-OLD 62-YEAR-OLD 27-YEAR-OLD $75,000 $30,000 $30,000 $75,000 $17,000 $75,000 $17,000 $17,000 $30,000 $10,395 $10,395 $10,395 $8,847 $8,846 $8,847 $8,847 $4,000 $4,000 $4,000 $4,000 $6,352 $4,624 $4,624 $4,624 $8,225 $8,847 $3,935 $3,935 $3,935 $3,792 $3,792 $3,792 $3,227 $3,227 $3,227 $3,227 $1,441 $6,395 $6,395 $6,395 $3,000 $3,000 $3,000 $3,000 $733 $2,000 $2,000 $2,000 $3,313 $3,935 $2,605 $2,494 $2,494 $2,494 $1,792 $1,792 $1,792 $2,494 $1,624 $1,624 $1,624 $622 $622 ACA AHCA ACA AHCA ACA AHCA ACA AHCA ACA AHCA ACA AHCA ACA AHCA ACA AHCA ACA AHCA What Consumer PaysAnnually Annual Tax Credit

42. American Healthcare Act • Hospital Impacts • Reduced hospital payments • Medi-Cal • Continuation of Medicare Cuts under ACA • Increased bad debt and charity care • Curtail employment and capital expenditures

43. AHCA Impact Analysis • Economic Impact – Inland Empire • $1 Billion (IEHP) • X 2-2.5 Economic multiplier $2 – 2.5 billion

44. American Health Care Act Healthcare system needed reform when ACA was enacted There were positive outcomes from the ACA and areas to improve Healthcare expenditures will continue to grow rapidly due to our aging population and the obesity epidemic Adjustments and further change is needed AHCA as proposed will have significant negative impacts on states and the Inland Empire

45. Health Care Jobs: Continuous Growth • 2011-2016 • 11.1% of Job Growth • Median Pay $59,494

46. Health Care Forecast – Hesitancy

47. Sophisticated Logistics Operations Mike Christensen Senior Executive for Supply Chain Optimization Port of Long Beach

48. Port Container VolumesOn Pace To Tie 2nd Highest Import Level

49. Port Update Port of Long Beach • Container volume performance • Outlook for 2017 • Trends & supply chain optimization Michael Christensen, P.E. Senior Executive,Supply Chain Optimization

50. Monthly Container Volume (2013-17)