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

Inland Empire Economic Growth . . . Take Off?. John Husing, Ph.D. Economics & Politics, Inc. Chief Economist, IEEP. After Losing 8.78 Million Jobs … U.S. Jobs Are Still Crawling Back. -664,000 Government Jobs +8,221,000 Private Sector (94.1%).

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

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  1. Inland Empire Economic Growth . . . Take Off? John Husing, Ph.D. Economics & Politics, Inc. Chief Economist, IEEP

  2. After Losing 8.78 Million Jobs …U.S. Jobs Are Still Crawling Back -664,000 Government Jobs +8,221,000 Private Sector (94.1%)

  3. Unemployment Falling, But High

  4. Worst U.S. Metropolitan Area Unemployment Rates

  5. How Regional Economies Work Secondary Tier Economic Development … Increase The Economic Base! Primary Tier

  6. Three Step Growth ProcessBased On Interaction Of: • Population • Preferences • Dirt Prices Force Decisions

  7. Southern California Population Growth, 2000-2012

  8. People Prefer To Live Near The Coast

  9. As a homeowner, would you prefer to move closer to work if it involved a townhouse or condo?(I-15 & Sr-91 Commuters, 2008) 87.5% No Answer stable over 5 years Same question to Renters: 72.3% No

  10. Stage #1: Rapid Population Growth • People forced to move inland for affordable homes • Population Serving Jobs Only • High Desert & I-215 South are current examples

  11. Commuting Bad, But Stable Over Time

  12. Construction: Finally Some Hope

  13. Share of Underwater Homes Plunging 4Q 2012 to 3Q 2013 333,720 to 170,768 -48.8%

  14. Home Price Trends 32.3% 49.5% less for Existing home 52.8% -39.2%

  15. Long Term Competitive Price Advantage Still Exists

  16. Permits: Finally Some Optimism

  17. Firms Prefers The Coastal Counties

  18. Stage 2: Strong Industrial Growth

  19. Vacancy Nearing Historic Lows

  20. Undeveloped Land … Industrial Prices Much Lower In Outlying Areas Exhibit 13.-Industrial Space Costs Differences Southern California, Sub-Markets, March 2013 Price Per Sq. Ft. 156.6% Price with 20% Cubic Factor Difference . $0.78 107.2% % Difference $0.63 $0.56 84.2% $0.38 $0.30 Inland Empire Los Angeles Co. Orange Co. San Diego (non-R&D) nnn=net of taxes, insurance, common area fees Source: CB Richard Ellis

  21. Workforce Needs Jobs Without Educational Barriers

  22. Workers Will Work For Less Not To Commute Exhibit 82.-Median Wage & Salary Percent Difference Inland Empire vs. Coastal Counties, 2010 459 Common Occupations, Under $70,000 Weight Median Pay Percent IE Pay Is Lower $35,173 $34,656 $34,089 $33,240 5.81% 4.26% 2.55% 0.0% Inland Empire San Diego Los Angeles Orange Note: Occupations in common weighted by Inland Empire Jobs Source: CA Employment Development Department, Occupational Wage Survey, Economics & Politics, Inc. calculations

  23. Logistics Flow of Goods

  24. Port Container Volumes

  25. Fulfillment Centers

  26. 17 Firms Looking For Space7 Are Fulfillment Centers 1,500,000 1,000,000 1,000,000 800,000 to 1,000,000 700,000 to 1,000,000 500,000 to 800,000 700,000 to 900,000 850,000 700,000 700,000 700,000 to 800,000 600,000 600,000 to 700,000 500,000 450,000 300,000 to 400,000 350,000 Source: Jones LaSalle

  27. Inland Empire Logistics Jobs 32.5% of All Inland Jobs … Jan-Nov. 2012-2013

  28. Manufacturing: Could Be A Major Growth Source

  29. Manufacturing Orders Irregular

  30. U.S. v. California Manufacturing Jobs

  31. Manufacturing Slowing

  32. Regulatory Environment Aimed At “Dirty” Blue Collar Sectors Impacts Construction, Manufacturing, Logistics

  33. Median Pay By Sector Groups

  34. Air Becoming Cleaner

  35. Poverty African American: 27.2% Hispanic: 23.9% White: 12.1% Asian: 10.4%

  36. Stage 3.-Office Based Firms Follow Their Workers

  37. Skilled Workers Migrate InlandFor Better Homes

  38. Office Absorption Finally Starting to Recover High-End Jobs Follow Workers into the Area

  39. Outlying Workers Will Work For Less Not To Commute Exhibit 98.-Median Wage & Salary Percent Difference Inland Empire vs. Coastal Counties, 2010 138 Common Occupations, $70,000 & Up Weight Median Pay Percent IE Pay Is Lower $94,806 $94,768 $93,489 $86,806 9.17% 9.22% 7.70% 0.0% Inland Empire San Diego Los Angeles Orange Note: Occupations in common weighted by Inland Empire Jobs Source: CA Employment Development Department, Occupational Wage Survey, Economics & Politics, Inc. calculations

  40. Office Vacancy Rates Improving But Still Very High 18.1%

  41. High End Occupations & Office Unstable

  42. Inland Empire’s In-migration From Coastal Counties Has Not Yet Recovered -15,538 Not Bringing Skills, Wealth, Income & Spending

  43. Health Care

  44. Health Care Jobs: Continuous Growth 700 600 800

  45. Health Care Demand Set To Explode People Without Health Insurance (2012): 828,431 (19.0%) People Will Age, Already Those 55 & Over are 926,696 (21.3%) Population Growth Will Resume (2000-2013) 1,075,807 (33.0%) Inland Health Care Workers Handle More People Than CA: (35%)

  46. Debt Ceiling Budget Fights Federal Job Cuts

  47. Assessed Valuation Finally Growing (6.1% for SB County) -1.0%

  48. Government Remains Weak

  49. How Regional Economies Work Secondary Tier Primary Tier

  50. Retail Sales Almost Back

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