The Inland Empire’s economic outlook has been given a significant boost with the news that multiple, effective vaccines for the COVID-19 virus have been developed and are being actively administered around the globe, according to an analysis released today by the UC Riverside School of Business Center for Economic Forecasting and Development. The first vaccines in the United States were given two days ago, on December 15, launching what will be a mass nationwide immunization campaign.
“While we’ve always known that the economic recovery hinged on controlling the virus, genuine containment has been a wildcard until now,” said Taner Osman, Research Manager at the Center for Economic Forecasting and one of the report’s authors. “Because we now have effective vaccines in hand, the path to economic recovery is more certain and governments and businesses can get a sense of the timeline for returning to normalcy.”
Although the stay-at-home mandates and restrictions enacted in California just this month will impact December’s numbers, significant job gains, including within the Inland Empire’s hardest hit industries, should begin in earnest in the coming months, according to the analysis. Moreover, the region will be building on a labor market recovery that has been slow but steady since April’s abysmal lows.
- IE Employment Recovery: Despite one of the largest annual jobs declines on record in the Inland Empire (110,600 jobs lost from Oct 2019 to Oct 2020), the region has managed to outpace California in employment growth, adding back 93,100 positions since April. The nation’s rate of job growth, however, has outpaced the Inland Empire.
- Unemployment Shrinking: The Inland Empire’s unemployment rate has also improved. At 9.2%, it is still far off from the 4% rate of one year ago but is now tracking slightly below the state’s rate of 9.3%. In addition, the region’s labor force has largely recovered with 28,300 workers added from Oct 2019 to Oct 2020, a 1.4% increase. This stands in contrast to continued declines in the California (-1.1%) and U.S. (-2.1%) labor forces.
- Industry Pain: Far and away the hardest hit industry in the Inland Empire has been the Leisure and Hospitality sector, which has 27,600 fewer workers than it did one year ago, a 27.6% decline. But given the positive vaccine news, even this disrupted sector should begin to experience strong job gains in the next few months.
- A Few Industry Bright Spots: The surge in e-commerce has helped keep the Inland Empire’s Transportation and Warehousing sector resilient over the last several months: Payrolls have expanded by 100 employees over the last year, compared with a 3.3% decline in the state overall.
- Oil Prices and COVID Dampen Fuel Receipts: From the second quarter of 2019 to the second quarter of 2020, taxable sales receipts in the Inland Empire fell 8.4%. At 42.4%, the decline was most pronounced at Fuel and Service Stations, due to both less car travel during the pandemic and a drop in global oil prices.
- ‘Non-Effect’ on Housing Markets: California’s in-demand housing markets have been left relatively unscathed by the pandemic, and the Inland Empire is no exception. The median home price in the region has continued to rise steadily, jumping 12% from the third quarter of 2019 to the third quarter of 2020. Asking rents also grew 3.7%.
- Retail Under Pressure: Demand for retail space in the Inland Empire has fallen over the last year as a result of mandated restrictions and consumer reticence amid the pandemic. Retail vacancies in the region grew to 9.9% in the third quarter of 2020 and asking rents fell 1.0%. Warehouse, office, and flex/R&D properties have not experienced the same drop in demand (just the opposite in some cases), and rents for all three have increased modestly.
The new Inland Empire Regional Intelligence Report was authored by Osman and Senior Research Associate Brian Vanderplas. The analysis examines how the Inland Empire’s labor market, real estate markets, and other indicators have been affected by the COVID-19 pandemic and where they stand in the economic recovery. View the full analysis here.