Business activity in the Inland Empire has continued to steadily recover from the historic COVID-19 pandemic and the outlook for the near-term future is one of solid growth. Following unprecedented declines in the first half of 2020, the region’s business activity rebounded in the second half of the year, and the economic fundamentals for ongoing growth are strong, according to the new Inland Empire Business Activity Index released today by the UCR School of Business Center for Economic Forecasting and Development.
In the 4th quarter of 2020, the latest numbers available, business activity increased 5.1% in the Inland Empire, slightly more than the growth rate in U.S. GDP (4.3%). The 4th quarter’s expansion followed a 3rd quarter in which the region’s business activity soared 16% - driven primarily by a jump in consumer spending. The new analysis is forecasting that local business activity will rise between 6% and 10% throughout the remainder of 2021.
“Successfully controlling the spread of COVID-19 and maintaining momentum in the labor market has been critical to the most recent growth we’ve seen in the Inland Empire’s economy,” said Taner Osman, research manager at the Center for Forecasting. “And looking ahead, the drivers of long-run growth remain strong, with many households in the area experiencing minimal income losses and even increasing their savings over the last year.”
Overall, compared to 2019, business activity in the Inland Empire was 7.3 percentage points lower in 2020, according to the analysis. However, as businesses begin to fully reopen (if health criteria continue to be met, the state is scheduled to reopen on June 15) the local economic recovery should pick up speed and gain greater momentum further into the year.
The current edition of the Inland Empire Business Activity Index also focuses on the local creative economy, which includes industries ranging from entertainment to fashion to performing arts. The creative sectors took a tremendous hit from the pandemic as productions shuttered, and the ability to gather in groups was quelled. While the Inland Empire accounts for a relatively small share of California’s creative workforce, prior to the pandemic, that share was growing. Between 2014 and 2019, payroll employment in the region’s creative sectors increased 22%.
“We expect growth to resume in these sectors,” said Osman. “One of the great lessons of the pandemic, when we were prevented from doing cherished things like enjoying live music or going to the movies, is just how necessary the creative work of others is to our quality of life.”
View the new Inland Empire Business Activity Index here.