Inland Empire Economic Growth Accelerates, Boosted By Industry Gains

UCR report shows regional growth gaining steam but election of Donald Trump introduces major ‘unknowns’ for the future

A photo of downtown riverside

The government sector made the biggest contributions to overall economic growth in the Inland Empire in the latest quarter.

RIVERSIDE, Calif. (www.ucr.edu) — The Inland Empire’s economic growth jumped in the latest quarter, boosted by gains that ranged from lukewarm to red hot in all but two local industries. The region’s real Gross Metropolitan Product (GMP) grew by 2.2 percent in the third quarter, more than double the second quarter growth rate, according to a report released today by the University of California, Riverside’s School of Business Center for Economic Forecasting and Development. Fourth quarter numbers will be released in late January.

The government sector made the biggest contributions to overall GMP growth in the Inland Empire and also accounted for half of all the metro job gains in the region in the latest quarter. The only two local sectors that contracted were construction and professional and business services. Losses in these industries may be related as commercial building activity has slowed. Year-to-date, permits for commercial building have fallen 4.4 percent.

The logistics industry, a stalwart of the region, remains a primary driver of local growth despite disruptions caused by the Hanjin shipping line bankruptcy. The trade, transportation, and utilities sector grew in both productivity and employment, making up 40 percent of the Inland Empire’s GMP growth in the third quarter. However, given this sector’s dependency on international trade relations, the election of Donald Trump has clouded the outlook.

“Large tariffs on imports, as the president-elect has proposed, may indefinitely depress the appetite for imports on the part of American consumers and businesses,” said Robert Kleinhenz, executive director of research at the Center for Economic Forecasting and Development. “On the other hand, trucking companies hope to benefit from increased spending on roads infrastructure and the possibility that when president, Trump will reverse costly safety regulations that are scheduled to go into effect next year.”

The latest Inland Southern California Gross Metropolitan Product Report is available here for download.

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