Inland Empire Economy Grows Faster Than Expected

An analysis released by UCR’s School of Business Center for Economic Forecasting and Development shows the local economy continuing its broad based expansion

workers building a house

A new report points out that the construction of residential properties has moved at a disappointing pace in recent years with fewer than average building permits filed in the Inland Empire.

RIVERSIDE, Calif. (www.ucr.edu) — The Inland Empire’s Gross Metropolitan Product (GMP) grew more than previously estimated, according to a report released today by the UCR School of Business Center for Economic Forecasting and Development. The region’s economic output grew by 2.6 percent annually through the third quarter of 2016, an upward revision from the 2.2 percent growth reported earlier.

The revision, which is in line with the U.S. Bureau of Economic Analysis’ recent revision of U.S. GDP, was due partly to continued strength in the Inland Empire’s leading sector, but also due to upward revisions to the region’s construction industry output, which did not decline as much as previously estimated. This aligns with recent data from the California Employment Development Department that shows strong job growth in the Inland Empire’s construction sector—up by 5.3 percent year-over-year in November.

However, the new UCR School of Business report points out that the construction of residential properties has moved at a disappointing pace in recent years with fewer than average building permits filed in the Inland Empire. This could degrade the region’s affordability advantage over neighboring coastal areas. “More residential construction activity is needed to help keep housing costs in check,” write the report authors.

The analysis also finds that technology industry growth in the Inland Empire continues to lag the state but notes intensifying local efforts to develop a skilled high tech workforce in the region. On the other end of the spectrum, the local manufacturing industry has bucked trends elsewhere in the state and continues to be a source of regional strength, increasing its employment counts.

“Overall, the numbers in this report reflect what is happening on the ground in the Inland Empire economy,” said Robert Kleinhenz, executive director of research at the UCR School of Business Center for Economic Forecasting and Development. “Logistics, manufacturing, and healthcare have been the mainstays of the local economy throughout 2016, and will continue contributing to the region’s growth in the year ahead.”

The December Inland Southern California Gross Metropolitan Product Report is now available.

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