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Business Activity in the Inland Empire is Growing

UCR Business - Business Activity Index

UCR School of Business report suggests eventually growth will be constrained by labor shortages caused by the state’s high cost of living.

Riverside, Ca. – Business activity in the Inland Empire continued on its growth trajectory in the first quarter of 2018 and is expected to expand further throughout the rest of the year, according to the newly released “Inland Empire Business Activity Index.” The Index, which draws on employment and other data, finds that the region’s business activity expanded by 2.2% in the first quarter, on par with U.S. GDP, which grew by 2.3%.

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However, looking over the past year—the first quarter of 2017 through the first quarter of 2018— the Inland Empire has significantly outperformed the nation, with business activity growing by 3.8% in the region compared to 2.9% growth for U.S. GDP.

UCR Business Activity Q1, 2018
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The Inland Empire’s economy currently remains on a steady growth trajectory, but the direction it takes in the future depends in part on its underlying structure. To understand that structure means knowing which industries serve as pillars for the regional economy – and knowing how well those industries are performing.

Not surprisingly, the Logistics sector, which is comprised primarily of Trade, Transportation, and Warehousing, is the region’s most concentrated (LQ 1.39) industry. It was also the second-fastest growing during the three-year period between 2014 and 2017. Construction (LQ 1.36) was the Inland Empire’s fastest growing industry, but construction activity levels still remain below their pre-recession peak.

The Inland Empire’s Government sector also stands out as being particularly concentrated in the region (LQ 1.13). Other industries, such as Health Care and Leisure and Hospitality, are on a par with the state, but have seen impressive growth in response to local population gains. It should be noted that every industry in the Inland Empire has experienced job gains over the past three years, regardless of their relative concentration, with several posting impressive increases.

Growth has been spread across the region’s industries, large and small, with job gains occurring in every sector from logistics to construction to health care. Looking ahead, business activity in the Inland Empire is forecast to expand between 2.5% and 3.5% in 2018. Eventually, however, growth will be constrained by labor shortages, driven primarily by the state’s high cost of living.

The Inland Empire Business Activity Index tracks performance of the Inland Empire regional economy on a quarterly basis and is adjusted for seasonal variations. The composite indicator is estimated using a wide range of economic data including employment, economic output, income, real estate, and other indicators at the national, state, and metropolitan level.

The UCR School of Business Center for Economic Forecasting and Development is the first world-class university forecasting center in the Inland Empire serving one of the most dynamic regions in the United States.

Together, Riverside and San Bernardino Counties make up an economic area that is larger than Seattle, San Diego, or Orange County and twice the size of Silicon Valley.

The Center publishes a variety of publicly available research focused on the Inland Empire’s economy and other leading economic and policy issues facing the region, state, and nation.

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