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Home My WebLink AboutCity of SB Economic Forcast Part IUCR Center for Economic Forecasting and Development | ucreconomicforecast.org Christopher Thornberg, Ph.D. Director, UCR School of Business Center for Economic Forecasting and Development Founding Partner, Beacon Economics LLC July 2021 Planning the Inland Empire’s Downtown A Strategy for San Bernardino City UCR Center for Economic Forecasting & Development •The Covid pandemic has been a tragic natural disaster. Yet history shows that natural disasters have limited long-run economic impact. A quicker-than-normal recovery was almost certain. The fiscal and monetary policy reactions to the crisis have been overwhelming. As a result, the US economy will see an even more rapid recovery. It is time to start thinking long term again about issues in SB City and the IE overall such as the slow pace of housing construction and the relatively low earnings for workers in the region. •There are no new-normal coming out of the pandemic, but it has substantially accelerated trends that were already in place in the economy, including the movement of core retail to online, and the sharp increase in work-from-home employment. Contrary to conventional wisdom, these changes will largely increase the demand by businesses and residents to live in dense urban regions. •The lack of dense urban regions in the Inland Empire has been the primary inhibitor to higher wages and development of the region into the world class economy it has the potential to be. The accelerated trends described will intensify this issue in coming year. San Bernardino City has the infrastructure and capacity to fill this critical role, if the City is willing to take aggressive steps to change the structure of the City’s land use policies—a change that will benefit the City and the region oveall. Big Themes on the SBC Economy UCR Center for Economic Forecasting & Development Where are we now? 15000 16000 17000 18000 19000 20000 21000 Jan-18Apr-18Jul-18Oct-18Jan-19Apr-19Jul-19Oct-19Jan-20Apr-20Jul-20Oct-20Jan-21Actual US GDP and Trend Output Gap as of March 2.4% 70 80 90 100 110 120 130 Q1-19 Q2-19 Q3-19 Q4-19 Q1-20 Q2-20 Q3-20 Q4-20 Q1-21 Taxable Sales California Los Angeles San Bernardino UCR Center for Economic Forecasting & Development GoodsTrade Flows 0 5,000 10,000 15,000 20,000 25,000 International Freight Trade IE Airports Southern California Logistics Airport San Bernardino International Airport March Air Reserve Base Ontario International Airport 0.0 2.0 4.0 6.0 8.0 10.0 12.0 14.0 16.0 18.0 2015-01-012015-06-012015-11-012016-04-012016-09-012017-02-012017-07-012017-12-012018-05-012018-10-012019-03-012019-08-012020-01-012020-06-01E-Commerce Share Retail Sales UCR Center for Economic Forecasting & Development Local Shifts $3.0 $3.5 $4.0 $4.5 $5.0 $5.5 $6.0 4 6 8 10 12 14 16 Q1-10Q3-10Q1-11Q3-11Q1-12Q3-12Q1-13Q3-13Q1-14Q3-14Q1-15Q3-15Q1-16Q3-16Q1-17Q3-17Q1-18Q3-18Q1-19Q3-19Q1-20Q3-20IE Industrial Space Vacancy Rents 0 5 10 15 20 25 30 35 40 45 $0.0 $20.0 $40.0 $60.0 $80.0 $100.0 $120.0 $140.0 Number of Deals Capital ($, Millions) Capital Invested and Deal Count Capital Invested Deal Count UCR Center for Economic Forecasting & Development Payroll Employment Index 80 100 120 140 160 180 200 220 240 Jan-90Sep-91May-93Jan-95Sep-96May-98Jan-00Sep-01May-03Jan-05Sep-06May-08Jan-10Sep-11May-13Jan-15Sep-16May-18Jan-20Index of Payroll Employment (1990 = 100) California Inland Empire Los Angeles (MD)Orange County (MD) Payroll Employment April Trough Pre-Pan Stockton 246 225 253 -2.5% Inland Empire 1516 1367 1589 -4.6% Sacramento 982 900 1037 -5.3% Fresno 347 327 370 -6.2% San Jose 1080 1013 1167 -7.4% Bakersfield 258 247 280 -7.9% San Diego 1400 1269 1523 -8.1% Ventura 291 266 317 -8.2% Orange County (MD) 1541 1408 1689 -8.7% Oakland (MD) 1094 1005 1201 -8.9% Santa Rosa 189 174 211 -10.5% Los Angeles (MD) 4125 3850 4623 -10.8% San Francisco (MD) 1066 1011 1198 -11.0% UCR Center for Economic Forecasting & Development Resident Labor Force 7 MSA / State Labor Force MSA Rank Oregon 2,128,399 Seattle-Tacoma-Bellevue 2,115,242 13 Louisiana 2,107,987 Riverside-San Bernardino-Ontario 2,073,421 14 Kentucky 2,063,185 Minneapolis-St. Paul-Bloomington 2,007,145 15 Connecticut 1,914,839 Oklahoma 1,861,101 Iowa 1,697,159 Denver-Aurora-Lakewood 1,653,341 16 San Diego-Carlsbad 1,611,458 17 Utah 1,571,635 Tampa-St. Petersburg-Clearwater 1,542,313 18 Nevada 1,526,445 UCR Center for Economic Forecasting & Development The Rhetoric 8 UCR Center for Economic Forecasting & Development Local Incomes 9 20000 25000 30000 35000 40000 45000 50000 55000 60000 65000 70000 Q1-97Q2-98Q3-99Q4-00Q1-02Q2-03Q3-04Q4-05Q1-07Q2-08Q3-09Q4-10Q1-12Q2-13Q3-14Q4-15Q1-17Average Payroll Wages California Riverside San Bernardino Rank Region 2015 Avg Pay 15 San Diego CA MSA $53,746 16 St. Louis MO-IL MSA $49,263 17 Denver CO MSA $56,454 18 Baltimore MD $54,089 19 Riverside-San Bernardino CA MSA $39,424 20 San Francisco CA MSA $99,209 21 Tampa-St. Petersburg FL MSA $44,265 22 Pittsburgh PA MSA $48,146 23 San Jose CA MD $109,862 24 Orlando FL MSA $41,699 25 Portland-Vancouver OR-WA MSA $53,844 Private Sector Employment Wages UCR Center for Economic Forecasting & Development Job Density 10 6 6.5 7 7.5 8 8.5 13 13.5 14 14.5 15 15.5Log Job Density Log Total Payroll Employment Employment and Density Inland Empire $35,000 $40,000 $45,000 $50,000 $55,000 $60,000 $65,000 $70,000 6 6.5 7 7.5 8 8.5 9 Density and Wages UCR Center for Economic Forecasting & Development Density Distributions 11 0 10 20 30 40 50 60 70 80 90 100 2 4 6 8 10 12Cumulative Distribution of Jobs Log (Jobs per square mile) Inland Empire Pittsburgh San Diego Tampa $0 $20 $40 $60 $80 $100 $120 $140 0 2,000 4,000 6,000 8,000Averagew Industry Wages Average Establishment Local Job Density Information Finance Professional Mgmt UCR Center for Economic Forecasting & Development When cities have high enough densities of firms and workers they can: — Share infrastructure and suppliers — Achieve better matches between employees and employers — Communicate better and learn more Great cities and neighborhoods rely on economies of scale — Wall Street — Hollywood — Silicon Valley — Fleet Street Urban Economies of Scale UCR Center for Economic Forecasting & Development Commercial Trends -40 -20 0 20 40 60 80 100 1995:01:001996:03:001998:01:001999:03:002001:01:002002:03:002004:01:002005:03:002007:01:002008:03:002010:01:002011:03:002013:01:002014:03:002016:01:002017:03:002019:01:002020:03:00SLOS: Net % Banks Tightening Standards All Development Non-Res Multifamily 0 200 400 600 800 1000 1200 1400 1600 1800 2000 2006200720082009201020112012201320142015201620172018201920202020*2021*$, Millions Permit Values Inland Empire Commercial Alterations UCR Center for Economic Forecasting & Development Work from home and the future of downtown UCR Center for Economic Forecasting & Development The Employment Paradox Source: California EDD 0.0 2.0 4.0 6.0 8.0 10.0 12.0 14.0 16.0 18.0 13000 13500 14000 14500 15000 15500 16000 16500 17000 17500 18000 Jan-04Feb-05Mar-06Apr-07May-08Jun-09Jul-10Aug-11Sep-12Oct-13Nov-14Dec-15Jan-17Feb-18Mar-19Apr-20California Labor Markets Payrolls Unemployment 0 1000 2000 3000 4000 5000 6000 7000 8000 9000 10000 2000-12-012001-12-012002-12-012003-12-012004-12-012005-12-012006-12-012007-12-012008-12-012009-12-012010-12-012011-12-012012-12-012013-12-012014-12-012015-12-012016-12-012017-12-012018-12-012019-12-012020-12-01US Job Openings UCR Center for Economic Forecasting & Development Is it labor demand or labor supply? Labor shortages Short Run Drivers Skill mismatches Truly unemployed vs temporary layoff High unemployment payments Long Run Drivers Labor force retirees Demographic challenges for labor supply State Housing Shortages -0.5 0.0 0.5 1.0 1.5 2.0 Jan-80Apr-82Jul-84Oct-86Jan-89Apr-91Jul-93Oct-95Jan-98Apr-00Jul-02Oct-04Jan-07Apr-09Jul-11Oct-13Jan-16Apr-18Jul-20Growth in Working Age US Population UCR Center for Economic Forecasting & Development The Labor Force Issue Mar-20 Mar-21 Men, 16 years and over 68.5 67.3 -1.2 16 to 19 years 35.1 35.3 0.2 20 to 24 years 71.5 72.4 0.9 25 to 34 years 88.7 87.3 -1.4 35 to 44 years 90.7 89.6 -1.1 45 to 54 years 87.4 85.7 -1.7 55 years and over 45.6 43.9 -1.7 Women, 16 years and over 57.1 56.1 -1.0 16 to 19 years 36.0 36.5 0.5 20 to 24 years 68.5 68.2 -0.3 25 to 34 years 76.3 76.0 -0.3 35 to 44 years 76.2 74.5 -1.7 45 to 54 years 76.0 75.1 -0.9 55 years and over 34.5 33.4 -1.1 UCR Center for Economic Forecasting & Development Beacon Economics 0.30 0.35 0.40 0.45 0.50 0.55 0.60 Maine…Vermont…North Dakota…West Virginia…Montana…New Jersey…Texas…Hawaii…California…Utah…Housing Units per Capita (2017) - Top 5 and Bottom 5 States) housing units/pop (2017)US Average California = 2nd Lowest Housing Unit to Population Ratio Source: American Community Survey, U.S. Census Bureau 51 California 8.3% 50 Washington 8.5% 49 Oregon 9.3% 48 Maryland 9.9% 47 Nebraska 9.9% 46 Mass 10.0% 45 Utah 10.1% 44 Ohio 10.3% 43 Colorado 10.3% 42 Connecticut 10.6% 41 DC 10.6% 40 New Jersey 11.0% 2017 Housing Vacancy UCR Center for Economic Forecasting & Development Net Migration Trends 2011 2019 Units w/ Mortgage Less than 20.0 percent US 49,049,732 34.9% 47.6% Arizona 1,023,943 32.8% 48.0% California 5,064,795 23.8% 35.1% Colorado 948,904 36.2% 45.1% Nevada 403,792 29.8% 44.2% Utah 446,690 33.6% 47.7% 35.0 percent or more US 49,049,732 28.1% 19.9% Arizona 1,023,943 30.5% 19.3% California 5,064,795 38.6% 28.5% Colorado 948,904 26.1% 20.7% Nevada 403,792 33.4% 21.0% Utah 446,690 24.9% 16.9% Owner Costs as % Income UCR Center for Economic Forecasting & Development Beacon Economics Labor Force and Unemployment Source: California Employment Development Department 20 0 2000 4000 6000 8000 10000 12000 14000 Q1-95Q1-96Q1-97Q1-98Q1-99Q1-00Q1-01Q1-02Q1-03Q1-04Q1-05Q1-06Q1-07Q1-08Q1-09Q1-10Q1-11Q1-12Q1-13Q1-14Q1-15Q1-16Q1-17Q1-18IE Housing Permits RV SF SB SF RV MF SBMF 0 20 40 60 80 100 120 2000 2500 3000 3500 4000 4500 5000 5500 6000 Population Components (Thousands) Total Population (Thousands) Population Change Population Natural Increase Net Migration UCR Center for Economic Forecasting & Development Housing = Economic Development 0 1000 2000 3000 4000 5000 6000 7000 8000 Q1-95Q2-96Q3-97Q4-98Q1-00Q2-01Q3-02Q4-03Q1-05Q2-06Q3-07Q4-08Q1-10Q2-11Q3-12Q4-13Q1-15Q2-16Q3-17Residential Permits LA County Single Famile Multi-Family 2% Job Growth 90,000 Jobs 1.5 Jobs / HH 60,000 24,400 UCR Center for Economic Forecasting & Development The IE needs density —Job density for high income industries —Housing density for young, skilled workers —Density for environment and infrastructure reasons San Bernardino City is the place that can best provide that density —Historic infrastructure —Current assets and location If done right, commitment to change will benefit everyone Density, Density, Density Thank You chris.thornberg@ucr.edu | ucreconomicforecast.org