The I.E. in the I.E. International Economy November 2017 Inland Empire Christopher Thornberg, PhD Director, Center for Economic Forecasting and Development
Center For Forecasting and Development Visions Building a better, more in-depth understanding of the economy of Inland Southern California; Promoting an active dialogue between government, business and academia Revealing the region's significance to the state & the nation; and Supporting its economic advancement and expansion. Internal Goals The Center for Economic Forecasting & Development is dedicated to: Actively engaging business and government communities; Informing and contributing to a robust policy dialogue on and off campus; Increasing media outreach and exposure; 2
Partner with local leaders on research We partner with local cities, counties, & businesses to do local analysis. Types of analysis the Center specializes in: Economic, Demographic & Revenue Forecasting Economic Impact Analysis Regional Intelligence Reports Employment and Industry Cluster Analysis A Selection of local Center partners: County of Riverside EDA County of San Bernardino EDA South Coast Air Quality Management District BNSF Railway Riverside Public Utilities Autoclub Speedway City of Ontario Coachella Valley 3
Collaborate with UCR Partners The Center seeks to be an active presence on campus in collaboration with fellow thought leaders at UCR. Sample collaborative engagements are below; the Center s campus footprints continues to grow. Center economists joined a Brookings working group exploring predictive analysis within the Inland Empire. Dr. Chris Thornberg joined UCR International Affairs Office s Delegation to Taiwan. Center Deputy Director, Sherif Hanna joined the School of Business Strategic Planning Committee in 2016. 4
Forecasting 101 5
The Victory of Miserabilism If it ain t broke don t fix it US GDP is growing at a logical pace Fundamentals still fine, no sign of looming recession U.S.: 5% world s population, 20% of the world s consumption Incomes have been rising, true well-being even more so Labor markets are tight! Inflation slow, interest rates low Business investment solid, profits are high US energy: too successful for its own good Manufacturing: doing just fine The true challenges State and Local budgets still stressed Under-investment in infrastructure Looming labor shortages Healthcare cost inflation Underfunded pensions and entitlements A broken tax system Growing wealth inequality An under-performing housing market / bad financial regulations (Dodd-Frank) Political gridlock and the growing disconnect between debate and reality 6
5.0% 4.0% 3.0% 2.0% 1.0% 0.0% -1.0% -2.0% -3.0% -4.0% GDP Growth: Back to 2.2% 2017 Real GDP Growth (y-o-y) 2015 2016 2017 Q3 GDP 2.00 1.85 2.43 3.00 FD 2.70 2.19 2.36 1.86 2004Q1 2005Q1 2006Q1 2007Q1 2008Q1 2009Q1 2010Q1 2011Q1 2012Q1 2013Q1 2014Q1 2015Q1 2016Q1 2017Q1 Consumption 2.04 1.93 1.73 1.62 Goods 0.88 0.87 0.74 0.92 Services 1.17 1.06 0.98 0.70 Fixed investment 0.40 0.18 0.68 0.25 Structures -0.28 0.10 0.15-0.15 Equipment 0.21-0.22 0.40 0.47 IPP 0.13 0.21 0.18 0.17 Residential 0.35 0.09-0.04-0.24 inventories -0.02-0.02-0.20 0.73 Net exports -0.68-0.31 0.28 0.41 Exports -0.23 0.07 0.52 0.28 Imports -0.45-0.38-0.24 0.12 Government 0.28 0.07-0.05-0.02 Federal 0.08-0.02 0.02 0.08 State and local 0.20 0.09-0.07-0.09 7
Foreign Trade 2200 2150 Exports of goods and services 105.0 100.0 $US RXR Index 2100 2050 2000 1950 1900 95.0 90.0 85.0 80.0 75.0 Jan 2009 Sep 2009 May 2010 Jan 2011 Sep 2011 May 2012 Jan 2013 Sep 2013 May 2014 Jan 2015 Sep 2015 May 2016 Jan 2017 8
Secular Stagnation? 6.0% 5.0% 4.0% 3.0% 2.0% 1.0% 0.0% -1.0% -2.0% -3.0% -4.0% Real GDP Growth Y-o-Y 1985Q1 1987Q3 1990Q1 1992Q3 1995Q1 1997Q3 2000Q1 2002Q3 2005Q1 2007Q3 2010Q1 2012Q3 2015Q1 2.5% 2.0% 1.5% 1.0% 0.5% 0.0% US Population of 25-64 Year Olds 1975 1980 1985 1990 1995 2000 2005 2010 Growth Share 50+ 2015 40.0% 35.0% 30.0% 25.0% 20.0% 15.0% 10.0% 5.0% 0.0% 9
Labor Markets 4.5 4.0 3.5 3.0 2.5 2.0 1.5 1.0 Dec-00 Mar-02 Jun-03 JOLT Job Openings Rate (% of Jobs) Sep-04 Dec-05 Mar-07 Jun-08 Sep-09 Dec-10 Mar-12 Jun-13 Sep-14 Dec-15 Mar-17 18 16 14 12 10 8 6 4 2 0 Jan-97 Sep-98 May-00 Unemployment Jan-02 Sep-03 May-05 U6 Jan-07 Sep-08 U3 May-10 8.3 Jan-12 4.2 Sep-13 May-15 Jan-17 10
Demographic Limits 25 20 15 10 5 0 2016 Population by Age by Nativity (Millions) Share Foreign Born by Age 15 to 19 6.9% 20 to 24 10.4% 25 to 29 15.1% 30 to 34 19.4% 35 to 39 22.1% 40 to 44 23.6% 45 to 49 21.0% 50 to 54 18.2% 55 to 59 15.7% 60 to 64 14.4% Native Foreign 11
California fact versus fiction 12
State Economic Performance 5 Year Change in Payroll Jobs by State New Jobs Ann Gr US Share Utah 226 3.5% 1.8% Nevada 188 3.1% 1.5% Florida 1,207 3.1% 9.5% Idaho 96 3.0% 0.8% Colorado 344 2.9% 2.7% Oregon 228 2.7% 1.8% Washington 401 2.7% 3.2% California 2,038 2.7% 16.1% Georgia 521 2.5% 4.1% Texas 1,425 2.5% 11.2% Arizona 298 2.3% 2.3% South Carolina 220 2.3% 1.7% Tennessee 314 2.3% 2.5% North Carolina 421 2.1% 3.3% Montana 40 1.8% 0.3% 140 135 130 125 120 115 110 105 100 Jan-95 Nov-96 Sep-98 Employment (Index) Jul-00 May-02 Mar-04 US Jan-06 Nov-07 CA Sep-09 Jul-11 May-13 Mar-15 13
The Big Slowdown State and National Job Growth California Labor Force Growth 4.0% 3.5% 3.0% 2.5% 2.0% 1.5% 1.0% 0.5% 0.0% 1.8% 1.6% 1.4% 1.2% 1.0% 0.8% 0.6% 0.4% 0.2% 0.0% -0.2% Jan-11 Sep-11 May-12 Jan-13 Sep-13 May-14 Jan-15 Sep-15 May-16 Jan-17 Jan-04 Mar-05 May-06 Jul-07 Sep-08 Nov-09 Jan-11 Mar-12 May-13 Jul-14 Sep-15 Nov-16 14
The IE in Context Private Sector Employment Ranking Rank Region 2015 Payrolls 15 San Diego CA MSA 1,221,336 16 St. Louis MO-IL MSA 1,203,540 17 Denver CO MSA 1,165,946 18 Baltimore MD 1,121,139 19 Riverside-San Bernardino CA MSA 1,092,635 20 San Francisco CA MSA 1,072,740 21 Tampa-St. Petersburg FL MSA 1,061,419 22 Pittsburgh PA MSA 1,034,884 23 San Jose CA MD 987,967 24 Orlando FL MSA 984,642 25 Portland-Vancouver OR-WA MSA 969,903 Recent Growth Rates Jul-17 14-15 15-16 16-17 Inland Empire 1,440,600 5.2% 3.3% 2.7% Fresno 342,100 3.6% 3.1% 2.1% San Francisco 1,118,800 5.1% 4.1% 2.0% East Bay 1,159,100 3.6% 3.2% 2.0% Sacramento 968,200 3.6% 3.5% 1.5% San Diego 1,442,900 3.3% 2.6% 1.2% San Jose 1,092,700 4.3% 3.3% 1.1% Los Angeles 4,448,400 2.6% 2.7% 1.1% Kern 257,400 1.4% -1.9% 1.1% Orange 1,592,700 3.6% 2.3% 0.6% 15
The Inland Empire no longer your father s economy Rank MSA Population 2016 10-16 1.2 million people in 20 years 3,200 Move over, New Orleans is moving in 7 Philadelphia 6,070,500 1.8% 8 Miami 6,066,387 9.0% 9 Atlanta 5,789,700 9.5% 10 Boston 4,794,447 5.3% 11 San Francisco 4,679,166 7.9% 12 Phoenix 4,661,537 11.2% 13 Inland Empire 4,527,837 7.2% 14 Detroit 4,297,617 0.0% 15 Seattle 3,798,902 10.4% 16 Minneapolis 3,551,036 6.0% 17 San Diego 3,317,749 7.2% 18 Tampa 3,032,171 8.9% Thousands 3,000 I.E. Population Forecast 2,800 2,600 2,400 2,200 2,000 2015 2020 2025 2030 2035 Riverside San Bernardino 16
Ahead, yet behind Private Sector Employment Wages 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 The Next Stage of Growth in the IE Job Densification Development and expansion of key clusters Public Investment in Infrastructure Workforce Education / Training Deepening the local attachment to the Global Economy 17
Teaching the global economy? Why? Expansion: the vast majority of growth will occur outside the United States in coming years Interdependence: The US interacts with the world economy more than ever before Walls Suck: Progress depends on cooperation which depends on trust and understanding How? Integrating global into the school curriculum Creating business / political linkages to the global marketplace Opportunities for personal experience Work to leverage existing relationships 18
Local Exporters $, Billions 12 10 8 6 4 2 0 Inland Empire MSA Exports 2016 All Products 10,211,645,251 Primary Metal Manufacturing 1,622,065,912 Miscellaneous Manufacturing 1,495,384,970 Computer Electronic Product 1,424,053,691 Transportation Equipment 1,083,083,215 Chemical Manufacturing 675,298,690 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Machinery Manufacturing 653,733,078 Food Manufacturing 625,344,618 19
Ontario International Airport Exports 80 70 Ontario International Airport Exports 2016 Highest Exports From Ontario International Airport 25 Exports (Millions of Dollars) 60 50 40 30 20 10 Exports (Millions of Dollars) 20 15 10 5 0 2003 2007 2011 2015 Total Partner Countries Source: WISER 0 UK Mexico Germany Hong Kong 20
Foreign Investment FOE by Source Nation (2016) San Bernardino % of all FOE Country Jobs Jobs Firms Japan 2969 13.7 133 Canada 2619 12.1 89 France 2363 10.9 40 Germany 1646 7.6 68 UK 1148 5.3 49 Mexico 1040 4.8 35 Sweden 979 4.5 13 Switzerland 872 4 28 Australia 865 4 15 Ireland 740 3.4 16 All Others 6355 29.4 240 FOE by Source Nation (2016) Riverside % of all FOE Country Jobs Jobs Firms Germany 2353 14.5 50 Japan 2018 12.4 94 UK 1836 11.3 71 Switzerland 1645 10.1 19 Canada 1498 9.2 73 Sweden 1450 8.9 13 Spain 1088 6.7 27 Ireland 808 5 17 France 805 5 33 Belgium 547 3.4 7 All Others 2163 13.3 157 21
What Industries FOEs by Industry Sector (2016) Sector Jobs Firms Total 43192 1452 Natural Resources 102 2 Construction 166 7 Manufacturing 4194 136 Wholesale Trade 7537 142 Retail Trade 2730 200 Transp., Warehousing, Utilities 599 23 Information 1082 29 Financial Activities 2167 54 Prof/Business Serv. 22626 799 Education/Health Care 920 18 Leisure/Hospitality 265 21 Other Services 138 15 Public Administration 666 6 FOEs by Industry Sector (2016) Sector Jobs Firms Total 32422 1122 Natural Resources 16218 563 Construction 46 5 Manufacturing 1326 82 Wholesale Trade 7331 92 Retail Trade 1722 177 Transp., Warehousing, Utilities 320 14 Information 542 17 Financial Activities 1637 80 Prof/Business Serv. 1382 45 Education/Health Care 277 15 Leisure/Hospitality 1360 16 Other Services 95 11 Public Administration 166 5 22
International Migration to the IE 30000 25000 20000 15000 10000 5000 0 International Migrant Population 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2016 2000 Total: 972,476 612,359 360,117 Mexico 565,229 386,169 179,060 El Salvador 34,449 15,617 18,832 Guatemala 24,509 12,613 11,896 South America 25,567 13,896 11,671 South Eastern Asia 111,418 56,682 54,736 China 39,903 10,595 29,308 Korea 15,197 9,488 5,709 Philippines 67,031 31,188 35,843 Vietnam 22,062 12,378 9,684 India 14,091 7,361 6,730 Europe 40,418 39,505 913 Canada 14,555 13,958 597 Africa 17,515 6,919 10,596 Total Migrants Source: ACS 23
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