Business activity in the Inland Empire continued to grow in recent numbers, standing in stark contrast to the decline in GDP nationally, according to the new Inland Empire Business Activity Index released today by the UCR School of Business Center for Economic Forecasts and Development. However, the region’s business activity growth in the second quarter of 2022 (the latest data available) represents a significant drop in growth from recent quarters.
Business activity in the Inland Empire expanded 1.6% in the latest numbers compared to 4.7% in the first quarter of 2022 and 6.4% in the fourth quarter of 2021. US GDP, on the other hand, shrank by 0.6 % in the last quarter. Additionally, the short-term outlook for the Inland Empire remains positive, with local business activity forecast to grow between 2% and 3% over the next 12 months.
According to the analysis, the long-term decline in the EI growth rate is expected as the region’s economy has strongly returned to pre-pandemic conditions.
“The durability of the Inland Empire’s overall economic recovery, and its forecast for continued growth, has been driven in part by the strength of its largest industry, shipping and warehousing, which flourished during the pandemic years but is now beginning to falter. slows down,” Tanner said. Osman, research manager at the Center for Economic Forecasts and one of the authors of the index. “Equally important to the slowdown we are seeing is that the local real estate market has cooled significantly due to rising interest rates, leading to a weakening of overall economic and business activity.”
According to the report, even after accounting for local inflation, the real cost of owning a home in the Inland Empire has risen 24.5% since the start of this year. In the same time,
inflation-adjusted average hourly earnings for private sector workers in the region fell by 6.1%.
The impact has been clearly visible: Sales of existing single-family homes, which make up the lion’s share of the Inland Empire’s housing market, fell 9.3% during the first half of this year. However, despite the drop in sales, prices rose by 17.9% over the same period. “These numbers are a testament to the acute shortage of housing supply in Southern California and the strong demand for housing that exists across the state in general,” Osman said.
Check out the new Inland Empire business activity index.
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