Inland business is back to pre-recession peaks
The premiere Business Activity Index generated by the research arm of UC Riverside’s School of Business shows 1.7 percent growth for the Inland area in the first quarter of 2017, a trend that has seen an 18.1 percent unbroken increase for the local economy over the past five years.
The index chart begins with the first quarter of 2005 and set the 100 mark baseline during the first quarter of 2009, when the economy began its slow recovery from the Great Recession.
For the most part, the Inland area has recovered from Great Recession valleys, with construction growing but still lagging behind housing boom-era numbers, said Robert Kleinhenz, Executive Director of Research at the UCR School of Business Center for Economic Forecasting and Development.
The growth picked up pace in the first quarter of 2012 and has continued upward for 21 quarters, the index concludes. The occasionally disrupted growth since the early 2009 baseline stands at 20 percent. Growth from the first quarter of 2016 to the same period of 2017 was 3.7 percent.
The Inland area’s first quarter growth of 1.7 percent compares with the U.S. Gross Domestic Product of 0.7 percent. The center forecasts business activity to increase in the Inland area by 3.1 percent in the second quarter of 2017, and the U.S. Gross Domestic Product at 2.3 percent for the same period.
The index is a “collection of indicators” that are measured in jobs, dollars, and other raw units of information to formulate the results Kleinhenz said.
The Business Activity Index covers the Riverside-San Bernardino-Ontario Metropolitan Statistical Area, defined by the U.S. Office of Management and Budget and used by several federal agencies including the Census Bureau and the Bureau of Labor Statistics.
The center plans to report it quarterly.
“The general indicators are that we have passed the pre-Great Recession peaks in areas such as gross metropolitan product totals, employment levels, and personal income,” Kleinhenz said in a telephone interview.
Strengths include growth in the professional and business services industry, with employment at an annualized growth pace of 7.3 percent in the first quarter of this year.
Kleinhenz said that included steady growth over the years in the professional, scientific and technical services subcategory, but there was not enough information yet to say precisely what is spurring that.
“The goods movement industry, especially in San Bernardino County, and manufacturing — those are the areas where we were expecting to see growth,” Kleinhenz said.
The construction sector also was growing, pushed chiefly by infrastructure projects such as freeway improvements and new warehouse and distribution center work, Kleinhenz said.
But while Inland residential unit building permits for 2016 stood at 10,239, an increase of 8 percent over 2015, home construction remains one lagging area of the Inland economy, Kleinhenz said.
“Construction, for certain, has not yet recovered,” Kleinhenz said. Mining and logging, although a very small part of Inland job count, also has stayed down due to lower energy costs which have discouraged exploration and extraction.
“But by and large, if you look at every major industry, nearly every one of them has recovered all the jobs lost” during the recession, he said.
The overall recovery streak for the Inland area matches the steady gains for the national economy, currently the third longest economic expansion on record, the center noted.