The Inland Empire’s emergence as a global trade hub and the impact of steady population growth on key industries such as health care, retailing, and hospitality will continue to drive economic expansion in the two-county region over the next year, according to a new economic report.
The report, released Thursday by the Southern California Association of Governments (SCAG) as part of its annual Southern California Economic Update, projects that increases in consumer and business spending, along with foreign trade, will continue to drive gains in one of the world’s biggest supply chain corridors. The Inland Empire’s robust logistics sector currently employs more than 166,000 people, and in San Bernardino County alone, accounts for one of every five jobs.
“The outlook for the near-term future is positive for the Inland Empire,” said Dr. Manfred Keil, Chief Economist for the Inland Empire Economic Partnership, who prepared the Inland Empire analysis for SCAG. “First, steady growth in the U.S. economy is expected over the next six to 18 months, driving increases in spending. Second, migration to the region will increase as households move from the coastal areas and elsewhere in search of more favorable housing costs (which) will trigger continued growth in population-serving industries such as health care, retail trade, and leisure and hospitality services.”
Keil is part of an Economic Roundtable convened by the SCAG to provide a snapshot of the region and a preview of economic opportunities and challenges ahead. Their research was presented Thursday to SCAG’s Regional Council, offering a mostly optimistic forecast for the coming year.
“The risk of recession is sharply lower than it was a year ago. Consumers continue to drive the state and regional economies with their spending, and business investment in equipment and software is sharply higher. This should extend into 2025 as interest rates soften,” said Kome Ajise, SCAG Executive Director.
Regionwide, the growth in logistics, development of large-scale transportation, health care, and energy projects, and increases in tourism will carry into 2025, the economists said. This will increase demand for labor as well as investment in capital equipment, software, and real estate. Also, housing construction and sales should rebound as the cycle of interest rates turns lower.
The Inland Empire, meanwhile, continues to perform somewhat better than the SCAG region as a whole, with steady employment gains in multiple sectors and a growing labor pool. Today, the Inland Empire ranks as the 12th largest metropolitan statistical area (MSA) in the United States and is within 200,000 residents of the Boston-Cambridge MSA for 11th place.
Positive factors moving forward include the strength of the two-county region’s health care industry, development of the Brightline West High-Speed Rail system between Rancho Cucamonga and Las Vegas, a number of extremely large housing developments (e.g., Silverwood in Hesperia, Ontario Ranch) and continued investment in major logistics centers.
Challenges do remain. Comparing wages to gross domestic product, the Inland Empire ranks 300th out of 390 MSAs nationwide. Also, proposed hefty tariffs on imported goods, in particular from China, could reduce imports and negatively impact the region’s logistics industry.
