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The Inland Empire: California's Growing Economic Powerhouse

Updated: Dec 4, 2023

Los Angeles County’s economy is far and away the biggest in Southern California, but the Inland Empire leads in population and job growth because of lower home prices and rising demand for warehouse workers amid the e-commerce explosion.

Those revelations are included in the latest UCLA Anderson Forecast released early Wednesday, Dec. 8, 2021. Inland Empire economist John Husing said online buying was already on the rise before the pandemic, but when COVID-19 hit it went through the roof.

“When all of the service sectors temporarily shut down, there was a tremendous change in how people bought merchandise,” he said. “And it’s been so strong it has overwhelmed the supply chain.”

California’s rent relief program runs short on money as deadlines near warehouses, trucking companies and Southern California ports are scrambling to keep pace with the demand and have been further hobbled by a pervasive labor shortage.

The Inland Empire’s transportation, warehousing and utilities sector has seen explosive growth, with a stunning 197% increase over the past decade due to the rapid rise of e-commerce, the forecast said.

World’s 13th Largest Economy

Southern California’s gross domestic product — or the total value of its goods and services — hit $1.6 trillion in 2021, according to UCLA’s report. That makes it the 13th largest economy in the world, landing between Brazil ($1.5 trillion) and Australia ($1.6 trillion).

L.A. County’s GDP is currently estimated at $815 billion — nearly three times the size of Orange County’s, which landed in second place with $272 billion. San Diego County ranked third with $256 billion, followed by the Inland Empire ($211 billion) and Ventura County ($56 billion).

Southern California’s economy has been growing faster than the nation’s over the last two decades, the report said. The Inland Empire saw the region’s biggest GDP growth at 52% while Orange County ranked last at 31%.

The Inland Empire has also recovered the most jobs since the COVID-19 pandemic began. Employment in the two-county region is down just 2% from February 2020, compared with the U.S. (down 2.8%), Orange County (down 5%), Ventura County (down 5.6%), San Diego County (down 5.9%) and L.A. County (down 7.4%).

Biggest Employers

Southern California’s biggest employer in 2021 is the healthcare and social assistance sector, followed by leisure and hospitality, retail, education and professional and business management. But in terms of challenges, the logistics network that supports the movement of e-commerce goods is stretched to the limit.

“Our vacancy rate for warehouses in the Inland Empire is 0.7%,” Husing said. “We’re beginning to run out of space to put them here. Now the market is starting to look at the high desert — areas like Victorville and the Antelope Valley.”

Husing said some office buildings in Orange County are being torn down to accommodate the construction of smaller warehouses so companies like Amazon can speed merchandise to consumers quicker.

“The supply chain backup will smooth out when consumer demand slows down,” he said. “We’re in an inflationary cycle right now and rising prices will cause people to spend less. I expect the logistics backup to smooth out in mid-year 2022.”

The Anderson Forecast predicts Southern California will see employment growth of 3.9% in 2022 and 1.7% in 2023. The region’s overall economy is expected to grow 4.2% in 2022 and 2.2% in 2023.

Article courtesy of Kevin Smith of the San Gabriel Valley Tribune on December 8, 2021 and image is from The Press-Enterprise/SCNG.

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