April 13, 2021-John Husing, Economics & Politics, Inland Empire 2021 Economic Forecast- via Zoom

Tuesday, April 13, 2021

Virtual Meeting via ZOOM


Present:  Ruthy Argumedo, Deborah Barmack, Carole Beswick, Gregg Bradbard, Rachelle Bussell, Lydia Chelle, Ken Coate, Sandra Cuellar, Michelle Decker, Kevin Dyerly, Louis Goodwin, Otis Greer, Fran Inman,  Mark Kaenel, Lowell King, Mike Layne, Bill Lemann, P.T. McEwen, Darcy McNaboe, Miguel Mendoza, John Mirau, Dan Murphy, Bansree Parikh, Catherine Pritchett, Thomas Rice, Michael Rivera, Elizabeth Romero, Kristine Scott, Paul Shimoff, Phil Southard, Sol Teh, Eric Ustation, Lupe Valdez, Pete Van Helden, Ray Wolfe, Marisa Yeager and Frank Zabaleta.

Guests:  Megan Barajas, LaDonna DiCamillo, Sheriff John McMahon, Boris Medzhibovsky and Todd Warden

Announcements:  1) The Inland Action Sacramento advocacy for 2021 will be held virtually on Tuesday, June 8, 2021.  2) Assembly member Ramos requests suggestions for nominees from his District for a “Distinguished Small Businesses” award.  Ideal nominees are those that have 100 or fewer employees and have made a significant contribution to the community or have been a model for other businesses.  Please contact Carole with suggestions. 3) Staff is currently scheduling appointments for Inland Action’s 2021 Federal Advocacy.  The virtual meetings will be held on April 27 & 28th, 2021.

Lowell King, Chair, presiding.

The San Bernardino Valley Municipal Water District has requested a letter of support for Federal Community Project Funding for on-going support of the Seven Oaks Dam Water Conservation project.
Motion by K. Coate/Second by D. McMcNobe/Passed: A letter of support for continued funding for the Seven Oaks Dam Water Conservation project will be sent.

Motion by T. Rice/Second by K. Coate/Passed: Minutes from April 6, 2021.

Mark Kaenel, Treasurer reported that he has reviewed and recommends approval for both the 2020 Accountant’s Year End Compilations Report and the 2020 Tax Returns prepared by the CPA firm of Spafford & Laundry.  Both documents were posted on the Inland Action web site and members were asked via e-mail on April 8, 2021to review these documents prior to today’s meeting.  He noted that the usual differences versus our internal financial statement are the recognition of revenue when earned and related deferred income liability, reclassification of member donations (unreimbursed airfare and hotel) as a reduction to these expenses, and the CPA’s calculation of depreciation expense.  The costs to revamp the website were also capitalized by the CPA rather than expensed.  Comments and questions were requested.
Motion by R. Wolfe/Second by K. Coate/Passed: The 2020 Accountant’s Year End Compilations Report and the 2020 Tax Returns are approved.

Sandra Cuellar introduced John Husing, Principal, Economics & Politics who discussed his 2021 Economic Forecast for the Inland Empire.

The United States experienced a -6.2% job loss from December 2019-December 2020 but saw a further decline of -13.4% (20 million jobs) from April 2019-April 2020 due to the pandemic.  The most current rates are improving but the loss of jobs has been worse than the Great Recession.  The Inland Empire job loss topped out at -4.19% (65,600 jobs) in April of last year but is expected by the end of 2021 to gain back a majority of jobs and land at a total loss of -0.20% (3,200 jobs).

Due to the pandemic shutdown, the job sectors most affected in our region have been restaurants/bars, hotels/amusement, retail trade, and personal services.  Logistics however has seen continued growth and added 21,100 jobs.  John Husing predicted the following for 2021:

  • Logistics will remain strong and will experience a 4.0% growth.
  • Construction will attempt to ramp up quickly but needs skilled workers to see their expected 5.0% growth.
  • Health care will grow by 3.0%
  • Retail will grow by 5.0% but some closures will be permanent.
  • Restaurants/Bars along with Travel/Amusement are expected to grow by 15.0% although many that closed will not re-open.

The Inland Empire retains its competitive advantage in the logistics and distribution sectors as we have land and L.A. and Orange Counties are already built out.   Amazon, for example, has some 15 facilities all located in the Inland Empire.  The logistics sector has a median income of $49K predominantly due to pay that truck drivers receive.  A majority of jobs in this sector are well suited to our population as 44% of our adults have education attainment levels at high school or less.  Another major driver in the growth of logistics is the thriving e-commerce market which went from a steady 15% growth to 44.5% at the peak of the pandemic.  E-commerce has settled somewhat but is predicted to maintain at 30% growth.  Currently 14% of all retail goods are conducted through e-commerce and will likely grow.  The increase is also reflected in port volumes that have accelerated to all-time highs and in February saw an incredible 51.7% increase.  Threats to growth in logistics are environmental regulations and environmental opposition.

Demand for industrial space in the IE has increased as companies migrate to our region to maintain their inventories and or handle e-commerce needs.  Over 23.1 million sq. ft. was absorbed in 2020 and with a vacancy rate of a mere 1.9% space is at a premium.

Construction of both housing and industrial space is very much needed in the IE.  Our population will continue to grow as extreme high prices in the coastal counties push people inland.  As we grow out, it is expected that the high desert areas will be next to experience big growth.  Challenges in the construction sector include difficulty permitting lots, CA Environmental Quality Act, high prices, lack of supply and a shortage of skilled craft workers.

Health care workers continue to be in high demand.  The number of people per health care worker in the state averages 25.9 but in the Inland Empire that number is 31.4 (21.6% more people per health care worker).  This sector is lacking trained workers, Covid-19 has made people hesitant of close contact, and the Affordable Care Act needs shoring up as it has lost participation due to changes from the former administration.

Retailing, one of the hardest hit sectors, is challenged by e-commerce which hurts in-store sales and the closing of stores (some permanently) due to Covid-19.  As we open up in 2021 it is hoped we will get back to 2019 numbers.   Many consumer services such as hair salons, gyms, spas etc. have permanently closed and those that survived are challenged by customers hesitancy for close contact.

Take out and sit-down restaurants were strong and doing well prior to the pandemic but Covid-19 shut down sit-down restaurants and bars and many will not re-open.  Although numerous people are anxious to go out again, incomes are not as strong as they were and there is customer uncertainty and some reluctancy of public places.

Q & A period followed.

Meeting adjourned at 9:01 a.m.