(CNS) – Inland Empire business activity is declining, but the downturn is not occurring at the same pace as the rest of the nation, UC Riverside economists said Thursday.
The UCR School of Business’ Center for Economic Forecasting & Development released its quarterly Inland Empire Business Activity Index, showing that area businesses experienced a 1.6% growth rate during the second quarter of 2022 — the most recent data available — a steep drop from the 4.7% expansion in the first three months of the year.
Despite the significant contraction, the rate still contrasted markedly with the negative 0.6% rate for the nation as a whole during the same quarter, according to the report.
Successive periods of sliding gross domestic product reflect that the country may already be in the early stages of a recession, according to some economists.
The UCR economic forecasting team said the financial headwinds should not derail prospects for regional growth going forward, with predictions that local business activity will continue to expand between 2% and 3% over the next 12 months.
“The steadiness of the Inland Empire’s overall economic recovery and its forecast for continued growth has been partially driven by the strength of its largest industry, transportation and warehousing, which boomed during the pandemic years but is now starting to slow,” Center for Economic Forecasting Research Manager Taner Osman said.
He cautioned that another economic driver, real estate, is losing steam, cooling “substantially due to rising interest rates,” contributing to weakening business activity.
The high cost of living in Southern California, exacerbated by accelerating inflation, is a deterrent to drawing workers to the region, unlike other parts of the country, the center said in its first-quarter report.
Forecasters said earlier this year that the region had largely recovered the jobs lost during the coronavirus public health lockdowns of 2020 and part of 2021.
The latest Inland Empire Business Activity Index can be found here: https://ucreconomicforecast.org/wp-content/uploads/2022/09/UCR_IE_BusinessActivityInex_9_2022.pdf
Copyright 2022, City News Service, Inc.