Inland Empire business activity surpassed national growth last year, but constraints on labor will be a drag on future growth potential, UC Riverside economists said Wednesday.
The UCR School of Business’ Center for Economic Forecasting & Development released its quarterly Inland Empire Business Activity Index, showing that area businesses experienced a 6.4% increase in consumer demand in the fourth quarter, making the total increase in 2021 6.1%, compared to 5.6% nationwide.
The center noted that growth has been steadily declining on a quarter-to-quarter basis, and economists don’t expect more than a 3.5% rate of expansion for the remainder of this year.
“Now that the region is again in expansion mode, as opposed to recovering losses from the … recession, growth will moderate,” the center’s Research Manager Taner Osman said. “That isn’t a detriment. The point of concern continues to be the prospect of workforce shortages and the ability to meet the labor market demand.”
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, according to the report.
Osman said e-commerce remains vibrant, as people do more shopping from home, keeping big box warehouses that are spread throughout the Inland Empire busy.
“A major component of e-commerce operations is transportation and warehousing, which has long been one of this region’s mainstay industries and one that should continue to benefit from consumers’ discernable preference for online purchasing,” he said.
The center released a report last week indicating that the region has largely recovered the jobs lost during the coronavirus public health lockdowns of 2020 and part of 2021.