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Inland Empire business activity surpassed national growth in the most recent quarter, but signs are pointing to a slowdown going into 2022, with housing costs among the factors imposing constraints on labor, 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 4.5% increase in consumer demand in the third quarter, compared to only a 2.1% increase nationwide.
Over the next two quarters, regional business activity is likely to expand between 3% and 6% — below the levels reached in the first half of 2021, according to the center.
“This slowdown is to be expected as we move closer to pre-pandemic conditions with respect to economic output,” Center for Economic Forecasting Research Manager Taner Osman said. “The bigger issue for the coming year is likely to be the labor market, which still has some way to go … and is going to continue to struggle with an adequate supply of workers.”
The current unemployment rate in Riverside County is 6.3%, compared to the pre-public health lockdown period of March 2020, when it stood at 4.7%. In San Bernardino County, the unemployment rate is also 6.3%, compared to 4.4% in March 2020.
Business closures are expected to decline in 2022, compared to this year and 2020, but workforce availability will likely remain well below numbers reached prior to the onset of coronavirus, according to the report.
“While the Inland Empire is less costly than many parts of the state, compared to the national average, home prices here are pretty sky high, which will exacerbate labor supply issues and restrain needed growth,” Osman said.
He said about 83% of the jobs lost during the lockdowns have been regained throughout the region.
