Professor Daniel MacDonald is the chair of Cal State San Bernardino's Economics department and the author of the weekly Inland Empire Economic Update email newsletter. You can subscribe to his newsletter here. Below is a transcript of the conversation between Professor MacDonald and KVCR's Jonathan Linden.
Jonathan Linden: Each month, I sit down with Cal State San Bernardino Economics Professor Daniel MacDonald to discuss economics here in the Inland Empire. Daniel, just to get started here, can you tell us what your economic indicator is for this month?
Daniel MacDonald: Sure, Jonathan, thanks for having me. My indicator for this month is the regional unemployment rate. As of May, the unemployment rate in San Bernardino and Riverside Counties is 3.4%. This translates to about 72,000 people that are currently out of a job and actively looking for work, compared to 158,000 people in that same position a year ago. So that's a big improvement in the number of people searching for work. The Inland Empire is doing better than, for example, the Los Angeles metro area, which currently has a 4.5% unemployment rate. Now, that's still pretty low, but it translates to about 222,000 people actively searching for work. We're also better than the state of California overall, which has a 4.3% unemployment rate, again, pretty low, but we're doing even better. Some other areas of Southern California are doing even better than the Inland Empire. So for example, the metro area covered by Irvine, Santa Ana, and Anaheim has a 2.4% unemployment rate, while the San Diego metro area is at 2.7%.
Jonathan Linden: And is it historically uncommon for there to be high inflation and a low unemployment rate?
Daniel MacDonald: Yes, there is some relationship between a low unemployment rate and high inflation. And that's because as the unemployment rate goes down, we tend to see all sorts of other things happening, the economy is getting healthier, it's getting harder, and as a result, prices tend to go up. Now, of course, the inflation that we're seeing these days is not just about the low unemployment rate, it's part of it, but it's not the whole picture. As we've spoken about before, gas prices remain high, and that's not necessarily a function of the unemployment rate. We're also seeing high inflation because of housing and rents going up, which again might be partly due to the low unemployment rate. But it's also kind of a separate thing by itself. So there is a link there, and it's not uncommon for time periods when there is very high inflation and also have low unemployment. But it's not the complete picture. What really is going on here is that the Inland Empire has done a very good job at getting people back to work. Over the last two years, the transportation and trade sector, basically logistics, has seen a surge in demand for work, and that has helped many IE residents find employment during these difficult times.
Jonathan Linden: And with that field of logistics, do you have any data on how much money those people are actually making within those jobs?
Daniel MacDonald: Sure, I don't have the exact numbers, Jonathan, but it is true that while job growth has been very solid in that area, and that's one reason why we have the low unemployment rates, that those jobs do typically pay less than, for example, a job in business services or financial services... those sectors tend to pay a little better. So you're right that the whole story is not just about jobs. We want to see good jobs, we want to see high-paying jobs in the Inland Empire, and we have seen a lot of those too. But part of the reason why our unemployment rate has been able to go so low, compared to some other regions, is because of the demand for work in that logistics sector.
Jonathan Linden: And Daniel, was there anything else that you would like to share with our listeners?
Daniel MacDonald: Just that the national outlook remains very strong as well. So these numbers all point to a very healthy economy. There's a lot of discussion right now about the possibility of a recession, but right now, economists remain very positive and optimistic about the economy. Just on Friday, July 8, the national jobs report for June came in, and it showed about 370,000 jobs gained nationally in the month of June compared to May. So, some economists are talking about a looming recession, but as of now, things are looking really good, really healthy, and most economists do not expect any recession to come by the end of the year.
Jonathan Linden: Well, Cal State San Bernardino Economics Professor Daniel McDonald, thank you for taking some time to join me.
Daniel MacDonald: Thanks, Jonathan. It's been a pleasure as usual.
