U.C. Riverside’s School of Business gave an optimistic outlook for the Inland Empire’s economic recovery from the pandemic-related recession during its annual conference on October 13. In many sectors, the region fairs better than the state despite a slowed recovery of jobs lost due to the shutdown.
Dr. Christopher Thornberg, director of U.C.R.’s Center for Economic Forecasting, says record home sales and increased consumer spending in recent months shows that people are learning to live as normally as possible with COVID-19.
“This is completely different than April when no one really understood what we were dealing with," said Thornberg. "And it means even of course even without a vaccination, the U.S. economy can continue to get back to normal levels of economic output.”
Both Thornberg and Dr. Tanner Osman, the center’s research manager, says this recession is unique.
“The primary reason why economic activity has contracted nationally, in California and in the Inland Empire as well, was due to efforts to contain the coronavirus and consumer and people’s reaction to the spread of the coronavirus," said Osman. "So, if we begin increasingly to enter a world where by the spread of the virus is contained in the Inland Empire, we would expect to see the economy to recover in sync.”
Which is why he and his colleagues at the university believe the economy will bounce back quickly to pre-pandemic levels. Unlike the slow recovery during the Great Recession, which was due to the structural issue of the false housing market created by sub-prime mortgage lending.
Osman says the region’s economic health, pre-pandemic, also sets it up for a faster recovery.
“The good news is that the Inland Empire’s economy has been somewhat of a juggernaut since the Great Recession," said Osman. "And this can be viewed in a number of different ways. First, with respect to job growth, we’ve seen very impressive job growth in the Inland Empire compared not only when compared to the state of California but also compared to the neighboring counties in the Southern California region.”
But the biggest economic fallout from the pandemic was the loss of 200,000 jobs in March and April. June saw the return of 25 percent of those lost jobs, but then a resurgence of coronavirus cases in July and state restrictions slowed job growth. By August there were 130,000 fewer jobs than in February, which mostly affected industries like hospitality, food services, and retail.
“Most economists will tell you that employment is a lagging variable and that as other aspects of the economy improve, we should expect to see employment follow in sync," said Osman. "But that is of course no help to the people who have been disproportionately affected by the fallout by the labor market. As we saw this labor market fallout has predominately affected non-white workers, lower-income workers, generally women and younger members of the work force also.”
He says a full recovery of the labor market should happen by 2022.