Business
Q3-2023 SCAG Economic Roundtable Update
Southern California Association of Governments Release Third Quarter Economic Update
Third Quarter, 2023
SCAG’s Economic Roundtable met for its quarterly discussion on the current state of the regional economy last week. Labor market conditions were a major focus of the conversation and several overarching themes emerged:
- Although a recession had been considered likely for the third quarter this year, the Roundtable was generally optimistic that a recession will be averted or will be mild, especially in California.
- The region’s economic resiliency is driven by strong labor markets. However, the region is facing a number of labor disputes in regionally significant industries.
- Commercial real estate is a weak spot in the region’s economy and housing continues to be soft, largely due to high interest rates and low supply.
- Federal spending through the Inflation Reduction Act is ramping up and presents significant opportunities and multiplier effects for the region, especially surrounding green technology. Lithium mining is an emerging opportunity in Imperial County with commercial grade production possible by 2025.
Labor Market
- The SCAG region’s unemployment rate is at pre-pandemic levels at 4.5 percent (4.8 percent seasonally adjusted). All six counties are experiencing low unemployment rates. The lowest is in Orange County at 3.2 percent (3.6 percent seasonally adjusted). While Imperial County has the highest rate at 16 percent (17.6 percent seasonally adjusted), this is far lower than historical levels in Imperial County. Continuing unemployment claims dropped in the last quarter, indicating that laid-off workers are finding alternative jobs quickly.
- The region’s labor supply is at 9.2 million, about 3.8 percent below the pre-pandemic high of February 2020. In the Inland Empire counties, labor supply slightly exceeds the February 2020 pre-pandemic levels. The Inland Empire counties also lead the state in employment gains since the pandemic; however, total employment is slightly below the post-COVID highs set in Fall 2022.
- There have been labor disputes in regionally significant sectors, including logistics, entertainment and hospitality. Disputes are largely driven by concerns over working conditions, wage levels not keeping up with inflation or corporate profits – and in the case of the entertainment industry, artificial intelligence (AI).
- The tight labor market is a cause of many current economic anomalies; it is expected to take some time for the effects of inflation and interest rate hikes to work itself through various parts of the economy.
Real Estate Market
- Sales of existing homes are still down significantly due to prices and rates both being higher for those looking to “step up;” however, sales are ’starting to increase. Despite supply constraints, new development is still rising in much of the region — and homebuilders’ stock prices are especially strong in reflecting optimism.
- Commercial real estate is the worst performing large sector, driven down by marquee loan defaults in large metropolitan areas and generally high office vacancy rates. However, banks don’t want to take properties back and have an incentive to work things out with building owners to prevent accelerating vacancies or defaults.
Broader Economy
- As of July, economic news as a whole is better than it has been all calendar year. Stock market indices are up and consumer sentiment from the University of Michigan’s index is the highest in two years.
- While many Economists predicted a third quarter recession, nothing suggests it is actually starting or about to come soon. Confidence is helpful in avoiding the self-fulfilling prophecy, which can trigger a downturn. In retrospect, the uniformity of COVID-era support payments in allowing for spending despite uncertainty may have been a major factor.
- Major risks may be on the horizon in commercial lending. Nationally, corporate bankruptcies are at the highest levels since 2010, up 68 percent relative to the first six months of 2022. This is impacting some sectors more quickly, particularly the region’s large hospitality sector. The reason appears to be that businesses are paying far higher rates for new commercial loans, which may lead to some difficult choices for small businesses—and lenders.
- Taxable sales are down as consumers continue to shift consumption from goods to services. While personal spending is positive nationwide, this may be a challenge for local government coffers.
- The region’s year-over-year core inflation rate is 1.3 percent lower than a quarter ago; however, this is largely the result of a 15 percent drop in energy (mainly gasoline) prices. This drop opens the possibility of only one (rather than two) remaining interest hike from the Federal Reserve in the rest of 2023, which would be a positive signal.
SCAG’s Economic Roundtable is a consortium of regional economic experts that meet quarterly to update the region’s economic outlook and discuss challenges and opportunities facing the six counties that comprise SCAG.
Members are:
- Imperial County, Michael Bracken, Development Management Group, Inc. (DMG)
- Los Angeles County, Shannon Sedgwick, Los Angeles County Economic Development Corporation (LAEDC)
- Orange County, Wallace Walrod, Tech Coast Consulting Group (TCCG) and Orange County Business Council (OCBC)
- Riverside & San Bernardino Counties, Manfred Keil, Inland Empire Economic Partnership (IEEP) and Claremont McKenna College
- Ventura County and the SCAG Region, Mark Schniepp, California Economic Forecast (CEF)
- Equity, Karthick Ramakrishnan, University of California, Riverside (UCR) and California 100
- Sustainability, David Roland-Holst, Berkeley Economic Advising & Research (BEAR) and University of California, Berkeley
- Workforce Development, Shaun Fernando, Guidehouse Consulting
Business
Inland Empire Regional Chamber of Commerce to Lead California Delegation at GITEX GLOBAL 2023 in Dubai
Fostering Technological Synergy: Bridging the Tech Gap with Global Partners
Demonstrating the Inland Empire Regional Chamber of Commerce’s (IERCC) commitment to global tech collaboration and innovation, the organization will lead a California delegation to the world-renowned GITEX GLOBAL event in Dubai from October 16-20, 2023. Though the original invitation extended to IERCC’s President & CEO, Mr. Edward Ornelas, Jr., he will not be in attendance. Instead, the California delegation will be spearheaded by the Chamber’s newly-appointed CTO, Mr. Gabriel Rangel.
Organized by the Dubai World Trade Centre, GITEX GLOBAL 2023 promises to be grander than ever. The event is set to host over 6,000 exhibiting companies and startups, drawing more than 170,000 tech and business executives from over 170 countries. The mega-event will sprawl across 41 vast halls and, for the first time ever, will be held at two prominent venues – the iconic Dubai World Trade Centre and the new Dubai Harbour for Expand North Star, making it the host for the world’s largest startup event.
Mr. Edward Ornelas, Jr. commented, “While I regret not attending GITEX personally, I am proud to have Mr. Rangel at the helm of this effort. I’m confident that our delegation will foster new collaborations and present the Golden State as a tech powerhouse.”
This year’s conference adopts the compelling theme of “The Year to Imagine AI in Everything”. Attendees are poised to witness the grandest showcase of AI tech giants and industry frontrunners. Additionally, it promises to kindle profound dialogues and debates concerning the socio-economic implications of burgeoning AI technology.
“Leading the California delegation at GITEX offers us an unmatched platform to nurture and solidify relationships with global tech partners,” said Mr. Gabriel Rangel, CTO of IERCC. “As the technology landscape continues to evolve, it’s critical for us to be a part of these international collaborations. I’m honored to spearhead this mission on behalf of the Inland Empire Regional Chamber of Commerce.”
An integral part of the California delegation, Mr. Ram Thanapandian, Principal Technology Consultant to the State of California and Chair of CA State Treasurer Fiona Ma’s Technical Advisory Commission, will be present, providing invaluable insights and representing the State of California Treasurer’s Office.
IERCC’s leadership in organizing this delegation underscores the crucial role that California plays in the global tech ecosystem and mirrors Dubai’s ambitious vision as encapsulated in the Dubai Economic Agenda (D33). This strategy aims to substantially expand Dubai’s economic landscape in the upcoming decade, securing its stature among the world’s leading global cities.
Trixie LohMirmand, Executive Vice President of the Dubai World Trade Centre and CEO of KAOUN International, remarked on the invaluable contributions the California delegation will bring to the event. She looks forward to an event marked by knowledge-sharing, collaboration, and pioneering discussions.
For additional information on GITEX GLOBAL 2023, please refer to: GITEX 2023 Preview.
Coming October 5th
Economic Horizon 2024: What Lies Ahead?
The Inland Empire Regional Chamber of Commerce, in collaboration with Beacon Economics and the County of San Bernardino, is thrilled to announce that the anticipated economic forecast conference, Economic Horizon 2024: What Lies Ahead, Inland Empire? will be held October 5th from 3:30 PM to 6:30 PM at the El Prado Golf Courses in the vibrant city of Chino, California.
Esteemed economist, Dr. Christopher Thornberg will present complete outlooks for the U.S., California, and Inland Empire economies. “The Inland Empire stands at the crossroads of remarkable economic opportunities and challenges,” said Thornberg. “I’m excited to unpack the trends and shifts that will define the region’s economic landscape in the next year, and beyond.”
Known for his razor-sharp observations, and fun, energized delivery, Thornberg’s presentation will include pointed discussions about inflation, the Fed’s next move, housing markets, strengths and instabilities in the economy, and what current trends mean for the nation, state, and local region.
The conference will also be graced by the insights of California State Treasurer Fiona Ma as keynote speaker. In her words, “The strength of California’s economy is deeply interwoven with the growth trajectories of its regions. The Inland Empire, with its dynamism and resilience, is a testament to this synergy. I am honored to join ‘Economic Horizon 2024’ and share a vision where policies, partnerships, and potentials converge to elevate the Inland Empire to unprecedented economic heights.”
“This conference is a testament to the collaborative spirit of the Inland Empire and our commitment to fostering a robust, resilient economy,” said Edward Ornelas, Jr., President of the Inland Empire Regional Chamber of Commerce. “Our partnership with Beacon Economics and the County of San Bernardino aims to offer a platform for profound economic discussion, forecasting, and strategic future planning.”
Attendees can anticipate not only expert insights into the economy but also networking opportunities and a chance to connect with key business, government, and nonprofit leaders from across the region.
Full event details are available at: economy.iechamber.org
Bizz Buzz
Webb Investments acquires Silver Creek Industries, an industry leader in modular construction for schools
Webb Investments today announced the launch of a new company, Silver Creek Modular, after acquiring the assets of Silver Creek Industries, a highly respected modular construction company known for bringing innovative, sustainable and cost-effective solutions to the education industry.
Silver Creek Industries’ existing business, including its employees and its Perris, Calif., manufacturing facility, will remain with the new company, with Webb providing the investment capital, resources and expertise to enhance Silver Creek’s presence in the modular construction marketplace.
The acquisition closed in June of 2023, following Silver Creek Industries’ Chapter 11 filing in the Central Bankruptcy Court of California.
“We are thrilled to have the opportunity to bring Silver Creek into our family business, and look forward to building on our shared commitment to improving educational opportunities within communities across our region,” said Kiana Webb, CEO of Webb Family Enterprises. “This acquisition aligns with our strategy to invest in established firms that can help us drive community revitalization and inclusive growth, while improving quality of life and increasing economic output.”
Silver Creek Industries was founded in 2004 and has completed more than 1,000 projects in the education, commercial, medical, military, government and multi-family housing markets. More recently, the company’s focus has been on providing high-quality, sustainable modular buildings for schools and educational institutions. Silver Creek Industries is well known for delivering projects on time and on budget, with minimal disruption to school and the community.
Webb Investments is a privately held, family-owned company focusing on creating a community development ecosystem that drives inclusive, organic growth and transforms the areas they serve.
For more information on Webb Investments, please visit webbinvestments.com.
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