Craving ‘Normal Activity’, Consumers Will Drive Growth; Trouble On The Horizon: The Cost Of Excessive Monetary And Fiscal Stimulus
The economic recovery from the historic COVID-19 pandemic that began last year regained steam at the start of 2021, and record savings and hot financial markets indicate an even more accelerated upturn will play out across the rest of the year. According to Beacon Economics’ latest outlook for the U.S. and California, the pandemic exacted its heaviest and most persistent damage within job markets, but a quickened pace of vaccinations and the easing of health-mandated restrictions nationwide is setting the stage for a major hiring bounce.
At the start of the pandemic the U.S. saw its payroll workforce decline by approximately 22 million jobs as the unemployment rate soared to 14.8%. The damage was not evenly distributed with some 40% of the losses occurring in the Leisure and Hospitality sector alone. But as of March 2021, 62% of the lost jobs have been recovered and the U.S. unemployment rate has fallen to 6%. Moreover, the job openings rate is currently higher than it was pre-pandemic, and wages among workers who have kept their jobs have continued to grow at a normal pace.
“As good as this data is, we’re not there yet. But even the most damaged industries are starting to see light at the end of the tunnel while industries that were essentially unscathed are facing tight job markets and having trouble hiring people,” said Christopher Thornberg, Founding Partner of Beacon Economics and one of the forecast authors. “Additionally, the depths to which badly affected labor markets sank have created conditions for exceptional growth as restrictions on activity – the only thing preventing hard-hit industries from expanding – recede.”
The new forecast estimates that the nation’s unemployment rate will shrink to 5.7% in the 2nd quarter of 2021 and to 4.9% by the end of the year.
Driven by consumer demand, other parts of the U.S. economy have already rebounded sharply, even flourishing throughout the pandemic. “Frustrated consumers who were denied an opportunity to eat at a favorite restaurant or fly to Disney World, spent unused dollars in other areas of the economy such as buying houses, campers, and home goods,” said Thornberg. “This is why worker earnings have recovered, job openings have remained remarkably high, and there was a surge in corporate profits – to their highest point ever in the second half of last year.”
While U.S. GDP experienced its largest annual decline in decades in 2020, these losses will be offset and the economy will likely return to trend this year – driven primarily by consumers, according to the new outlook.
Like the nation, California’s pace of vaccination has ramped up and the easing of restrictions will accelerate the state’s labor market recovery (assuming health criteria is met, the state is scheduled to fully open on June 15). As of March, California had 8.6% fewer jobs compared to pre-pandemic levels, while the national economy had 5.5% fewer jobs. “The state finds itself in a deeper hole with respect to jobs lost than is the case nationally,” said Taner Osman, Research Manager at Beacon Economics and one of the forecast authors. “But that relative underperformance will likely translate into higher job gains in 2021.”
The new outlook estimates that California’s unemployment rate will shrink to 7.1% in the 2nd quarter of 2021 and to 4.4% by the end of the year.
Also like the nation, while the state’s job recovery lags, many aspects of California’s economy have returned to their pre-pandemic trends, and some, such as the housing market, boomed over the past year. Home prices in the state increased 15% from the 4th quarter of 2019 to the 4th quarter of 2020, compared to just 5% growth from the 4th quarter of 2018 to the 4th quarter of 2019. Moreover, a severe shortage of housing supply in California will continue to place upward pressure on home prices in the year ahead, said Osman.
Additional Key Findings:
- In California, sales of single-family homes have also increased, jumping by 24% from the 4th quarter of 2019 to the 4th quarter of 2020. This rate of sales is unsustainable, however, as supply and inventory constraints will act as significant headwinds.
- The economic fallout from labor market losses in both the U.S. and California disproportionally affected the lowest wage earners. An unprecedented policy response by the federal and state governments went some way towards dulling the pain.
- This year, the Federal deficit will be on the order of $4 trillion. In two just two years, the United States has issued $7 trillion in new debt—an amount equal to 30% of the nation’s GDP, or $24,000 for every person in the United States under the age of 70. This threatens to be an overstimulation and could have seriously distorting economic consequences in the future.
- U.S. commercial bank deposits mushroomed during the pandemic, increasing by $3 trillion in 2020 compared to 2019 levels.
- Over the past year, the nation’s household savings rate shot up to levels never seen in U.S. history: 25% in the 2nd quarter of 2020 and a still high 13.4% by the end of last year. This was driven by the fiscal stimulus but also by the fact that spending dropped significantly.
View the newly designed The Beacon Outlook here.
Inland Empire Regional Chamber of Commerce Welcomes Hawaii Chamber as Honorary Global Member
Empowering Future Generations: IERCC and Chamber of Commerce Hawaii Forge Partnership for Youth Development
In a landmark meeting that signifies the growing collaboration between regional chambers of commerce, the Inland Empire Regional Chamber of Commerce (IERCC) proudly welcomed the Chamber of Commerce Hawaii as an Honorary Global Member. This momentous occasion was marked by a ceremonial presentation led by Eddy Sumar, MBA, CCE, CICE, a distinguished member and Chair of the Education and Youth Skills Development Liaison at IERCC.
Eddy Sumar, renowned for his passionate advocacy for youth education and skill development, met with Sherry Menor-McNamara, CCE, President & CEO, and Tyler Hunt, Associate Vice President of Membership Services, of the Chamber of Commerce Hawaii. The meeting was not just a formal presentation but also an opportunity to share the innovative approaches IERCC is employing to champion youth development.
In a unique and inspiring gesture, the Chamber of Commerce Hawaii representatives were introduced to IERCC’s youth initiatives through a trilogy of educational books authored by Eddy Sumar himself. These books – “A Treasure Hunt With OTIS,” “The Hidden Dreams,” and “The Cutting Edge” – are a testament to Sumar’s dedication to empowering the youth. Each book addresses critical areas of youth development:
- “A Treasure Hunt With OTIS” provides wisdom to guide young lives.
- “The Hidden Dreams” unlocks the potential of identifying and pursuing youthful aspirations.
- “The Cutting Edge” offers vital insights into understanding credit and financial literacy.
Edward Ornelas, Jr., President & CEO of the Inland Empire Regional Chamber of Commerce, expressed his enthusiasm for this new partnership, stating, “This collaboration with the Chamber of Commerce Hawaii represents a significant step in our ongoing commitment to foster the leaders of tomorrow. By combining our resources and expertise, we can more effectively prepare our youth for the dynamic world they will inherit. Our shared vision for youth development and education is the cornerstone of this partnership.”
The Chamber of Commerce Hawaii expressed its enthusiasm for the collaboration, recognizing the value of the resources provided by IERCC. This partnership is a significant step towards a shared goal of fostering a brighter future for youth through education, skill development, and empowerment.
The Inland Empire Regional Chamber of Commerce is enthusiastically developing plans to launch a summer internship program exclusively for students from the Inland Empire, offering them the opportunity to travel to Hawaii for this enriching experience. This initiative, which stems from the IERCC’s recent collaboration with the Chamber of Commerce Hawaii, is focused on providing Inland Empire students with a unique opportunity to immerse themselves in the diverse business and cultural environment of Hawaii. The program aims to equip these students with invaluable hands-on experience in various industries, enhancing their skills and broadening their perspectives. This visionary approach underscores the IERCC’s dedication to fostering the professional and personal growth of its youth, preparing them for successful careers in an increasingly interconnected world.
The IERCC is committed to continuing these collaborative efforts and looks forward to a fruitful and impactful partnership with the Chamber of Commerce Hawaii, collectively striving to nurture the leaders of tomorrow.
Corona Factory Files Landmark Trade Secret Lawsuit in New Hampshire Federal Court
Leading Private Label Company Alleges Massive Data Breach by SGS North America, Inc., Threatening Millions in Investment and Profits
Amid a surge of corporate theft nationwide, U.S. Continental Marketing, Inc. has initiated trade secret litigation against SGS North America, Inc. alleging misappropriation of proprietary and confidential chemical formulations that may cost U.S. Continental millions of dollars.
The largest private label leather and fabric care company in the world, U.S. Continental operates out of a 100,000 square foot factory in Corona, California, and partners with popular footwear, fashion, and furniture brands such as Birkenstock, Timberland, and Michael Kors to develop a range of products. The company provides commercial packaging solutions as well.
In its complaint filed last week in the U.S. District Court for the District of New Hampshire, U.S. Continental alleges that earlier this year, it spent millions to develop five unique and secret chemical formulations for an unnamed customer for use on branded textiles. Those formulas were sent to SGS North America for independent testing. David Williams, U.S. Continental’s President, explains, “Leading up to its testing, we made very clear to SGS that the confidentiality of any and all information about our formulations was critical. Third parties, and even our customers, could not be privy to our proprietary data and SGS knew that.”
Williams added, “To put a finer point on the sensitivity of the formulations in question, we negotiated an ironclad NDA with SGS, which it signed, promising not to disclose confidential information related to our formulations to anyone without written approval.”
U.S. Continental’s complaint alleges that despite its assurances, SGS twice sent detailed, unredacted testing reports directly to the customer in August, revealing specifics about the chemical formulations SGS promised to keep under wraps.
According to Williams, “By virtue of SGS’s indiscretion, which one of its Vice Presidents cavalierly claimed was a ‘mistake,’ our customer was sent all the information it needed to manufacture essential chemical formulations on its own. That puts at risk the $2 million we invested in R&D, along with another $20 million or so in profits from our manufacturing agreement with the customer. It only gets worse from there if SGS discloses our proprietary information—which it refuses to return—to any others.”
Jeffrey Farrow, a partner at Michelman & Robinson, LLP, which represents U.S. Continental along with local counsel in New Hampshire, says, “It’s beyond crucial that trade secrets, like my client’s chemical formulations, be carefully safeguarded. By failing to do so, SGS breached its NDA—a breach that continues given that the data at issue has yet to be returned despite multiple requests from U.S. Continental. This is simply unacceptable and through this lawsuit, we want SGS to know that its unlawful disclosure of trade secrets, and unlawful retention of them, won’t go unchecked.”
The lawsuit is currently pending and U.S. Continental is awaiting a response from SGS.
Alibaba.com Partners with Inland Empire Regional Chamber of Commerce to Launch California Pavilion
In a landmark initiative, Alibaba.com, a global leader in e-commerce, has announced a strategic partnership with the Inland Empire Regional Chamber of Commerce (IERCC) to bolster business opportunities for Small and Medium-sized Enterprises (SMEs) in California. This historic collaboration is set to unveil the California Pavilion on Alibaba.com, a pioneering platform promoting the “Made in California” brand to a global audience.
Join us for a special event where Mattia Miglio, Director of North America Business Development at Alibaba.com, will introduce the California Pavilion alongside representatives from the IERCC. This digital hub is the first of its kind, designed to connect California’s SMEs with international buyers, importers, and distributors, marking a significant milestone in global business expansion.
This initiative sees the convergence of several key trade associations including the California Trade Alliance, California Hispanic Chamber of Commerce, and Valley Industry & Commerce Association, all coming together to transform the SME landscape in California.
As part of the California Pavilion, members will receive an exclusive membership package offering numerous benefits designed to elevate businesses to new heights. This initiative not only supports business growth but also aligns with Alibaba’s vision of empowering SMEs in the global market.
The Inland Empire Regional Chamber of Commerce stands as a pivotal partner in this venture. Known for its innovative approaches and customized support for businesses, the IERCC plays a crucial role in guiding enterprises in the Inland Empire, from startups to established companies.
“We are thrilled to partner with Alibaba.com in this groundbreaking initiative. The California Pavilion is more than just a digital platform; it’s a beacon of opportunity for small and medium-sized enterprises across California. This collaboration is a testament to our commitment to empowering local businesses, giving them the tools and exposure they need to thrive in the global marketplace. We believe that through this partnership, we can elevate the ‘Made in California’ brand to new heights and open doors for unprecedented growth and success for our members”, stated Edward Ornelas, Jr., President & CEO of the IE Chamber.
We invite businesses to explore the advantages of joining the California Pavilion. Learn how this platform can revolutionize your business prospects and connect you with the global market.
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