Since we attended not one but two economic forecast events last week (one hosted by Claremont McKenna and one hosted by the Inland Empire Economic Partnership), we thought it made sense to share the take-aways:
- The economy has never looked better especially in the Inland Empire – All the signs point up. Even though folks are concerned about when the other shoe will drop, from an economic point-of-view, all appears positive.
- Jobs at record levels with the Inland Empire leading California – We are virtually at zero unemployment. Perhaps we need to be concerned about retaining our top talent!
- Tax law is a boost for manufacturers! The Claremont McKenna economic forecast showed the progression and the definite boost from the tax law. Not only is it increasing profit but it is also encouraging investment. It is likely to lead to interest rate increases as the Fed meets in 2018.
- The Inland Empire is on fire! First, did you know that just the Inland Empire is larger than 25 of the 50 states, let alone if we added the rest of Southern California? It is leading California in many respects – job growth for one. And it is an attractive place to be in business, surrounded by tons of customers/ consumers, lower wages on average, more space availability at lower prices than Los Angeles and Orange County, access to a growing Ontario airport (with a new international direct flight to China soon) and with significant advances in technology and access to skills. We believe the IE is the place to be in manufacturing and distribution today! Amazon agrees since they have 21 of their 26 million square feet in Southern CA in the IE!
- And a few cautionary comments… There was a panel of CEO’s at the Claremont McKenna economic forecast that spoke about the California minimum wage hikes. These are definitely not popular with manufacturers and distributors who utilize talent in the lower pay scales – challenging to compete with other states of course. At the IEEP, there was talk about the pace of automation and technology. From a profit, customer and competitive perspective, there are lots of advantages. In manufacturing, this is already prevalent and the impacts aren’t expected to be dramatically different; however, in distribution, they are just getting started. Although there are several positive points, it will be disruptive in terms of jobs and there will be a need to redeploy these blue collar employees. Lastly, trade can certainly impact the IE – stay tuned. In talking with two IEEP manufacturers, one said the tariffs helped, and the other said it could go well or really, really poorly depending on a few factors.