06:42 PM PDT on Tuesday, October 5, 2010

The Press-Enterprise

A new economic report paints a bleak picture of Riverside and San Bernardino’s employment prospects stemming from the collapse of the housing market bubble and the loss of 80 percent of the region’s construction jobs.

“Basically the Inland Empire is the Detroit of California, but we build houses instead of cars,” said Marc Weidenmier, associate professor of economics at Claremont McKenna College, which today is set to release its first economic forecast for the Inland region.

The report notes that the depth of the recession was far greater in Inland Southern California than statewide or nationally and the recovery will be long and grueling.

It is predicted that the Inland region, where unemployment most recently was 14.8 percent, will not return to single-digit unemployment until the second half of 2014.

Economic recovery will be stalled, the report said, because so many of the jobs lost in manufacturing and construction will not soon be replaced, and workers coming from these fields will need to be trained for other employment sectors that may rebound more quickly.

“It is necessary for the region’s public officials and business leaders to understand and adapt to this difficult reality,” said Claremont McKenna’s first Inland forecast.

The Inland region’s economy is burdened by a high volume of home foreclosures and vacancies in commercial buildings that discourage additional construction. Its economy also is shackled by a large number of occupied houses that have fallen steeply in value and now are worth less than their mortgages.

People who are unemployed or own homes with negative equity and have high monthly mortgage payments can’t do much to help recharge the local economy with their spending, Weidenmier observed.

The Claremont McKenna report noted that before the recession, household consumption in the region and throughout California was fueled in large part by homeowners who borrowed against burgeoning home equity. As much as a third of new car sales in California were completed with home-equity loans during the housing boom, the report said.

Burdened with mortgages they can’t repay by selling their homes, today’s Inland homeowners are unlikely to move to another part of the country where jobs are more plentiful, although that strategy would help to reduce the number of unemployed in the Inland Empire, said Weidenmier.

The report did point to a few bright spots on the horizon. Because the economy is recovering faster on the coast, it suggested that Inland residents who are out of work might find jobs in Los Angeles, Orange and San Diego counties.

“While it stretches one’s imagination to see high growth rates in the Inland Empire in the near term, it is more plausible to expect such growth in the Greater Los Angeles area,” said the report. “This, in itself, would allow commuters to find jobs and thereby lower Inland Empire unemployment rates.”

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