Construction off by 19 percent
Joe Nelson, Staff Writer
Created: 02/28/2011 09:17:48 PM PST

Total economic output in the Inland Empire dropped 2.8 percent in 2009 – according to the latest report by the Commerce Department’s Bureau of Economic Analysis.

Construction and mining were among the hardest hit industries, declining in gross domestic product by 19 and 24 percent, respectively, in 2009 as opposed to the previous year.

The construction trade was at its lowest level since 2003, and mining was at its lowest since 2004. Economic output in the manufacturing sector in San Bernardino and Riverside counties dropped by a total of 8 percent in 2009 over 2008, according to the BEA.

A stunted housing market, which drives construction and impacts the local mining companies that produce cement for local
construction activity, are all factors affecting the dwindling output, experts say.

“2009 was, of course, the worst year of this downturn,” said economist John Husing.

The recession that began in 2008 dug into the national and local economies, slowing construction, international trade and warehouse manufacturing and distribution, Husing said.

Commerce Department numbers show that the transportation and warehousing sector took the softest blow, declining 1.7 percent in 2009 over 2008.

Husing said the slowing of cargo in the ports of Los Angeles and Long Beach affected the movement of goods through the Inland Empire, but was actually up in 2010 due to an uptick in international trade.

“We had the biggest one-year increase on two-way trade through the ports in U.S. history, and that’s going to show up when the numbers come out next year. So that will be a growth area for us,” Husing said.

Manufacturing and construction, on the other hand, will remain stagnant until the housing market rebounds, but the Inland Empire will likely see a marginal increase in construction activity in 2011 the industrial market, Husing said.

Nationally, the U.S. GDP by metropolitan area declined in 292 of 366 (80 percent) metropolitan statistical areas, led by national declines in durable-good manufacturing, construction, and professional and business services, according to a BEA news release.

George Huang, an economist for the San Bernardino County Economic Development Agency, said it will likely be some time before the office building and residential housing markets show any significant growth.

“Consumption is basically dead in the water. There’s an oversupply in both residential and office buildings,” Huang said.

Something will likely get built, but nowhere near the levels seen between 2005 and 2007, Huang said.

In 2010, the construction industry lost a total of 5,900 jobs. An abundance of foreclosed homes, properties listed on short sale and bank-owned properties has all contributed to an over-supply of housing stock, Huang said.

Another wrench in the pile, said Huang, are stringent environmental laws, mainly A.B. 32, which are changing the way companies operate as they grapple with meeting greenhouse gas emissions laws. Manufacturers may now be hesitant to expand operations, partly because of uncertainty surrounding A.B. 32’s implementation.

Mining companies that produce aggregate for cement, which feeds construction activity, are a good example, said Huang.

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