John Husing, Ph.D. Economics & Politics, Inc. Chief Economist, IEEP

1. So. California Prosperity . . . John Husing, Ph.D. Economics & Politics, Inc. Chief Economist, IEEP

2. U.S. Jobs Still Setting Records

3. 17.9% Add Potential Workers: Given Up Or Part Time 10.1% 7.5% 3.9%

4. Inflation Worry 3.6% 1.9%

5. Interest Rates: 2 More Short Term Rate Increases 4.48% 2.69%

6. Yield Curve: Potential Recession Predictor Recession: 2020 Likelihood Rising 2 Year to 10 Year 0.18%

8. California Job Gains/Losses

9. Southern California

10. 9 Southern County Economy Gaining Strength! 2008-2010 Lost -759,000 Jobs 2011-2018e Add +1,540,210 Jobs 8.4% Above 2007 Level

11. Job Quality: Split

12. Unemployment Rates

13. Gold Mine Theory Secondary Tier Primary Tier

14. Industrial Market

15. Logistics

16. E-Commerce 14.5%

17. Port Container VolumesRecord Levels

18. Logistics Powerful Job Growth • 2011-2017 • 11.7% of New Jobs

19. Manufacturing

20. U.S./CA Manufacturing Job Growth

21. CA Electrical Cost +74.6% +83.5% +135.4%

22. Natural Gas A Bargain

23. Marijuana?

24. Manufacturing Jobs • 2011-2017 • 0.4% of Job Growth

25. Construction Locations

26. Net Industrial Absorption 20.2 million

27. Industrial Rates & Vacancies Lease Rates Per Square Foot Per Month, Sep-2018 Central Valley $0.42 5.3% Inland Empire $0.56 3.6% Ventura $0.72 3.0% Los Angeles $0.84 1.1% Orange $0.92 1.5% San Diego $0.94 4.1% Source: CB Richard Ellis

28. Residential Market

29. Sales Volumes, First Nine Months 2018 2017 Change % Chg.

30. Residential Prices

31. Share of Local Population Can Afford the Median SFR Home

32. Construction Jobs • 2011-2017 • 10.3% of Job Growth

33. Office Market

34. Health Care

35. Health Care Jobs: Continuous Growth • 2011-2017 • 10.8% of Job Growth

36. ACA Impact Health Care Demand & Quality of Life -60% Drop in Uninsured

37. High Paying Sectors

38. Professionals & Mgmt., Higher Ed., Mining Utilities, Information & Government Group Slowly Adding Jobs 2011-2016 12.6% of Growth

39. BA or Higher, 2017

40. Net Office Space Absorption, 2018 ytd

41. Office Rates & Vacancies Lease Rates Per Square Foot Per Month, Sep-2018 Central Valley $1.45 8.3% Inland Empire $1.96 9.3% Ventura $2.09 13.5% Orange $2.94 10.9% San Diego $2.96 10.2% Los Angeles $3.58 13.3% Source: CB Richard Ellis

42. Office Space Construction, Sept.-2018 Market Hurt by E-Commerce, Low Govt Revenues

43. Retail Market

44. Low Paying Job GrowthRetail, Consumer & Bus. Services, Hotel, Eat & DrinkAmusement, Agriculture, Employment Agency 2011-2017 44.6% of Job Growth

45. Net Retail Space Absorption

46. Retail Lease Rates & Vacancies Lease Rates Per Square Foot Per Month, Sep-2018 Inland Empire $2.05 8.5% Ventura $2.53 6.2% Orange $2.40 3.3% San Diego $2.44 2.4% Los Angeles $2.48 4.7% Source: CB Richard Ellis

47. Retail Space Under Construction

48. Summary U.S. Economy Humming Recession in 2020 A Growing Possibility Southern California Economy 8.4% In Jobs Above 2007 Industrial Real Estate Soaring … Particularly Inland Resident Real Estate Restrained By Regulation Office Real Estate Moderate Performance E-Commerce an Issue Retail Real Estate Under Strain By E-Commerce Except Restaurants

49. www.johnhusing.com