Evaluating the Trade War's Impact on the IE

Thankfully, the impact so far has been limited

As I wrote about last week, the Inland Empire's labor force became especially dependent on logistics during the pandemic. The share of the workforce in this sector has steadily trended downward since then, and may even move further downward over the coming months, as employment in the Public Sector (local government) and Education and Health Services, among others, are increasing.

Still, the region remains heavily dependent on logistics and trade. How are the recent developments in international trade affecting the IE labor market? One way to answer this question is to compare us to Los Angeles and San Diego. In March 2025, 26.5% of nonfarm employment in the IE was in Trade, Transportation, and Utilities - the broad sector which includes logistics. This compares to 14.1% in San Diego metro area and 17.6% in Los Angeles. Thus, if trade fluctuations are especially affecting IE workers, we would expect to see more significant changes in the unemployment rate out here, compared to San Diego or LA.

The good news is that we have seen limited real-time impact on the IE labor market. All three areas’ unemployment rates have trended downward since last summer, and the indices are largely coincident. There was a slight upward movement in the IE unemployment rate in January 2025 that wasn’t seen in LA (though it was seen in SD), but the patterns have returned to coincidence since then.

This chart above compares year-over-year change in the unemployment rate by these metro areas. This helps control for seasonal factors by looking at what the unemployment rate was exactly one year ago in the same month. Again, the IE has seen a slight increase, but this has actually been smaller than what we saw in LA.