How the Inland Empire is finding stability and strength in a changing economy
As Inland Empire entrepreneurs wrap up 2025, the region’s economic outlook is one of cautious optimism. After a slow start to the year, the national economy regained its footing. According to the U.S. Bureau of Economic Analysis, U.S. GDP slipped slightly in the first quarter but rebounded with 3.8% growth in the second. The recovery has been tempered by persistent inflation, with core PCE prices at 2.91%, slightly above the Federal Reserve’s target of 2%.
This combination of renewed growth and lingering inflation is shaping conditions across the Inland Empire. Higher borrowing costs are slowing investment, yet strong consumer demand continues to support housing, healthcare, and logistics. With nearly 4.7 million residents, the region remains one of the country’s largest metro economies. For small businesses, the key will be balancing optimism with discipline, planning carefully, managing costs, and staying flexible as the economy adjusts to a more measured pace of growth.
Regional Industry and Labor Market Trends
Logistics is slowing, and the ripple effects are being felt.
Warehousing and transportation, long the Inland Empire’s strongest growth engine, have cooled significantly. According to Community Forward Redlands, the region lost about 26,000 logistics jobs during the first half of 2025, erasing much of the sector’s growth from the past five years. Cargo traffic through the ports of Los Angeles and Long Beach fell about 4 to 5 percent year over year, and warehouse vacancies rose roughly 7%. Because so much of the region’s economy depends on goods movement, these losses are reverberating through construction, manufacturing, and local service providers.
Construction and housing are helping to stabilize the economy.
Even with logistics slowing, construction continues to support regional employment. The sector added about 1,700 jobs in June, driven by ongoing demand for housing. The California Association of Realtors reports the median price of an Inland Empire single-family home reached $609,230 in March 2025, up 2.5% from a year earlier. While higher interest rates have cooled some activity, builders and suppliers are still seeing steady orders, helping offset losses in other industries.
Service sectors are picking up momentum.
Public-sector hiring has remained strong, with more than 4,000 new government positions added over the summer. Health care also continues to expand, adding about 1,800 jobs. These gains show how service-based industries are becoming more central to the Inland Empire’s economic balance as logistics and manufacturing contract.
Manufacturing is volatile and demands caution.
The region’s industrial base remains unpredictable. The Institute of Applied Research and Policy Analysis at Cal State San Bernardino reported a Purchasing Managers Index (PMI) of 42.5 in December 2024, signaling contraction. The index then rose above 65 in early 2025 before dropping below 50 by midyear and settling in the mid-40s by late summer. These swings suggest uncertainty in production and employer hesitation to invest or expand.
Manufacturing data from the same institute shows that production sentiment improved early in 2025, though recent readings suggest continued volatility. The logistics sector also remains under pressure from slower e-commerce activity and shifting trade flows. Even so, diversification into advanced manufacturing, clean energy, and professional services offers a path for renewed growth and reflects the region’s gradual move toward a more balanced economic base
The labor market reflects these crosscurrents.
Unemployment in the Inland Empire held at 5.6% in August 2025, according to IEGO’s Labor Market Brief, slightly higher than California’s 5.5% and above the national rate of 4.3%. The regional labor force grew by about 10,700 people, showing more residents reentering the job market. However, many of these workers are shifting into health care, public administration, and retail as opportunities in logistics and manufacturing decline.
Overall, the Inland Empire economy remains resilient but uneven.
The slowdown in logistics and manufacturing is being countered by growth in housing, health care, and government employment. This mix reflects a region in transition, shifting from an economy centered on goods movement to one that is more diversified across services and housing.
Small Business Confidence and Challenges
National small-business sentiment reflects that same cautious optimism. The U.S. Chamber of Commerce and MetLife Small Business Index reached 72.0 in the third quarter of 2025, its highest reading on record. About 40% of business owners rated the national economy as good, and 46% said the same about their local economy, showing stronger confidence in community-level conditions.
Despite that optimism, cost pressures remain the leading concern. 46% of business owners identified inflation as their biggest challenge, while 34% pointed to rising costs of goods and materials. Only 31% said they are very comfortable with their cash flow. This tension between opportunity and expense is the defining theme for Inland Empire entrepreneurs. For small business owners, adaptability and strategic planning will be key to thriving as the Inland Empire finds its new balance.
Access to Capital and Local Support
Credit conditions remain tight even though they have eased somewhat compared with 2024. The Federal Reserve’s July 2025 Senior Loan Officer Opinion Survey found that banks reported tighter lending standards and weaker demand for commercial and industrial loans and indicated that lending standards were on the tighter end of their historical range but had eased relative to July 2024. Despite tighter standards, national small‑business lending has been robust: the Small Business Administration ended fiscal year 2025 with about 84,400 guaranteed loans worth nearly $45 billion, the strongest year on record.
Local programs continue to help fill financing gaps for entrepreneurs who may not qualify through traditional banks. Across the Inland Empire, several city and regional initiatives offer small grants, digital marketing support, or low-interest loans tied to business training programs. Organizations such as AmPac Business Capital, along with local SBDCs, SCORE chapters, and women’s business centers, provide education, technical assistance, and access to SBA and direct-loan programs that help business owners secure the capital they need to grow. Business owners can also explore AmPac’s Access to Capital Resource Guide, which compiles regional and national funding sources.
Outlook for Q3–Q4 2025
The Inland Empire’s economy is shifting into a steadier pace. Growth is expected to ease to around 1% by year-end, down from about 3% in 2024, as high borrowing costs continue to slow investment and hiring. Even with these constraints, strong consumer demand for housing, healthcare, and essential services continues to sustain local momentum.
Manufacturing remains uneven, and logistics still faces challenges from weaker trade flows. At the same time, emerging activity in advanced manufacturing, clean energy, and professional services is beginning to shape a more diversified future for the region.
In this environment, small businesses should monitor cash flow and operating costs carefully, and consider locking in fixed-rate financing to protect against future rate increases. Programs such as SBA 504 loans can offer the stability of long-term fixed rates and help preserve working capital. Entrepreneurs can also strengthen their position by participating in training opportunities, advisory programs, and local grant initiatives designed to build resilience and expand capacity.
As a certified mission-based lender, AmPac Business Capital continues to support Inland Empire business owners through access to affordable capital, education, and partnership programs that encourage sustainable growth. Building cash reserves and maintaining flexibility will remain essential as the region adjusts to slower growth and ongoing uncertainty.