Outlook for the Ridgecrest and IWV economy in 2021

Outlook for the Ridgecrest and IWV economy in 2021Highlights of the presentation given at the recent Outlook Conference by keynote speaker Mark Schniepp, will be published in several segments. To the reader who is interested in who we are, where we are, where we have been and where we are going, we believe this series will be of significant interest. Editor’s note.


General U.S. Economy

After the first 50 days of 2021, the evidence on the U.S. economy remains mixed. Through December, the economy was losing momentum as new restrictions on businesses were mandated during the winter surge in COVID-19 cases.

The surge appears to have abated and hopefully for good. The recession that gripped the economy last year is over; it ended in the third quarter of 2020. In fact, the risk of the economy falling into another recession over the next 6 months is currently very low.



The fate of the state’s economy is directly linked to the growth of daily coronavirus cases. This is unlike other states like Missouri or Florida which have weathered the ebb and flow of the pandemic but have maintained relatively wide-open economies since late summer.

The California economy has been severely impacted by the shutdowns, and full recovery is not expected this year, despite the current abatement in daily cases and the ongoing distribution of the vaccine.

Currently, the state’s visitor services, event, and restaurant sectors remain largely closed or restricted.

Consequently, nearly half of all labor market declines are epicentered in the leisure and hospitality sector that includes restaurants, hotels, catering and other food services, entertainment, meeting, and recreation services.


The Indian Wells Valley

The region has remarkably weathered the recession caused by the pandemic last March. Where we best and clearly see the economic calamity caused by the pandemic is in the labor markets, especially those sectors which were closed down due to restrictions on business activity imposed by the Governor’s office.

There was a net loss of total employment in the greater Ridgecrest area in 2020, but most of the decline was due to the closures of, or restrictions on hotels, restaurants, other food services, and personal services.

Total employment dropped by only 3 percent and had almost fully recovered by the end of the year. For all of Kern County, the employment decline in April and May was 15 percent. The total Kern County workforce is still off 8 percent from year ago levels in the most recent labor market report.

In Ridgecrest, the professional services, construction, warehousing, and manufacturing industries were initially impacted but have either restored workforce levels or have augmented them.

The construction industry is soaring in Ridgecrest.

More than 90 new permits for single family homes were issued in 2020, the most for any one year during the entire past expansion.

New construction will remain busy this year and into next. Earthquake repair at the base will bring hundreds of construction workers into the area this year. Other projects in town will also require more workers within the next few years, including the Oasis Project and the Marriott Townplace Suites.

Tourism has fully recovered from the spring 2020 period when recreational visitors were virtually non-existent. Death Valley attendance is climbing, and occupancy rates for hotels and motels in the high desert region improved sharply when the shelter-in-place mandate was lifted in late January 2021. That response bodes well for visitor demand in the area for the rest of the ski season and the hiking season thereafter.

Demand for filming locations within the region was interrupted by business shutdowns in California in the spring and early summer months of 2020. Activity resumed in August. The Trona Pinnacles remains a principal location for on-location commercials and videos. While too early to know, film activity appears to be strong with the advent of the new calendar year. Already, permits have been issued or inquiries have been made for 12 on-site projects in January and February 2021.

The median home price in Ridegcrest increased 6.6 percent in 2020, rising to $211,400. And with the lowest mortgage rates on record, existing home sales soared during 2020.


A new risk is the possibility that new variants of the coronavirus are immune to current vaccines. This would cause consumers to turn more cautious, which could occur no matter what, if reports indicate that the new strains are more contagious. More cautious consumers would reduce their spending on services during the first half of this year, lending downside risk to the forecast for both GDP and employment.

I would like to think that the economy will look much better in the second quarter of this year because the first quarter is not looking so great. However, the fact that consumers are being told they must continue to social distance and wear masks after receiving the coronavirus vaccine regimen will likely be further accompanied by some degree of restrictions on business well into the summer months and possibly beyond. While this is not a foregone conclusion, it is a higher risk with increased likelihood if daily case counts do not decline precipitously and remain contained into the year.1

The risk of greater consumer spending this year is higher than the risk of a potential drag on spending due to rising case counts from the new coronavirus variants which would heighten consumer reticence to spend on services. Greater spending occurs because of strong wage growth, an opening economy, and more fiscal stimulus.

The fiscal stimulus appears to be coming. Opening economies are occurring throughout the nation, except in California when more than 90 percent of economic activity in the state is still subject to some form of limitation.

The path of the coronavirus and how effective the vaccine will be are significant wild cards for the economic outlook this year. New, more infectious variants of the virus are racing against the vaccines and the winner will impact confidence, both directly and through the restrictions we expect to see on various types of business activity.

The extent of the recovery in the public’s perception of economic conditions will remain limited until the labor market improves and the number of reported COVID-19 cases falls significantly, enabling the removal of restrictions and restoring the ability to move freely.

An unrestricted economy would likely result in a surge of growth, led by consumer spending, job and income creation, business travel, leisure travel and tourism, and strong demand for public gathering events such as concerts, conferences and sporting events.

Consequently, with the clear abatement of the pandemic, we expect a sharp rebound in the economy, though a return to the normal we knew in 2019 will be delayed until late 2022 or 2023.

This is the first of a series to be published on the economic outlook as delivered by the keynote speaker at the 20-21 Outlook Conference.


The Outlook

With massive repair and reconstruction of facilities underway at China Lake NAS, this activity alone represents a substantial engine of economic growth for the region, and for an extended period of time.

The Defense budget outlook for normal base operations in the U.S. does not suggest any departure from the current trend in place, providing continued stability of operations at China Lake.

As restrictions are eased in California this year, more travel will be unleashed. Visitors should inundate all regions of California including the Eastern Sierra. The demand for onsite film shoots is also likely to surge, having been postponed by on-and-off business shutdowns for most of 2020.

The forecast for the local economy is quite favorable. It is likely that the Indian Wells Valley economy will return to a more normally functioning environment sooner than the rest of Kern County or California.


Eastern Kern County

This area of the County is dominated by Department of Defense activities, aerospace testing and exploration research, massive development of energy resources, and tourism.

Ridgecrest is in the northeastern most corner of the broader Eastern Kern County region. Historically the location of the principal borax mining in the nation, today the U.S. Navy and Air Force are the key economic engines in the region, operating the large and strategic facilities of China Lake Naval Air Station and Edwards Air Force Base. These two facilities employ over 15,000 direct workers and create thousands of indirect jobs as a result of their economic reach.

The Mojave Air and Space Port is a principal industrial park and industrial center for Eastern Kern County. Over 1,000 workers in 60 companies are engaged in aerospace design, test, and evaluation, wind energy, industrial manufacturing, and airliner storage.

Pictured: Mark Schniepp, PhD.

Story First Published: 2021-03-05