To say that the Riverside-San Bernardino economy has been sideswiped by the collapse of the sub-prime housing bubble would be a gross understatement.

The city has lost almost 80,000 jobs over the past 12 months and currrent has the dubious distinction of having the second- highest unemployment rate (12.2%) among the 50 largest metro areas in the U.S.

It is clear that Riverside-San Bernardino has been hit head on by the recession. Over the past year, housing demand has all but evaporated, pushing existing housing prices down by 38% year over year. As a result, residential building permits have fallen by 55%. The drop in residential permits has, in turn, led to a 23% year-over-year drop in construction employment.

While the the drop in housing demand has had a direct negative impact on construction employment, it has also indirectly contributed to a weakening in house-related retail employment and a decline in employment in financial services (-7.5%) and professional and business services (-6.4%).

According to the Los Angeles Economic Development Corporation Kyser Centre for Economic Research, housing activity in Riverside San Bernardino will continue to contract into 2010, due to a persistently high level of mortgage foreclosures.

Moreover, a further pullback in international trade will depress industrial building activity in the area over the near term.

According to the latest Manpower Employment Outlook Survey, most Riverside-San Bernardino employers have weak near-term hiring plans.

Only three sectors — Transportation and Utilities, Information Services and Leisure and Hospitality — plan to add staff. Staffing levels are expected to remain unchanged in construction and durable goods manufacturing.

While the prospects for Riverside-San Bernardino are likely to remain extremely weak over the near term, the fact that the Purchasing Managers Index(PMI) for the metro area increased from 34.7 in February to 45.2 in March is a very tentative indication that the metropolitan area's economic health is showing signs of stabilizing.