Last week, business leaders, elected officials, and economic development professionals gathered at Wilson Creek Winery for the 2026 Southwest California Economic Forecast. Hosted by the Temecula Valley Chamber of Commerce and regional partners, the event provided valuable insight into the economic trends shaping Southwest Riverside County and what business leaders should be watching in the months ahead.

The overall message was encouraging: our region remains one of the fastest-growing and most economically resilient areas in California. While challenges exist, particularly around labor costs, consumer spending, and regulation, significant opportunities continue to emerge across retail, tourism, healthcare, manufacturing, and professional services.

Southwest Riverside County Continues to Grow

Southwest Riverside County is now home to approximately 445,000 residents and continues to grow at an annual rate of 1.3%. The region is characterized by stable households, strong homeownership, and increasing incomes.

Some key indicators include:

• 77% of housing units are owner-occupied.
• Average household size is 3.1 people.
• The majority of residents are employed in white-collar professions.
• Major employment sectors include business services, finance, healthcare, and professional occupations.

Speakers emphasized that our population is highly attractive to investors and retailers because residents tend to have strong purchasing power, are community-oriented, and carefully research purchasing decisions.

More Than $1 Billion in Spending Is Leaving the Region

One of the most significant findings presented by Matthew Tate of Capital Rivers Connect was the amount of retail spending that currently leaves Southwest Riverside County. While the region performs exceptionally well in categories such as general merchandise, clothing, and warehouse clubs, approximately $1.19 billion in annual consumer spending is still occurring outside the region.

The largest opportunities include:

1. Motor vehicles and auto parts: $506 million in leakage
2. Home and garden products: $364 million in leakage
3. Additional retail categories where local demand exceeds local supply

For business owners and investors, this represents a substantial opportunity. Companies that can meet unmet consumer demand locally may find significant room for growth.

Consumers Continue to Prioritize Experiences

A recurring theme throughout the forecast was the growing importance of experience-based spending. Consumers continue to seek destinations that combine shopping, dining, entertainment, recreation, and convenience. Experts noted that successful businesses are increasingly creating experiences rather than simply offering products. This trend extends beyond retail and hospitality and is influencing customer expectations across nearly every industry.

Restaurant Industry Faces Challenges but Opportunities Remain

Chris Duggan of the California Restaurant Association provided an update on the food and beverage industry.

California's restaurant industry remains a major economic driver, generating approximately $220 billion annually and supporting 1.8 million jobs. However, operators continue to face rising labor costs, increasing food prices, workforce shortages, and regulatory pressures.

Additional trends include:

• 75% of restaurants report flat or declining customer traffic.
• Consumers remain highly price conscious.
• Younger consumers increasingly prefer app-based ordering and fast-casual experiences.
• Demand continues to grow for health-focused menus, local sourcing, and entertainment-driven dining concepts.

Despite these challenges, the region still has more than $364 million in food and beverage opportunities available for businesses that adapt to changing consumer preferences. Technology, operational efficiency, and customer experience were repeatedly identified as key factors for long-term success.

Tourism Remains a Major Economic Engine

John Kelliher of Visit Temecula Valley and Grapeline Wine Tours highlighted tourism's growing impact on the local economy.

Tourism now generates approximately $1.1 billion in annual visitor spending in Temecula alone. According to the data presented, one out of every seven dollars spent locally comes from visitors.

Additional tourism indicators include:

• Average daily hotel room rates exceed $314 per night.
• Visitors primarily originate from Southern California, but national visitation continues to grow.
• Tourism supports local restaurants, wineries, attractions, retail businesses, and community amenities.

Tourism leaders also noted several challenges, including economic uncertainty, reduced international travel, and declining wine consumption nationwide. However, the long-term outlook remains positive. Regional organizations are increasingly focused on expanding tourism beyond wine country by promoting youth sports, outdoor recreation, entertainment, and family-friendly experiences.

Regional Cities Continue to Invest in Growth

City leaders from Temecula, Murrieta, Menifee, Wildomar, and Lake Elsinore shared updates on major projects and investments occurring throughout Southwest Riverside County.

Several themes emerged:

Temecula: Temecula continues to strengthen its position as the region's economic hub through investments in life sciences, manufacturing, professional services, transportation infrastructure, and entrepreneurship. The city is also attracting unique retail, dining, and entertainment concepts while continuing to outperform expectations at the Promenade Temecula mall.

Murrieta: Murrieta is experiencing strong growth in healthcare, hospitality, and innovation. Eight hotels are currently in the development pipeline, major retail projects are advancing, and the city continues to attract startup companies through its biotechnology incubator programs.

Menifee: Menifee remains one of California's fastest-growing cities and was highlighted for its income growth, business-friendly environment, and substantial retail opportunities. The city reported approximately $2.2 billion in retail leakage, representing significant future investment potential.

Lake Elsinore: Lake Elsinore is advancing its Dream Extreme 2040 vision through major investments in tourism, entertainment, hospitality, sports facilities, waterfront improvements, and downtown revitalization.

Wildomar: Wildomar continues to experience steady growth with new hotels, healthcare investments, retail development, and long-term planning efforts designed to support future economic expansion.

What Business Leaders Should Be Watching

The strongest message from this year's forecast was that Southwest Riverside County continues to outperform many regions across California.

While businesses should remain mindful of inflationary pressures, labor challenges, regulatory costs, and shifting consumer behaviors, the region's fundamentals remain strong:

• Population growth continues.
• Household incomes are increasing.
• Tourism remains healthy.
• Major infrastructure projects are moving forward.
• Significant retail and business opportunities remain untapped.

For local business leaders, success will likely come from focusing on customer experience, embracing technology, identifying unmet market demand, and staying engaged with the economic development efforts occurring throughout the region. The future of Southwest Riverside County remains bright, and businesses that position themselves to meet the changing needs of residents and visitors will be well positioned for growth in the years ahead.