Leading Indicators Down in July

	Index of Leading Economic Indicators  The index for San Diego County that includes the components listed below (July)  Source: University of San Diego	- 0.8 %
	Building Permits  Residential units authorized by building permits in San Diego County (July)  Source: Construction Industry Research Board	- 1.25%
	Unemployment Insurance  Initial claims for unemployment insurance in San Diego County, inverted (July)  Source: Employment Development Department	- 2.38%
	Stock Prices  San Diego Stock Exchange Index (July)  Source: San Diego Daily Transcript	- 1.56%
	Consumer Confidence  An index of consumer confidence in San Diego County (July)  Source: San Diego Union-Tribune	- 0.06%
	Help Wanted Advertising  An index of help wanted advertising in the San Diego Union-Tribune (July)  Source: Greater San Diego Chamber of Commerce	+ 1.33%
	National Economy  Index of Leading Economic Indicators (July)  Source: The Conference Board	- 0.65%

July’s decrease was the fourth in a row for the USD Index of Leading Economic Indicators, and was the largest one-month decline since September 2001. The breadth of the decline was decidedly negative, with five of the components declining against only one advancing. A look at the chart on the back showing the performance of the Index shows that a "W" or double dip pattern developing. The result is that the local economy will likely remain sluggish through the end of 2002, as manifested by an unemployment rate that will hover in the high 3%, low 4% range. Key to a turnaround in the local economy will be the performance of the national economy and geopolitical developments with regards to military action against Iraq.

Highlights: Despite soaring housing prices and rents, residential construction activity as measured by residential units authorized by building permits remain weak. Residential units authorized are on a pace to hit 13,500 for all of 2002, down from the 15,650 units authorized in 2001. The big problem is in multi-family housing, where only 62 units were authorized in July, compared to a monthly average of over 500 units for the last three and a half years. . . The labor market components continue to move in opposite directions. While initial claims for unemployment insurance were negative for the fifth straight month, help wanted advertising had its biggest one-month increase in more than two years. The combination led to a jump in the unemployment rate in San Diego County to 4.4% in July, which is the highest level in nearly five years (September 1997). . . Local stock prices fell in July along with the rest of the equity markets as news of corporate scandals battered share prices. . . The weak stock markets, negative news about corporate behavior, and worries about an impending conflict with Iraq took its toll on local consumer confidence, which dropped after seven months of relatively strong gains. This is a key development as strong consumer spending has been credited with bolstering an otherwise lackluster economy. . . The national Index of Leading Economic Indicators declined for the second month in a row as economists remain concerned about the strength of an economic recovery at the national level. Preliminary estimates of second quarter Gross Domestic Product (GDP) growth came in at a relatively weak 1.1% annual rate, down from the revised 5.0% growth rate of the first quarter.

July's decrease puts the Index of Leading Economic Indicators for San Diego County at 136.5, down from June’s reading of 137.5. The values for the Index of Leading Economic Indicators for San Diego County for the last year are given below:

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