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Leading Economic Indicators Up in December

Note: A problem with the data delayed the release of this report.  The tentative release date for next month's report is February 25.

February 11, 2010 -- The University of San Diego's Index of Leading Economic Indicators for San Diego County rose 0.7 percent in December. For the first time since April 2004, all six of the components in the USD Index were up in the month. The advance was led by a sharp increase in the outlook for the national economy. Four components - - building permits, initial claims for unemployment insurance, local stock prices, and help wanted advertising - - were up moderately, while local local consumer confidence was up but virtually unchanged. With a revision to last month’s unchanged reading, the USD Index has now risen for nine consecutive months.

	Index of Leading Economic Indicators  The index for San Diego County that includes the components listed below (December)  Source: University of San Diego	+ 0.7 %
	Building Permits  Residential units authorized by building permits in San Diego County (December)  Source: Construction Industry Research Board	+ 0.65%
	Unemployment Insurance  Initial claims for unemployment insurance in San Diego County, inverted, estimated  (December)  Source: Employment Development Department	+ 0.22%
	Stock Prices  San Diego Stock Exchange Index (December)  Source: San Diego Daily Transcript	+ 0.39%
	Consumer Confidence  An index of consumer confidence in San Diego County (December)  Source: San Diego Union-Tribune	+ 0.02%
	Help Wanted Advertising  An index of online help wanted advertising in San Diego (December)  Source: Monster Worldwide	+ 0.38%
	National Economy  Index of Leading Economic Indicators (December)  Source: The Conference Board	+ 2.25%

With December’s advance in the USD Index, the outlook continues to be positive for the local economy. There are signs of recovery in some sectors of the economy, such as housing, where prices are up more the eight percent from the low and where there has been a pickup in sales. Continued strength is expected in the housing market due to low interest rates, federal incentives for first-time and even move-up buyers, and the rebounding economy. On the downside, there is likely to be another wave of foreclosures as adjustable rate mortgages readjust and job losses take their toll. Still, a gain in the single digit percentage range is expected for 2010.

Highlights: Although the year closed with a positive month, 2009 was the worst year on record for residential units authorized by building permits. There were fewer than 3,000 units authorized for the entire year, which was down 42 percent from the previous low set in 2008. While single-family units authorized were down 24 percent, the biggest damage was in multi-family units authorized, which were down 57 percent. . . There continue to be signs of improvement in the labor market. Initial claims for unemployment insurance fell, which is a positive for the Index and an indication that the pace of job loss is slowing. There is also good news on the hiring front as help wanted advertising registered a second consecutive monthly gain after having fallen for 38 months in a row. The net result was that the local unemployment rate was 10.1 percent in December, which was down from the 10.6 percent rate in November but still the seventh month in a row in which the local unemployment rate was above 10 percent. Employment fell by more than 43,000 compared to the same month in 2008. . . After leading the USD Index to the upside since March, the trend in local consumer confidence is beginning to flatten out. The component ended the year up nearly 49 percent and up 71 percent from the February low. . . Local stock prices ended a three month losing streak to end the year on a positive note. Local stocks rose nearly 28 percent in 2009. . . The national Index of Leading Economic Indicators matched the local index by advancing for the ninth month in a row. Gross Domestic Product grew at a 5.7 percent rate for the fourth quarter, which was the highest growth rate in six years (since the third quarter of 2003).

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