Leading Indicators Down Sharply in April

	Index of Leading Economic Indicators  The index for San Diego County that includes the components listed below (April)  Source: University of San Diego	- 1.4 %
	Building Permits  Residential units authorized by building permits in San Diego County (April)  Source: Construction Industry Research Board	- 0.62%
	Unemployment Insurance  Initial claims for unemployment insurance in San Diego County, inverted (April)  Source: Employment Development Department	- 1.76%
	Stock Prices  San Diego Stock Exchange Index (April)  Source: San Diego Daily Transcript	- 1.83%
	Consumer Confidence  An index of consumer confidence in San Diego County (April)  Source: San Diego Union-Tribune	- 3.08%
	Help Wanted Advertising  An index of help wanted advertising in the San Diego Union-Tribune (April)  Source: Greater San Diego Chamber of Commerce	- 1.23%
	National Economy  Index of Leading Economic Indicators (April)  Source: The Conference Board	+ 0.17%

April's decline in the USD Index of Leading Economic Indicators extended the string of consecutive declining or unchanged months to eleven. It was also the second sharp drop in a row for the Index. The decrease continues to be broad and appears to be deepening, with four of the six components down significant amounts. The summer months are likely to prove crucial to the health of San Diego's economy. Questions about the reliability of electricity, the impact on high gasoline prices on tourism and consumer spending, and the continued volatility of the stock market will likely be the most significant factors affecting the local economy in the months ahead. Looming in the background are concerns about the health of the national economy. The outlook continues to be for weakness in San Diego, although the local economy is expected to outperform the state and national economies.

Highlights: Despite lower interest rates and steady housing demand, residential units authorized by building permits continue to lag the pace set in 2000. The number of units authorized is on a pace to just top the 15,000 mark for 2001. . . Just two months ago, both the labor market variables were positive. Now, both are substantially negative. On a seasonally adjusted basis, initial claims for unemployment insurance are at their highest level since September 1999, indicating some deterioration in terms of job losses.　.　. Meanwhile, help wanted advertising also dropped during the month, a sign that hiring plans are softening. Help wanted advertising in April was nearly 25% lower than during the same month one year ago. . . Despite the negatives on both sides of the labor market, the county unemployment rate is still below 3% at 2.7% for May. . . Local stock prices have now fallen for eleven months in a row. . . April's decline in consumer confidence is the largest monthly decrease for that component since it has been calculated. . . The increase in the national Index of Leading Economic Indicators supports the view of many economists that the national economy may not even suffer one negative quarter of growth, let alone the two negative quarters that would constitute a recession. While other economists are more pessimistic, it is possible that the aggressive actions of the Federal Reserve to lower interest rates, particularly the two cuts in January, may have forestalled a recession at the national level.

April's decrease puts the Index of Leading Economic Indicators for San Diego County at 142.6, down from March's reading of 144.6. An upward revision in the national Index of Leading Economic Indicators caused the previously reported change of -1.2% for March to be revised upward to -1.1%. The fluctuations of the Index of Leading Economic Indicators for San Diego County for the last year are given below:

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