Leading Economic Indicators (January - March 2003)

April 30, 2003 -- The recent receipt of data allow the University of San Diego =s Index of Leading Economic Indicators for San Diego County to be brought up to date through the end of March.  It is uncertain whether this timeliness can be maintained in the future.   

The USD Index of Leading Economic Indicators was down in each month from January to March of 2003.  The Index has now fall for 12 consecutive months, although the most recent declines have not been as severe as those in the middle of 2002.  The outlook for the local economy remains unchanged from last months report: Weak job growth for much of 2003, with the unemployment rate likely to remain above 4% for the rest of the year.  One positive development is the rapid end to the conflict in Iraq , which will allow for the quick return of local military personnel.  However, that is not likely to be enough to offset the negatives of a weak national economy and the adverse impact of the huge state budget deficit.

The USD Index of Leading Economic Indicators is published under the auspices of the School of Business Administration's Real Estate Institute. For more information about the Institute, please visit its Website at http://realestate.sandiego.edu
    January February March
Index of Leading Economic Indicators 
The index for San Diego County that includes the components listed below
Source: University of San Diego
- 0.2% - 0.3% - 0.2%
Building Permits 
Residential units authorized by building permits in San Diego County 
Source: Construction Industry Research Board 
+ 0.40% + 2.38% + 2.00%
Unemployment Insurance 
Initial claims for unemployment insurance in San Diego County, inverted  
Source: Employment Development Department
+ 1.72% + 1.11% + 1.33%
Stock Prices 
San Diego Stock Exchange Index
Source: San Diego Daily Transcript 
+ 0.02% - 0.95% + 0.00%
Consumer Confidence 
An index of consumer confidence in San Diego County
Source: San Diego Union-Tribune
- 2.58% - 2.94% - 3.01%
Help Wanted Advertising 
An index of help wanted advertising in the San Diego Union-Tribune  
Source: Greater San Diego Chamber of Commerce 
- 0.87% - 0.58% - 0.89%
National Economy 
Index of Leading Economic Indicators
Source: The Conference Board 
+ 0.17% - 1.00% - 0.34%

Highlights: Residential units authorized by building permits were up a whopping 45% in the first quarter of 2003 compared to the same period in 2002.  While single-family units authorized showed a good gain (+21%) for the quarter, most of the surge came on the multifamily side, with units authorized up 74% for the quarter.  The 3,105 multifamily units authorized was the most in the first quarter since 1990. . . The labor market variables remain mixed.  Initial claims for unemployment insurance are down significantly compared to high levels seen in 2002, which indicates that the rate of job loss in San Diego has slowed considerably.  However, hiring plans remain weak, with help wanted advertising now down for seven straight months.  The result of this combination is a county unemployment rate of 4.3% for March, which is much better than many metropolitan areas but much higher than the sub-3% unemployment rates that were seen just two years ago. . . Local stock prices remain in a narrow trading range along with the rest of the stock market. . . Consumer confidence remains the big drag on the Index.  Local consumer confidence has fallen about 40% from its peak in April 2002. . . The outlook for the national economy is cloudy, with the national Index of Leading Economic Indicators falling in the last two months.  While the quick end to the conflict with Iraq limited damage to national consumer confidence, consumers remain wary.   One potential area of concern for the national economy is the impact of the Severe Acute Respiratory Syndrome (SARS) epidemic.  With Asia the only region of the world showing good growth, any economic downturn there caused by the disease would in turn hamper the recovery of the U.S. economy.  A slowdown would hurt the large volume of U.S. exports that go to the region, including some inputs into China =s huge manufacturing sector.

March's decrease puts the Index of Leading Economic Indicators for San Diego County at 131.3.  The values for the Index for the last year are given below:

    Index   % Change
 2002 MAR 138.8 +0.5%
  APR 138.5 -0.2%
  MAY 138.2 -0.2%
  JUN 137.5 -0.5%
  JUL 136.5 -0.7%
  AUG 135.6 -0.7%
SEP 134.4 -0.9%
OCT 133.2 -0.9%
NOV 132.8 -0.3%
DEC 132.2 -0.5%
2003 JAN 131.9 -0.2%
FEB 131.5 -0.3%
MAR 131.3 -0.2%

For more information on the University of San Diego's Index of Leading Economic Indicators, please contact:

Professor Alan Gin 
School of Business Administration 
University of San Diego 
5998 Alcalá Park 
San Diego, CA 92110 
TEL: (619) 260-4883 

FAX: (858) 484-5304 

E-mail: agin@san.rr.com