Leading Economic Indicators Up in
August 24, 2004 --The
University of San Diego's Index of Leading Economic Indicators for San Diego
County rose 0.2 percent in June. As
has been the case since the beginning of the year, the gain was led by a
positive change in initial claims for unemployment insurance.
Stock prices and consumer confidence were both up to a smaller extent.
Building permits, help wanted advertising, and the outlook for the
national economy were all down modestly.
||Index of Leading Economic
The index for San Diego County that
includes the components listed below (June)
Source: University of San Diego
|+ 0.2 %
Residential units authorized by building
permits in San Diego County (June)
Source: Construction Industry Research
Initial claims for unemployment insurance
in San Diego County, inverted (June)
Source: Employment Development Department
San Diego Stock Exchange Index (June)
Source: San Diego Daily Transcript
An index of consumer confidence in San
Diego County (June)
Source: San Diego Union-Tribune
||Help Wanted Advertising
An index of help wanted advertising in the
San Diego Union-Tribune (June)
Source: San Diego Union-Tribune
Index of Leading Economic Indicators (June)
Source: The Conference Board
increase means that the USD Index of Leading Economic Indicators has increased
every month for the last year. However,
the gain in June was the smallest monthly change since August 2003, and the
ratio of positive indicators to negative ones (three each) is weak.
Since this is data for only one month, it is not yet time to draw any
conclusions about a possible downturn in the
Indicators. A careful
examination of the next few months is in order, but for now, the outlook for the
local economy remains positive.
factor that is likely to impact the local economy in the months ahead is the
high price of oil, which, at this
writing, is nearing $50 a barrel. Since
there is not a lot of major manufacturing in San Diego and no need for heating
oil, the biggest impact here is on the price of gasoline.
Although off its high, the price of gasoline remains well over $2 a
gallon. My estimate is that, for
every 10 cent per gallon increase in the price of gasoline, consumers in San
Diego County spend $7 million more per month on gasoline instead of on other
purchases. While not a large
percentage of the local economy, it is certainly not helpful at a time when the
economy could use every boost that it can get.
likely that gasoline prices will remain above $2 a gallon and possibly go higher
in the near future.
The news on residential units authorized by building permits is mixed.
While single-family units authorized are up more than 7% compared to the
same period in 2003, weakness in the multi-family sector pulled total units
authorized down 3.6% through the second quarter of 2004. . . Also mixed is the
labor market. Job loss remains low
as evidenced by another fall in initial
claims for unemployment insurance. However,
the hiring side of the labor market remains weak.
Help wanted advertising, which has been positive but not
spectacular, turned negative after 10 consecutive monthly increases.
One consequence of this mixed news is that the local unemployment rate
edged up to 4.2% in June. . . Consumer confidence continues to increase,
although the gain in June was second straight month of where the gain was slight
compared to big increases experienced at the end of 2003. . .
Local stock prices rebounded in June after falling in May.
San Diego stocks gained 0.87% in the second quarter of 2004, compared to
gains of 0.75% for the Dow Jones Industrial Average and 2.69% for the NASDAQ
Composite Index. . . The outlook for the national economy turned
cloudy in June, with the national Index of Leading Economic Indicators
turning negative for the first time in 15 months.
Higher energy prices and an increase in interest rates are beginning to
take a toll on the recovery at the national level.
increase puts the Index of Leading Economic Indicators for San Diego County at
142.0, up from May's
reading of 141.7. The values for the
Index of Leading Economic Indicators for San Diego County for the last year are
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Economic Indicators, please contact: