Leading Economic Indicators
Down Slightly in October
30, 2006 -- The
University of San Diego's Index of Leading Economic Indicators for
fell 0.1 percent in October.
Leading the way to the downside were building permits and initial claims
for unemployment insurance, with help wanted advertising registering a smaller
loss. These were nearly offset by
moderate gains in local stock prices, consumer confidence, and the outlook for
the national economy.
||Index of Leading Economic
The index for San Diego County that
includes the components listed below (October)
Source: University of San Diego
|- 0.1 %
Residential units authorized by building
permits in San Diego County (October)
Source: Construction Industry Research
Initial claims for unemployment insurance
in San Diego County, inverted (October)
Source: Employment Development Department
San Diego Stock Exchange Index (October)
Source: San Diego Daily Transcript
An index of consumer confidence in San
Diego County (October)
Source: San Diego Union-Tribune
||Help Wanted Advertising
An index of print and online help wanted advertising in
San Diego (October)
Source: Monster Worldwide, San Diego Union-Tribune
Index of Leading Economic Indicators (October)
Source: The Conference Board
October's drop was the seventh consecutive
monthly decrease for the USD Index of Leading Economic Indicators.
On a positive note, the decrease in October was the smallest of the seven
months. For a second straight month,
the number of advancing components was equal to the number of declining ones at
three apiece. It remains to be seen
whether the Index is on the verge of turning positive or will continue its
downward trend. The forecast
continues to be for a relatively weak local economy at least through the first
half of 2007. In addition to being
weighed down by a slowing national economy, the weak housing market will hurt
the local economy in three areas: slow or negative job growth in construction
and real estate-related jobs, weaker consumer spending due to lower home equity
and a "reverse
wealth effect" (people feeling poorer as the values of their homes
decline), and more homes lost to foreclosures, particularly by those who
stretched themselves to get into the housing market, many times with
unconventional home loans.
Residential units authorized by building permits fell again as the weak
housing market continued to take a toll on construction activity.
Single-family building permits continue to be particularly hard hit, with
the 259 single-family units authorized in October being the lowest number since
224 units were authorized in November 1994.
One impact this is having on the local economy is that construction
employment declined on a year-over-year basis for the first time since June
1994. . . Both labor market variables were down for the second straight month.
Initial claims for unemployment insurance have now risen (a
negative for the Index) for seven months in a row.
Help wanted advertising dropped in October as print advertising
fell and online advertising edged up only slightly.
The strongest sectors for online advertising were "Computer
and Mathematical" and "Healthcare
Support." While employment
growth is expected to slow in 2007, the already low unemployment rate dropped
further to 3.6 percent in October. . . Consumer
confidence continues to rebound from recent lows as gas prices continued to
fall in October. Will a
post-election boost in gas prices send confidence sinking again? . . . Local
stock prices continue to benefit from the surge in the stock market that saw
the Dow Jones Industrial Average reach numerous new all-time highs in October. .
. The national Index of Leading Economic Indicators rose for the second
month in a row despite worries of a slowdown in the national economy.
Policy makers, particularly at the Federal Reserve, find themselves in a
quandary trying to balance concerns about inflation with worries about the
impact of a rapidly slumping national housing market.
decrease puts the Index of Leading Economic Indicators for
at 141.0, down from September=s
revised reading of 141.1. Revisions
in building permits and the national Index of Leading Economic Indicators caused
the previously reported change of -0.3 percent for September to be adjusted
slightly upward to -0.2 percent. The
values for the Index of Leading Economic Indicators for
for the last year are given below:
For more information on the University of San Diego's Index of Leading
Economic Indicators, please contact: