Leading Economic Indicators
Down Sharply in August
September 27, 2007 -- The University of San Diego's Index of
Leading Economic Indicators for San Diego County fell 1.4 percent in August.
All six components in the Index were down for the month. The way the
Index is calibrated, any monthly change higher than one percent is considered a
large change. Using that criteria,
there were big drops in initial claims for unemployment insurance, local stock
prices, consumer confidence, help wanted advertising, and the outlook for the
national economy. The building
permits component performed the best, but was still down moderately.
||Index of Leading Economic
The index for San Diego County that
includes the components listed below (August)
Source: University of San Diego
|- 1.4 %
Residential units authorized by building
permits in San Diego County (August)
Source: Construction Industry Research
Initial claims for unemployment insurance
in San Diego County, inverted (August)
Source: Employment Development Department
San Diego Stock Exchange Index (August)
Source: San Diego Daily Transcript
An index of consumer confidence in San
Diego County (August)
Source: San Diego Union-Tribune
||Help Wanted Advertising
An index of print and online help wanted advertising in
San Diego (August)
Source: Monster Worldwide, San Diego Union-Tribune
Index of Leading Economic Indicators (August)
Source: The Conference Board
drop was the 16th time that the USD Index of Leading Economic
Indicators has fallen in the last 17 months.
The last time that all six components were down in a month was in April
and May of 2006. But the magnitudes
of the changes back then were not as severe as this month's
changes. The outlook for the local
economy continues to be for weakness at least through the first half of 2008.
An outright downturn is not expected, but the possibility of a recession
in the local economy is at its highest point in years.
Highlights: The weak
housing market impacted each of the components of the Index negatively in
August. After a tiny gain in July,
residential units authorized by building permits reverted back to its
recent negative trend as developers cut back on construction plans in reaction
to the weak housing market. While
both single-family and multi-family permits remain weak, the 211 single-family
units authorized in August was the lowest amount since 193 units were authorized
in January 1993. . . There was negative news on both sides of the labor market.
Job loss is picking up, as reflected by weakness in initial claims for
unemployment insurance. On the
hiring side of the market, help wanted advertising has now fallen for an
entire year. Print advertising is
down considerably, and Monster.com reports declines in online advertising in
real estate-related sectors and across most white-collar occupational
categories. The net impact was that
the local unemployment rate remained at 4.8 percent in August, the same as July
and the highest level in three years. . . Local consumer confidence fell
to its lowest level since October 2003.
Negative news about problems with subprime loans and foreclosures were
the likely cause of the drop. . .
The big declines in stock prices during the summer were finally reflected in the
decline in local stock prices in August as investors worried about the
financial system being heavily impacted by the weak housing market and the
subprime loan problems. . . The national Index of Leading Economic Indicators
continued its 2007 pattern of alternating advances with declines the next month.
A positive development was the Federal Reserve following up its recent
cut in the discount rate with a cut in the federal funds rate.
It will likely take further cuts in both rates to boost the national
economy in the wake of the slump in the housing market.
decrease puts the USD Index of Leading Economic Indicators for San Diego County
at 135.0, down from July's revised reading of 137.3.
Revisions in initial claims for unemployment insurance and the national
Index of Leading Economic Indicators canceled each other out and led to no
change in the previously reported change of -0.3 percent for July.
Please visit the Website address given below to see the revised changes
for the individual components. The
values for the USD Index for the last year are given below:
For more information on the University of San Diego's Index of Leading
Economic Indicators, please contact: