Leading Economic Indicators Down Sharply in December

January 31, 2008 -- The University of San Diego's Index of Leading Economic Indicators for San Diego County fell 1.0 percent in December after falling 1.5 percent in November.  Leading the way to the downside were sharp drops in consumer confidence and help wanted advertising.  Also down to a lesser extent were initial claims for unemployment insurance, local stock prices, and the outlook for the national economy.  The only positive component was building permits, which were up moderately during the month.  

Index of Leading Economic Indicators 
The index for San Diego County that includes the components listed below (December) 
Source: University of San Diego 
- 1.0 % 
Building Permits 
Residential units authorized by building permits in San Diego County (December) 
Source: Construction Industry Research Board 
+ 0.74% 
Unemployment Insurance 
Initial claims for unemployment insurance in San Diego County, inverted (December) 
Source: Employment Development Department 
- 0.87% 
  Stock Prices 
San Diego Stock Exchange Index (December) 
Source: San Diego Daily Transcript 
Consumer Confidence 
An index of consumer confidence in San Diego County (December) 
Source: San Diego Union-Tribune
- 2.61% 
Help Wanted Advertising 
An index of print and online help wanted advertising in San Diego (December) 
Source: Monster Worldwide, San Diego Union-Tribune
- 2.58% 
National Economy 
Index of Leading Economic Indicators (December) 
Source: The Conference Board 

December=s decline was the fourth large drop (one percent or more) in the last five months, and the Index has now fallen in 20 of the last 21 months.  Although the local economy is not in a recession in the sense that there has been a loss of jobs or a drop in Gross Regional Product,  economic activity has slowed considerably.  Initial data for 2007 shows an increase of 10,700 jobs for the year, compared to a gain of 17,800 jobs in 2006, and the unemployment rate is approaching 5 percent.  Combined with slow housing sales and a surge in foreclosures, we are probably in the San Diego-equivalent of a recession at this point.  That weakness is expected to continue for most of 2008, with a projected job gain of only 5,000 - 8,000 for the year.

 Highlights: Despite a gain in December, residential units authorized by building permits declined by 31 percent in 2007 compared to 2006.  Both single-family units (down 26 percent) and multi-family units (down 35 percent) were hurt by the slump. . . The labor market variables continue to be weak, with both initial claims for unemployment insurance and help wanted advertising  in long and deep slides.  The net impact was that the local unemployment rate edged up to 4.9 percent in December, a sharp rise from the 3.7 percent unemployment rate in December 2006. . . Local consumer confidence fell for the eighth month in a row as bad news about the housing market and foreclosures dominated the news.  Local consumer confidence finished the year down almost 22 percent . . .  Although the stock market has slumped considerably in January, local stock prices were off just slightly in December. . . The national Index of Leading Economic Indicators fell for the third straight month in December.  Economists consider three consecutive monthly changes in one direction as a sign of a potential turning point in the economy, so this suggests a possible downturn in the national economy.  One sign of this is that the growth rate of GDP was an anemic 0.6 percent in the fourth quarter compared to 4.9 percent in the third quarter.

 December=s decrease puts the USD Index of Leading Economic Indicators for San Diego County at 128.8, down from November=s reading of 130.0. Revisions in building permits, initial claims for unemployment insurance and the national Index of Leading Economic Indicators impacted the value of the Index and the monthly changes for every month going back to 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:


% Change
DEC 140.0 -0.3%
2007 JAN 139.6 -0.3%
  FEB 139.2 -0.3%
  MAR 139.3 +0.1%
  APR 139.1 -0.1%
  MAY 138.4 -0.5%
  JUN 137.3 -0.8%
  JUL 136.8 -0.4%
  AUG 135.0 -1.3%
  SEP 133.8 -0.9%
  OCT 132.0 -1.4%
  NOV 130.0 -1.5%
  DEC 128.8 -1.0%

Home - All Months


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: (858) 603-3873 

FAX: (858) 484-5304 

E-mail: agin@san.rr.com