Leading Economic Indicators Down Sharply in September

October 31, 2007 -- The University of San Diego's Index of Leading Economic Indicators for San Diego County fell 1.0 percent in September.  Big drops in building permits, initial claims for unemployment insurance, consumer confidence, and help wanted advertising overwhelmed smaller increases in local stock prices and the outlook for the national economy.  September's drop was the 17th decrease in 18 months, and marked the second sharp decline in row for the Index.

Index of Leading Economic Indicators 
The index for San Diego County that includes the components listed below (September) 
Source: University of San Diego 
- 1.0 % 
Building Permits 
Residential units authorized by building permits in San Diego County (September) 
Source: Construction Industry Research Board 
- 1.54% 
Unemployment Insurance 
Initial claims for unemployment insurance in San Diego County, inverted (September) 
Source: Employment Development Department 
- 1.89% 
  Stock Prices 
San Diego Stock Exchange Index (September) 
Source: San Diego Daily Transcript 
+ 0.49%
Consumer Confidence 
An index of consumer confidence in San Diego County (September) 
Source: San Diego Union-Tribune
- 1.21% 
Help Wanted Advertising 
An index of print and online help wanted advertising in San Diego (September) 
Source: Monster Worldwide, San Diego Union-Tribune
- 2.26% 
National Economy 
Index of Leading Economic Indicators (September) 
Source: The Conference Board 
+ 0.57% 

The outlook continues to be for weakness in the local economy at least through the first half of 2008. The weak housing market continues to be the dominant factor, having likely been responsible for the declines in the four negative components in this month's Index.  The recent wildfires will likely have a negative impact on the local economy in the very short run, but may actually provide a boost in early 2008 as rebuilding gets underway.  The beleaguered construction sector (see below) will get a boost, as will retail activity on items such as furniture and appliances.

Highlights: There were 307 residential units authorized by building permits in September, the lowest monthly total since February 1993.  Of those, only 138 were single-family units.  Data are not available, but that was probably the lowest number of single-family units authorized in a month since the early 1980s, although it was close to the 145 units authorized in November 1992.  Through the end of the third quarter, building permits were down 34.5 percent compared to the same period last year, with single-family permits down more than a quarter and multi-family units authorized down more than 40 percent . . . Both sides of the labor market continue to be strongly negative.  The pace of job losses is picking up, with initial claims for unemployment insurance on a seasonally adjusted basis at their highest level in more than three years.  On the hiring side, help wanted advertising remains weak, with problems in the housing market adversely affecting the construction and financial sectors.  The net impact was that the local unemployment rate of 4.8 percent in September was nearly a full percent higher than the 3.9 percent rate in September 2006. . . The trend in local consumer confidence continues to be negative, with that component being down sharply for five months in a row.  In the past, local consumer confidence was strongly correlated with gasoline prices.  But with gasoline prices still below the highs seen earlier this year, the decline in in confidence is likely the result of the continuing bad news related to housing . . .  Local stock prices rebounded from a sharp drop in August to post a modest gain in September. . . The news on the national economy remains mixed, with the national Index of Leading Economic Indicators flipping once again to the positive side.  The national index has not moved in the same direction in consecutive months since the middle of 2006. 

September's decrease puts the USD Index of Leading Economic Indicators for San Diego County at 133.6, down from August's revised reading of 134.9.  Revisions in building permits, initial claims for unemployment insurance, and the national Index of Leading Economic indicators caused the previously reported change of -1.4 percent to be revised to - 1.5 percent.  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
2006 SEP 140.9 -0.2%
OCT 140.7 -0.1%
NOV 140.3 -0.3%
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 136.9 -0.3%
  AUG 134.9 -1.5%
  SEP 133.6 -1.0%

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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