Leading Economic Indicators Down Sharply in March

April 30, 2008 -- The University of San Diego's Index of Leading Economic Indicators for San Diego County fell 1.4 percent in March.  The six components were split evenly, but sharp drops in three of the components - - building permits, consumer confidence, and help wanted advertising - - overwhelmed the much smaller gains in initial claims for unemployment insurance, local stock prices, and the outlook for the national economy.  March's drop was the six consecutive significant decline in the Index, which has now fallen in 23 of the last 24 months.

Index of Leading Economic Indicators 
The index for San Diego County that includes the components listed below (March) 
Source: University of San Diego 
- 1.4 % 
Building Permits 
Residential units authorized by building permits in San Diego County (March) 
Source: Construction Industry Research Board 
- 1.96% 
Unemployment Insurance 
Initial claims for unemployment insurance in San Diego County, inverted (March) 
Source: Employment Development Department 
+ 0.76% 
Stock Prices 
San Diego Stock Exchange Index (March) 
Source: San Diego Daily Transcript 
Consumer Confidence 
An index of consumer confidence in San Diego County (March) 
Source: San Diego Union-Tribune
- 4.63% 
Help Wanted Advertising 
An index of online help wanted advertising in San Diego (March) 
Source: Monster Worldwide
- 2.57% 
National Economy 
Index of Leading Economic Indicators (March) 
Source: The Conference Board 

The outlook for the local economy is for continued weakness for the rest of 2008, with job growth flat or even negative.  Data for March shows employment down 1,700 jobs compared to the same month in 2007, the first negative year-to-year job comparison since July 1993.   The weak housing market was the chief cause of the decline, with more than 14,000 jobs lost in real estate-related sectors (construction, real estate, and lending).  Whether this is the start of a negative trend or just a one month aberration remains to be seen.

Highlights: Construction plans, as measured by residential units authorized by building permits, have virtually dried up in response to the weak housing market.  The 193 residential units authorized in March was the lowest monthly total for building permits since November 1992.  Only eight multi-family units were authorized in March, which compares to 804 units authorized in the same month last year and which is the lowest number authorized in a month since only four units were authorized in February 1995.  For the first quarter of 2008, total residential units authorized are down more that 63 percent compared to the first quarter of 2007.  Single-family units authorized were down 48 percent while multi-family units authorized were down nearly 74 percent.  What is particularly troubling is that 2007 was already the slowest year for building permits since 1996. . . The labor market variables remain mixed.  After a post-holiday surge in January, initial claims for unemployment insurance have edge downward, which indicates that mass layoffs are not occurring locally.  While job losses are not widespread, the hiring side of the market remains weak, with help wanted advertising now down 19 straight months.  The net result was the local unemployment rate rising to a five-year high of 5.3 percent in March. . . Local consumer confidence suffered its largest one month decline ever as gas prices hit record highs.    Combined with bad news on the housing and jobs market, local consumer confidence is at an all-time low, down more than 40 percent from a year ago . . . Local stock prices ended a four month losing streak by edging up slightly in March. . . The national Index of Leading Economic Indicators turned upward for the first time in six months.  But GDP numbers for the first quarter are likely to be negative, as the national economy has lost jobs in each of the first three months of 2008.   

March's decrease puts the USD Index of Leading Economic Indicators for San Diego County at 122.7, down from February's revised reading of 124.4. Revisions in initial claims for unemployment insurance affected the value of the Index for both January and February, as well as the previously reported changes for those months.  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
2007 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 134.6 -1.6%
  SEP 133.5 -0.8%
  OCT 131.7 -1.4%
  NOV 129.4 -1.8%
  DEC 128.1 -1.0%
2008 JAN 126.1 -1.6%
  FEB 124.4 -1.4%
  MAR 122.7 -1.4%

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