Leading Economic Indicators Down Sharply in October

Note: The holidays delayed the release of this month's report and makes the release date of next month's report uncertain.

December 2, 2008 -- The University of San Diego's Index of Leading Economic Indicators for San Diego County fell 2.3 percent in October.  This was the biggest one-month change in the Index in either direction on record.  Every component was down and down significantly during the month, with the biggest damage occurring in local stock prices and initial claims for unemployment insurance.  With October's drop, the USD Index has now fallen in 30 of the last 31 months.

Index of Leading Economic Indicators 
The index for San Diego County that includes the components listed below (October) 
Source: University of San Diego 
- 2.3 % 
Building Permits 
Residential units authorized by building permits in San Diego County (October) 
Source: Construction Industry Research Board 
- 1.58% 
Unemployment Insurance 
Initial claims for unemployment insurance in San Diego County, inverted, estimated  (October) 
Source: Employment Development Department 
- 2.29% 
Stock Prices 
San Diego Stock Exchange Index (October) 
Source: San Diego Daily Transcript 
- 5.39%
Consumer Confidence 
An index of consumer confidence in San Diego County (October) 
Source: San Diego Union-Tribune
- 1.39% 
  Help Wanted Advertising 
An index of online help wanted advertising in San Diego (October) 
Source: Monster Worldwide
- 1.31% 
National Economy 
Index of Leading Economic Indicators (October) 
Source: The Conference Board 

An already difficult situation took a decided turn for the worst with the developments in October.  What started as a problem related to real estate spread into the financial system as the viability of some of the country's biggest financial institutions was called into question.  The problems in the housing and financial markets in turn have impacted the rest of the economy, as retail and auto sales have plummeted, which threatens the loss of more jobs and further weakness in the housing and financial markets. This downward spiral is projected to continue through the first half of 2009.  The economy is expected to stabilize in the second half of the year due to a combination of lower oil and gas prices, increased home sales, and another stimulus package by the federal government.  The stimulus package will likely include massive spending on infrastructure and relief to state and local governments among other elements.

Highlights: After a promising spring and summer, residential units authorized by building permits have fallen off once again, as the surge in multi-family units that boosted permits has cooled considerably . . . The labor market outlook remains very weak with both initial claims for unemployment insurance and help wanted advertising remaining under pressure.  The net result was that the local unemployment rate surged to 6.8 percent in October, the highest level since July 1995. . . The barrage of bad news on the economy, housing, and the financial markets continues to take a toll on local consumer confidence.  With consumers likely to be cautious in the near term, the Christmas shopping season is projected to be one of the worst in decades. . . Local stock prices suffered along with the other financial markets as stocks were battered by concerns about the economy and the health of financial institutions.  The Dow Jones Industrial average fell 14 percent during the month amid huge volatility which saw the average daily point change a mind boggling 340 points. . . The latest economic data at the national level suggests that the downward move of the national economy is accelerating.  The preliminary estimate for real GDP growth showed that the economy shrank by 0.3 percent in the third quarter.  On the jobs front, more than 500,000 have been lost in the last two months, bringing the total to 1.2 million for the year so far.  The national Index of Leading Economic Indicators is signaling continued weakness in the months ahead as it has fallen in three of the last four months.  .

 October's decrease puts the USD Index of Leading Economic Indicators for San Diego County at 112.8, down from September's reading of 115.4.  Revised data for building permits and the national Index of Leading Economic Indicators led to the previously reported change of -0.8 percent to be revised to -0.7 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
2007 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%
  APR 121.1 -1.3%
  MAY 119.8 -1.1%
  JUN 118.6 -1.0%
  JUL 117.2 -1.3%
  AUG 116.3 -0.8%
  SEP 115.4 -0.7%
  OCT 112.8 -2.3%

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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