Leading Economic Indicators Down Sharply in February

Note: The tentative release date for next month's report is April 30.

March 26, 2009 -- The University of San Diego's Index of Leading Economic Indicators for San Diego County fell 2.7 percent in February.  Four of the six components in the Index -- building permits, initial claims for unemployment insurance, consumer confidence, and help wanted advertising -- were sharply negative during month, and a fifth -- the outlook for the national economy -- was down moderately.  The only positive component was local stock prices, and it was up only slightly.  February’s decline was the largest one month drop ever in the USD Index, and marked its 34th decrease in 35 months.  

Index of Leading Economic Indicators 
The index for San Diego County that includes the components listed below (February) 
Source: University of San Diego 
- 2.7 % 
Building Permits 
Residential units authorized by building permits in San Diego County (February) 
Source: Construction Industry Research Board 
- 4.93% 
Unemployment Insurance 
Initial claims for unemployment insurance in San Diego County, inverted, estimated  (February) 
Source: Employment Development Department 
- 2.90% 
Stock Prices 
San Diego Stock Exchange Index (February) 
Source: San Diego Daily Transcript 
+ 0.11%
Consumer Confidence 
An index of consumer confidence in San Diego County (February) 
Source: San Diego Union-Tribune
- 3.60% 
  Help Wanted Advertising 
An index of online help wanted advertising in San Diego (February) 
Source: Monster Worldwide
- 4.10% 
National Economy 
Index of Leading Economic Indicators (February) 
Source: The Conference Board 

The outlook for the local economy remains unchanged from recent months, and that is decidedly negative.  February’s employment report for San Diego showed that the county last an astonishing 37,900 jobs compared to the same month last year.  Sectors experiencing the largest declines were construction (-10,100 jobs), retail trade (-8,600), administrative and support services (-5,700), manufacturing (-5,200), wholesale trade (-3,400), leisure and hospitality (-2,900), and finance (‑2,500).  The local economy is likely to remain in a downturn for the rest of this year, with heavy year-over-year job losses to continue and the unemployment rate likely to top 10 percent.

Highlights: January’s record for the lowest number of residential units authorized by building permits ever (87) lasted just one month as there were only 80 units authorized in February.  That puts residential authorized in January and February down almost 78 percent compared to the first two months of 2008, which eventually became the lowest year on record for building permits. . . There was no relief in the labor market as both initial claims for unemployment insurance and help wanted advertising were down.  The latter component experienced its biggest one month decline ever.  The net result was that the local unemployment rate edged up to 8.8 percent in February from 8.7 percent in January. . . Local consumer confidence hit another all-time low in February and has now fallen more than 67 percent in the last two years.  This is important because consumer spending is typically two-thirds of economic activity.  In particular, consumers are less likely to make commitments to big ticket items such as houses and automobiles if they are worried about their job and income prospects. . . As was the case in January, local stock prices bucked the trend of the broader market averages by going up in February as opposed to going down. . . Last month, the national Index of Leading Economic Indicators was poised to signal a turning point to the upside in the national economy as it had been up for two months in a row.  Those hopes were dashed with February’s negative reading and a revision in the December change from positive to negative.  The final estimate for the fourth quarter Gross Domestic Product will be released on the day this report is released, with the national economy expected to have contracted at a worse that previously reported rate of 6.5 percent annual rate.

 February’s decrease puts the USD Index of Leading Economic Indicators for San Diego County at 103.0, down from January’s revised reading of 105.8.  Revised data for building permits and the national Index of Leading Economic Indicators led to a revision in the values of the USD Index for December and January and 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
2008 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 -0.8%
  OCT 112.8 -2.2%
  NOV 110.6 -2.0%
  DEC 108.1 -2.2%
2009 JAN 105.8 -2.2%
  FEB 103.0 -2.7%

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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