Leading Economic Indicators Up in June

Note: The tentative release date for next month's report is August 27.

July 28, 2009 -- The University of San Diego's Index of Leading Economic Indicators for San Diego County rose 0.4 percent in June. The recent pattern of a sharp rise in consumer confidence supported by solid advances in building permits, local stock prices, and the outlook for the national economy pushed the USD Index to its third gain in a row after being down the previous 24 months. The positive news is tempered somewhat by the fact that initial claims for unemployment insurance and help wanted advertising both continue to be sharply negative.

Index of Leading Economic Indicators 
The index for San Diego County that includes the components listed below (June) 
Source: University of San Diego 
+ 0.4 % 
Building Permits 
Residential units authorized by building permits in San Diego County (June) 
Source: Construction Industry Research Board 
+ 0.68% 
Unemployment Insurance 
Initial claims for unemployment insurance in San Diego County, inverted, estimated  (June) 
Source: Employment Development Department 
- 2.89% 
Stock Prices 
San Diego Stock Exchange Index (June) 
Source: San Diego Daily Transcript 
+ 0.88%
Consumer Confidence 
An index of consumer confidence in San Diego County (June) 
Source: San Diego Union-Tribune
+ 4.65% 
  Help Wanted Advertising 
An index of online help wanted advertising in San Diego (June) 
Source: Monster Worldwide
- 2.26% 
National Economy 
Index of Leading Economic Indicators (June) 
Source: The Conference Board 

With its third consecutive increase, the USD Index has given the traditional signal of a turning point in the local economy.  The typical time frame involved with the local leading indicators would suggest a possible bottom in the first half of 2010.  That bottom would take the form of continued strong home sales, a pickup in retail sales, and a stabilization of the labor market.  Reasons for the reversal would include the continued rebound in home sales due to low prices and interest rates, relatively low gas prices, the impact of the federal stimulus package and other programs to deal with the economy, and a turnaround in the national economy.  As has been mentioned previously, the rebound from the bottom is likely to be weak; indeed, the local economy could remain at the bottom for a while before it starts to grow significantly again. 

Highlights: Residential units authorized by building permits continue to rebound from the historic lows set in January and February, but still ended the first half of 2009 down 47 percent compared to the same period in 2008. Single-family units were off 36 percent during that period, while multi-family units were down 56 percent. . . The employment situation remains grim.  There were more than 37,000 initial claims for unemployment insurance filed during June, a record high number.  The raw data for help wanted advertising has been steady over the last few months, but the seasonally adjusted trend remains sharply negative.  The net result was that the local unemployment rate topped the 10 percent mark, hitting 10.1 percent in June with year-over-year job loss totaling almost 55,000. . . Another strong performance pushed local consumer confidence to a level nearly 16 percent higher than in June 2008.  As has been the case in recent months, consumers' views of the current situation remain depressed, but the outlook for the future has brightened considerably. . .  Local stock prices moved up for the third month in a row as the financial markets continue to rally from the March lows. . . Like the local index, the national Index of Leading Economic Indicators advanced for the third month in a row, signaling a potential turning point for the national economy.  Expectations among many economists are for another down quarter (the fourth in a row) for Gross Domestic Product (GDP) growth in the second quarter, with GDP growth turning positive in the second half of 2009.  This would help San Diego companies with national markets, as well as the local tourism industry.  GDP growth for 2009 as a whole is expected to be in the -1.0 to -2.0 percent range.   

June's decrease puts the USD Index of Leading Economic Indicators for San Diego County at 101.6, up from May's reading of 101.2. There were revisions to the data for building permits in May and the national Index of Leading Economic Indicators in April and May, but they did not affect the percentage change or the previously reported level of the USD Index 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 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 108.2 -2.2%
2009 JAN 105.7 -2.3%
  FEB 102.9 -2.7%
  MAR 100.7 -2.2%
  APR 100.9 +0.2%
  MAY 101.2 +0.3%
  JUN 101.6 +0.4%

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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