Leading Economic Indicators Up in October

Note: The tentative release date for next month's report is January 5.

December 1, 2009 -- The University of San Diego's Index of Leading Economic Indicators for San Diego County rose 0.2 percent in October.  Leading the way to the upside once again was a sharp gain in consumer confidence.  There were also smaller increases in building permits and the outlook for the national economy.  Big negative moves in initial claims for unemployment insurance and local stock prices and a smaller decrease in help wanted advertising nearly offset the positive moves, but were not enough to keep the USD Index from advancing for the seventh straight month.

Index of Leading Economic Indicators 
The index for San Diego County that includes the components listed below (October) 
Source: University of San Diego 
+ 0.2 % 
Building Permits 
Residential units authorized by building permits in San Diego County (October) 
Source: Construction Industry Research Board 
Unemployment Insurance 
Initial claims for unemployment insurance in San Diego County, inverted, estimated  (October) 
Source: Employment Development Department 
- 1.28% 
Stock Prices 
San Diego Stock Exchange Index (October) 
Source: San Diego Daily Transcript 
Consumer Confidence 
An index of consumer confidence in San Diego County (October) 
Source: San Diego Union-Tribune
+ 3.36% 
  Help Wanted Advertising 
An index of online help wanted advertising in San Diego (October) 
Source: Monster Worldwide
- 0.41% 
National Economy 
Index of Leading Economic Indicators (October) 
Source: The Conference Board 

With October's gain, the outlook for the local economy remains unchanged with a bottom expected in the first half of 2010. That is in terms of employment, which typically lags behind other economic activity.  The labor market will remain weak for the next few months, which will make 2009 the worst year ever in terms of job loss for San Diego County.  Employment will fall by nearly 50,000 this year, which will push the number of jobs in the local economy back to the level that existed in 2004.  After hitting the bottom, job growth will be slow, with employment expected to increase by only a couple of thousand jobs for 2010 as a whole.

Highlights: Although the trend was positive in October, 2009 will be by far the worst year on record for residential units authorized by building permits, even worse than last year’s previous low mark of 5,154 units authorized.  Construction activity remains at low levels despite the fact that housing prices and sales activity are both on the upswing.  An improvement is expected in 2010, but residential units authorized next year will likely be the second lowest ever. . . There are still no signs of a turnaround on the job front.  Initial claims for unemployment insurance hit another all-time high in October and are approaching the 40,000 mark.  By comparison, this is roughly four times what the level was when the local economy was at its peak at the end of 2005.  Help wanted advertising fell for 38th consecutive month but seems to have stabilized a little in the last few months.  The net result was that the local unemployment rate was 10.5 percent in October, the fifth month in a row that the local unemployment rate was in double digits. . . Local consumer confidence continues to lead the move to the upside.  As has been mentioned in previous reports, the key to reviving the local economy is for that to translate into increased spending by consumers.  The holiday buying season will be a good indication as to whether or not that comes into fruition.  Initial reports on post-Thanksgiving sales nationally indicate that traffic is up but average spending is down, leading to overall sales levels about equal to those of last year. . . After rebounding 40 percent from the March lows, local stock prices have pulled back in the last couple of months. . . The outlook for the national economy continues to be positive, with the national Index of Leading Economic Indicators increasing for the seventh consecutive month.  As expected, the Gross Domestic Product (GDP) turned positive in the third quarter, with the national economy advancing at a 2.8 percent annualized rate.

October's increase puts the USD Index of Leading Economic Indicators for San Diego County at 103.7, up from September's reading of 103.4.  There was a small revision in building permits for September, but it was not enough to change the previously reported change and level of the USD Index for that month.  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 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 101.7 +0.5%
  JUL 101.9 +0.2%
  AUG 102.5 +0.5%
  SEP 103.4 +1.0%
  OCT 103.7 +0.2%

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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