Leading Economic Indicators Up in January

Note: The tentative release date for next month's report is March 25.

February 25, 2010 -- The University of San Diego's Index of Leading Economic Indicators for San Diego County rose 0.6 percent in January. Leading the advance was a strong positive move in initial claims for unemployment insurance. There were also solid increases in building permits, local stock prices, help wanted advertising, and the outlook for the national economy. The only component to decrease was local consumer confidence. With January’s increase, the USD Index has now advanced for 10 months in a row.

Index of Leading Economic Indicators 
The index for San Diego County that includes the components listed below (January) 
Source: University of San Diego 
+ 0.6 % 
Building Permits 
Residential units authorized by building permits in San Diego County (January) 
Source: Construction Industry Research Board 
+ 0.96% 
Unemployment Insurance 
Initial claims for unemployment insurance in San Diego County, inverted, estimated  (January

Source: Employment Development Department 
+ 1.76% 
Stock Prices 
San Diego Stock Exchange Index (January) 
Source: San Diego Daily Transcript 
+ 0.52%
Consumer Confidence 
An index of consumer confidence in San Diego County (January) 
Source: San Diego Union-Tribune
- 0.42% 
  Help Wanted Advertising 
An index of online help wanted advertising in San Diego (January) 
Source: Monster Worldwide
+ 0.50% 
National Economy 
Index of Leading Economic Indicators (January) 
Source: The Conference Board 
+ 0.56% 

There is no change in the previously reported outlook for the local economy. A bottom in terms of economic activity is likely in the first half of 2010, if it hasn’t already occurred. Unlike the national economy, where the Gross Domestic Product is reported quarterly as a gauge of the strength of the economy, the only measures that come out frequently at the local level are the employment and unemployment numbers. The problem is that employment is typically a lagging indicator, as firms usually wait until they are sure that a recovery has taken hold before they make the big commitment to add permanent staff. The situation will probably be more difficult in this recovery as many firms took steps to be much more efficient and are unlikely to hire back as many employees as they let go during the downturn.

Highlights: Residential units authorized by building permits began the year like it ended 2009, with a gain. The 282 residential units authorized in January were low by historic standards, but were much better than the 87 that were authorized in January 2009, the first time ever that fewer than 100 units had been authorized in a month. . . Both the labor market variables continue to rebound. Initial claims for unemployment insurance dropped during the month, which is very positive news because January is usually the worst month of the year in terms of initial claims as retailers lay off their seasonal staff after the holidays. On the hiring front, help wanted advertising was up for the third month in a row, although that was due primarily to seasonal adjustment, as January is also typically the worst month of the year for that component. The employment and unemployment numbers for January have not been released as of the writing of this report. . . The trend in local consumer confidence turned negative for the first time since last March. As has been mentioned before, the USD Index uses a weighted moving average to smooth out the month-to-month fluctuations in the individual components. While the actual level of the consumer confidence index was up, the seasonally adjusted moving average was down. . . The methodology used also came into play with local stock prices. The value used for local stocks is the average daily close for the entire month. So even though local stocks ended the month lower than they started it, the average for the month as a whole showed an increase. . . There continues to be good news on the national economy as the national Index of Leading Economic Indicators was up for the tenth month in a row. Unemployment and job loss remain high at the national level, although there is hope that job growth will resume in the coming months.

January’s increase puts the USD Index of Leading Economic Indicators for San Diego County at 107.9, up from January’s revised reading of 107.2. Changes in building permits for December and for the national Index of Leading Economic Indicators from July on led to a revision in the previously reported change for July and in the level in the Index for every month going back to July. 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
2009 JAN 105.2 -2.1%
  FEB 102.7 -2.5%
  MAR 100.7 -1.9%
  APR 101.1 +0.4%
  MAY 102.0 +0.8%
  JUN 102.9 +0.9%
  JUL 103.6 +0.6%
  AUG 104.5 +0.9%
  SEP 105.8 +1.2%
  OCT 106.3 +0.5%
  NOV 106.5 +0.1%
  DEC 107.2 +0.7%
2010 JAN 107.9 +0.6%

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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