Leading Economic Indicators Up in December

Note: Due to the holidays and travel, the release of November's report was delayed and there is no separate report for that month.  The tentative release date for next month’s report is February 28.

January 31, 2012 -- The USD Burnham-Moores Center for Real Estate’s Index of Leading Economic Indicators for San Diego County rose 0.6 percent in December.  Although no component was up sharply, the gain was broad-based, with five of the six components—building permits, initial claims for unemployment insurance, consumer confidence, help wanted advertising, and the outlook for the national economy--up solidly during the month.  The only negative component was local stock prices, and they were down only slightly.  The gain marked the first time that the USD Index was up in consecutive months since May, and snapped a string of six straight months where it had alternated between being positive and negative.      

Index of Leading Economic Indicators 
The index for San Diego County that includes the components listed below (December
Source: USD
 Burnham-Moores Center for Real Estate
+ 0.6 % 
Building Permits 
Residential units authorized by building permits in San Diego County (December)
Source: Construction Industry Research Board
+ 0.85% 
Unemployment Insurance 
Initial claims for unemployment insurance in San Diego County, inverted (December

Source: Employment Development Department 
+ 0.55% 
Stock Prices 
San Diego Stock Exchange Index (December) 
Source: San Diego Daily Transcript 
- 0.01%
Consumer Confidence 
An index of consumer confidence in San Diego County, estimated  (December)
Source: The Conference Board
+ 0.82% 

Help Wanted Advertising 
An index of online help wanted advertising in San Diego (December) 
Source: Monster Worldwide
+ 0.61% 
National Economy 
Index of Leading Economic Indicators (December)
Source: The Conference Board 
+ 0.83% 

Given the back-to-back gains in the USD Index and the breadth of December’s gain, the outlook for the local economy remains positive for 2012.  The local economy is expected to add 20,000 to 25,000 wage and salary jobs during the year, which may be pessimistic, given that employment was up nearly 27,000 in December compared to the same month in 2010.  Things expected to hold the local economy back include continued weakness in the housing market, political conflict in an election year, and uncertainty in the international economy.

Highlights:  Residential units authorized by building permits finished the year on a strong note, with total units authorized for the year as a whole up 56 percent compared to 2010.  All of the gain was in multi-family units, which were up 170 percent for the year.  Single-family units authorized were flat, being down a single unit compared to 2010.  Although much better than the last two years, 2011 is still the third worst year ever for residential units authorized. . . Both labor market variables were up during the month.  While Initial claims for unemployment insurance have been positive for three months, help wanted advertising has now increased every month for an entire year.  This pushed that component to its highest level since October 2008 on a seasonally adjusted basis.  The net result was that the local unemployment rate fell below 9 percent for the first time since April 2009.  The local unemployment rate was 8.9 percent in December, down from 9.2 percent in November. . . Consumer confidence rebounded in December and has now returned to the level it was at prior to its collapse in August, when the debt ceiling debate and the downgrade of U.S. debt by Standard and Poor’s rattled consumer sentiment . . . Local stock prices ended a down year with a virtually flat month in December.  For the year, local stocks lost 9.4 percent, which compares negatively with a gain of 5.5 percent in the Down Jones Industrial Average and losses of 0.1 percent and 1.8 percent in the S&P 500 and the NASDAQ Composite Indexes, respectively. . . The outlook for the national economy remains solid, with the national Index of Leading Economic Indicators up for the eighth straight month.  Although below expectations, the “advance” estimate for the Gross Domestic Product for the fourth quarter was 2.8 percent, making it the strongest quarter of 2011. 

December’s increase puts the USD Index of Leading Economic Indicators for San Diego County at 116.8, up from 116.1 in November.  Although there were revisions in the data for building permits and the national Index of Leading Economic Indicators, there was no revision to the previously reported change or the level of the USD Index for September.  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
2010 DEC 110.7 +0.4%
2011 JAN 111.7 +1.0%
  FEB 114.0 +2.0%
  MAR 115.3 +1.2%
  APR 116.4 +1.0%
  MAY 117.2 +0.7%
  JUN 116.9 -0.2%
  JUL 117.2 +0.2%
  AUG 116.0 -1.0%
  SEP 116.1 +0.1%
  OCT 115.9 -0.2%
  NOV 116.1 +0.2%
  DEC 116.8 +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