Leading Indicators Down in December

February 18, 1999--The University of San Diego's Index of Leading Economic Indicators for San Diego County fell 0.5 percent in December. Consumer confidence, local stock prices, and building permits all posted moderate declines. There were smaller drops in initial claims for unemployment insurance and help wanted advertising. The only positive component was the outlook for the national economy.

	Index of Leading Economic Indicators  The index for San Diego County that includes the components listed below (December)  Source: University of San Diego	- 0.5 %
	Building Permits  Residential units authorized by building permits in San Diego County (December)  Source: Construction Industry Research Board	- 0.84%
	Unemployment Insurance  Initial claims for unemployment insurance in San Diego County, inverted (December)  Source: Employment Development Department	- 0.44%
	Stock Prices  San Diego Stock Exchange Index (December)  Source: San Diego Daily Transcript	- 0.89%
	Consumer Confidence  An index of consumer confidence in San Diego County (December)  Source: San Diego Union-Tribune	- 0.91%
	Help Wanted Advertising  An index of help wanted advertising in the San Diego Union-Tribune (December)  Source: Greater San Diego Chamber of Commerce	- 0.12%
	National Economy  Index of Leading Economic Indicators (December)  Source: The Conference Board	+ 0.46%

December’s decrease was the fourth in a row for the Index, which had previously risen 41 consecutive months. While none of the components dropped sharply, December’s decline was broad-based, with five of the six components negative during the month. The last time that many components were negative was July 1992. The behavior of the Index continues to forecast a slowdown in the local economy later in 1999.

Turning negative in December for the first time in five months was initial claims for unemployment insurance. Because changes in this component are calculated on an inverted basis, this represents an increase in the number of initial claims. After being below the 14,000 level since August, initial claims surged to 15,275 in December. This is troublesome since December is traditionally one of the lower months in terms of initial claims filed. This indicates that the pace of job loss is accelerating in San Diego County. This is mitigated somewhat on the other side of the job market, where the recent falloff in help wanted advertising slowed considerably. Although still negative on a month-to-month basis, December’s reading in that component was the highest for any December in the 1990s.

The local economy ended 1998 on a strong note, with the unemployment rate for San Diego County at the end of the year initially estimated at 3.0%. This is a full percent below the unemployment rate nationally, and 1.4% below the rate for the state of California. Given that the local Index of Leading Economic Indicators is diverging from the positive performance of the national Index, whether this will be the case at the end of 1999 remains to be seen.

December's increase puts the Index of Leading Economic Indicators for San Diego County at 141.4, down from November’s revised reading of 142.0. Because of a revision in building permits, the previously reported change of -0.4% for November was modified to -0.5%. The attached table gives the revised figures for all the indicator components for all months of 1998. The fluctuations of the Index of Leading Economic Indicators for San Diego County for the last year are given below:

		Index	Change
1997	DEC	141.4	+0.6%
1998	JAN	142.0	+0.4%
	FEB	142.6	+0.4%
	MAR	142.8	+0.1%
	APR	142.9	+0.1%
	MAY	143.1	+0.1%
	JUN	143.2	+0.1%
	JUL	143.5	+0.2%
	AUG	143.8	+0.7%
	SEP	143.3	-0.4%
	OCT	142.7	-0.4%
	NOV	142.0	-0.5%
	DEC	141.4	-0.5%

For more information on the University of San Diego's Index of Leading Economic Indicators, please contact:

The Index of Leading Economic Indicators is published by USD’s Real Estate Institute (REI). For more information about the REI, please contact Mark Riedy at (619) 260-4872.