Leading Indicators Down in August

	Index of Leading Economic Indicators  The index for San Diego County that includes the components listed below (August)  Source: University of San Diego	- 0.7 %
	Building Permits  Residential units authorized by building permits in San Diego County (August)  Source: Construction Industry Research Board	- 0.36%
	Unemployment Insurance  Initial claims for unemployment insurance in San Diego County, inverted (August)  Source: Employment Development Department	- 1.74%
	Stock Prices  San Diego Stock Exchange Index (August)  Source: San Diego Daily Transcript	- 0.84%
	Consumer Confidence  An index of consumer confidence in San Diego County (August)  Source: San Diego Union-Tribune	- 1.51%
	Help Wanted Advertising  An index of help wanted advertising in the San Diego Union-Tribune (August)  Source: Greater San Diego Chamber of Commerce	+ 0.46%
	National Economy  Index of Leading Economic Indicators (August)  Source: The Conference Board	- 0.32%

The drop in August was the fifth consecutive monthly decrease for the USD Index of Leading Economic Indicators, and matched in magnitude the revised decrease in July. For the second straight month, five of the six components were negative. While a decline in the local economy is unlikely, the weakness in the indicators is a sign of continued sluggishness in the months ahead. This sluggishness will be characterized by slow job growth and a relatively high unemployment rate (high 3%, low 4%), and will likely extend at least through the first quarter of 2003. A big uncertainty is the impending military conflict with Iraq. Potential problems include a sharp spike in oil prices, a drop in consumer confidence, and turmoil in the financial markets. A unique impact on San Diego=s economy would result from the deployment of ships and personnel from the area, which would adversely affect income and spending in the region.

Highlights: Residential units authorized by building permits were down for the sixth straight month, although there was a rebound in multi-family units authorized from the unusually low level of July. . . There continue to be mixed signals in the labor market. A total of 19,662 initial claims for unemployment insurance were filed in August, which was roughly 5,000 more than during the same month in 2001. This is an indication of an acceleration in the rate of job loss in the local economy. On the other hand, help wanted advertising was up for the sixth month in a row. The net effect of these influences is that the unemployment rate in San Diego County was 4.1% in September, the fourth consecutive month in which the unemployment rate topped 4%. . . Local stock prices remain on the defensive, with investors concerned about the prospects for local companies in the face of a weak economy. . . After registering its first decline in eight months in July, consumer confidence plunged sharply in August. With consumer spending representing two-thirds of economic activity, this downturn can have a significant impact on the local economy, particularly during the important holiday buying season. . . The national Index of Leading Economic Indicators dropped for the third consecutive month, a sign that there are still problems with the national economy. While it is likely that the recession of 2001 is officially over, growth remains anemic, and some economists are talking about a jobless recovery.

August's decrease puts the Index of Leading Economic Indicators for San Diego County at 135.6, down from July=s revised reading of 136.6. A revision in the national Index of Leading Economic Indicators caused the previously reported change of -0.8% to be revised to -0.7%. The values for the Index of Leading Economic Indicators for San Diego County for the last year are given below:

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