Leading Economic Indicators (September - December 2002)

		September	October	November	December
	Index of Leading Economic Indicators  The index for San Diego County that includes the components listed below Source: University of San Diego	- 0.9%	- 0.9%	- 0.3%	- 0.5%
	Building Permits  Residential units authorized by building permits in San Diego County  Source: Construction Industry Research Board	- 0.20%	0.21%	1.34%	0.55%
	Unemployment Insurance  Initial claims for unemployment insurance in San Diego County, inverted   Source: Employment Development Department	- 1.29%	- 1.13%	0.27%	1.21%
	Stock Prices  San Diego Stock Exchange Index Source: San Diego Daily Transcript	- 0.66%	- 0.46%	1.41%	0.06%
	Consumer Confidence  An index of consumer confidence in San Diego County Source: San Diego Union-Tribune	- 2.05%	- 3.79%	- 4.85%	- 3.84%
	Help Wanted Advertising  An index of help wanted advertising in the San Diego Union-Tribune   Source: Greater San Diego Chamber of Commerce	- 0.22%	- 0.79%	- 1.07%	- 1.13%
	National Economy  Index of Leading Economic Indicators Source: The Conference Board	- 0.82%	0.33%	0.98%	0.16%

Although nine consecutive monthly declines in a leading economic indicators index would normally signal an upcoming recession, the structure of the San Diego economy protects it somewhat from the normal swings of the national business cycle.  There are not a lot of companies locally that manufacture cyclical products such as automobiles, appliances, and steel which would be adversely affected by inventory buildup and subsequent layoffs during a downturn in the business cycle.  Also, because there are not a lot of big corporate headquarters here, the region is less affected by the mass layoffs that often occur in middle management during difficult economic times.  Thus, a “recession” in San Diego might be defined as positive but slower economic growth as opposed to strong growth during good economic times.  It would probably take a strong outside shock, such as a prolonged military conflict or terrorist activity, for there to be an actual decline in the local economy.

 Highlights:  The drop in consumer confidence continues to be the main drag on the Index.  Consumer confidence has fallen for six straight months, including sharp drops in the last five months.  Fears about the state of the economy and about the impending conflict with Iraq are the main contributors to this falloff in consumer sentiment.  This is a serious development since consumer spending represents two-thirds of economic activity. . . The labor market components remain mixed.  Initial claims for unemployment insurance have stabilized after rising sharply in the spring and summer of 2002 and have actually dropped in the last couple of months, which is a positive for the Index.  On the other side of the labor market, help wanted advertising has dropped four months in row.  Thus, while the rate of job loss has slowed recently, firms are not doing much hiring. . . An encouraging note is many of the components have turned positive in recent months.  Building permits, local stock prices, and the outlook for the national economy were all up in the closing months of 2002.  In fact, four of the six components of the Index were positive in December, with only a sharp drop in consumer confidence tilting the Index to the negative side.

 The values for the Index of Leading Economic Indicators for San Diego County for the last year are given below:

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