With July's decrease, the USD Index of Leading Economic Indicators has now fallen in 15 of the last 16 months. Things improved a little over the previous month, with an even split in the number of positive versus negative components. The outlook then for the local economy remains unchanged from recent months: slow growth for the rest of 2007 and into the first part of 2008. The slow housing market remains the main influence, with fewer home sales, more foreclosures, job losses in real estate-related sectors, and lower spending as home equity declines.

Highlights: Residential units authorized by building permits broke a modest three month negative streak, but remain down more than a third for the year. . . The labor market remains weak. Initial claims for unemployment insurance increased modestly in July. The small drop in this component may signal that the recent surge in job losses may be reaching a plateau. However, there is not much help on the hiring side of the market, as help wanted advertising fell for the eleventh month in a row. Monster.com reports that online advertising suffered its first year-over-year drop since data since data became available in May 2005. The net impact was that the local unemployment rate rose to 4.8 percent in July versus 4.4 percent one year earlier. . . As was the case last month, the raw numbers on local consumer confidence were up, but the seasonally adjusted trend is down.  Local consumer confidence is down 11 percent from its most recent high in January of this year. . . Despite the recent volatility in the stock market, local stock prices were up for the fourth month in a row. Local stock prices are measured by taking the average value of the local stock index for all days in the month, so the big drops in the stock market at the end of July were not enough to cause a drop for the month as a whole. . . Although the national Index of Leading Economic Indicators posted a strong gain in July, there is still no clear trend, as the Index has alternated rising and falling for the last six months. As is the case for the local economy, the housing market is the dominant factor affecting the national economy at this point. It is now likely that the Federal Reserve will follow up its recent cut in the discount rate with further cuts before the end of the year. Whether that will be enough to prevent the weak housing market from dragging down the rest of the economy remains to be seen, but the thought here is that it will.

July's decrease puts the USD Index of Leading Economic Indicators for San Diego County at 136.9, down from June's revised reading of 137.3. Revisions in building permits and initial claims for unemployment insurance affected the previously reported value of the Index and its change for May and June. 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:

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