The outlook for the local economy remains unchanged: Weak job growth and continued pressure on the housing market through at least the first half of 2008.  The housing market may bottom out in the latter half of next year, but a rebound in prices is not expected to begin until 2009.  A recession in the local economy is possible, but not likely, as San Diego has few of the industries that are severely impacted by an economic downturn, such as auto and steel production.  Also helping is that defense and tourism dollars continue to flow into the local economy at all points in the business cycle, even when things are going badly.

Highlights: The trend in residential units authorized by building permits remains negative in response to the weak housing market.  This has negative implications in terms of employment in construction and will adversely affect sales of housing-related products such as furniture, appliances, and home improvement items. . . Both labor market variables continue to be weak.  Initial claims for unemployment insurance have risen to more than 14,000 a month, compared to a low of less than 10,000 for several months in late 2005 and early 2006.  In terms of the hiring side of the market, help wanted advertising was down for the 14^th consecutive month, with weakness in both print and online advertising.  The net impact was a local unemployment rate of 4.8 percent for the third month in a row in October. . . Already weakened by bad news from the housing market, local consumer confidence suffered another blow as gasoline prices surged.  Local consumer confidence has fallen more than 23 percent from the yearly high reached in January, and is at the lowest level since March 2003 . . . Local stock prices shrugged off all the negative news to edge up slightly in October. . . Despite the national Index of Leading Economic Indicators turning down once again and worries of a recession, the preliminary estimate for GDP growth in the third quarter was a strong 4.9 percent.  This follows a solid 3.8 percent growth rate in the second quarter.

October's decrease puts the USD Index of Leading Economic Indicators for San Diego County at 131.8, down from September's revised reading of 133.5. Although there were revisions in building permits and the national Index of Leading Economic Indicators for September, there was no impact on the previously reported change of -1.0 percent for the month.  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:

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