The outlook for the local economy remains negative, with weakness expected through the first half of 2009 and likely beyond.  A big question mark at this point is the impact on the local economy of the national financial crisis.  Due to the slump in real estate, employment among the lenders in San Diego County through August was already down more than 2,500 compared to the same period in 2007.  It remains to be seen whether the recent mergers of institutions such as Merrill Lynch and Washington Mutual will result in more job losses in the financial sector, or whether the tightening credit markets will adversely impact local economic activity.

Highlights: Despite the slump in the housing market, residential units authorized by building permits were up for the third month in a row in August.  A surge in multi-family units authorized the last five months is largely responsible for the unexpected rise. . . There was no relief on either side of the labor market.   Initial claims for unemployment insurance and help wanted advertising were negative for the 5^th and 24^th consecutive months respectively.  The net result was that the local unemployment rate remained at a high 6.4 percent in August. . . Once again, the raw data on local consumer confidence was positive but the moving average trend continues downward.  It will be interesting to see the September data, as all the bad news on the financial front occurred during that month, including the problems with Fannie Mae, Freddie Mac, Merrill Lynch, Lehman Brothers, AIG, Washington Mutual, and Wachovia, as well as the largest one-day point drop ever in the Dow Jones Industrial Average. . . In the calm before the storm, local stock prices staged a solid rebound in August. . . The national Index of Leading Economic Indicators was down for the second month in a row as the national economic news continues to be bad.  The one piece of good news was that the preliminary estimate of Gross Domestic Product growth for the second quarter of 2008 was a solid 3.3 percent.  However, much of that growth was due to the stimulus checks that were mailed to consumers during that quarter.  The employment situation remains bleak, with the national economy shedding jobs in each of the first eight months of 2008 and the national unemployment rate topping 6 percent in August for the first time since 2003.

August's decrease puts the USD Index of Leading Economic Indicators for San Diego County at 116.5, down from July's revised reading of 117.2. Revised data on the national Index of Leading Economic Indicators led to revisions in both the USD Index value and the previously reported change for June, while revisions in building permits and initial claims for unemployment insurance affected the value and change for July.  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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