An already difficult situation took a decided turn for the worst with the developments in October.  What started as a problem related to real estate spread into the financial system as the viability of some of the country's biggest financial institutions was called into question.  The problems in the housing and financial markets in turn have impacted the rest of the economy, as retail and auto sales have plummeted, which threatens the loss of more jobs and further weakness in the housing and financial markets. This downward spiral is projected to continue through the first half of 2009.  The economy is expected to stabilize in the second half of the year due to a combination of lower oil and gas prices, increased home sales, and another stimulus package by the federal government.  The stimulus package will likely include massive spending on infrastructure and relief to state and local governments among other elements.

Highlights: After a promising spring and summer, residential units authorized by building permits have fallen off once again, as the surge in multi-family units that boosted permits has cooled considerably . . . The labor market outlook remains very weak with both initial claims for unemployment insurance and help wanted advertising remaining under pressure.  The net result was that the local unemployment rate surged to 6.8 percent in October, the highest level since July 1995. . . The barrage of bad news on the economy, housing, and the financial markets continues to take a toll on local consumer confidence.  With consumers likely to be cautious in the near term, the Christmas shopping season is projected to be one of the worst in decades. . . Local stock prices suffered along with the other financial markets as stocks were battered by concerns about the economy and the health of financial institutions.  The Dow Jones Industrial average fell 14 percent during the month amid huge volatility which saw the average daily point change a mind boggling 340 points. . . The latest economic data at the national level suggests that the downward move of the national economy is accelerating.  The preliminary estimate for real GDP growth showed that the economy shrank by 0.3 percent in the third quarter.  On the jobs front, more than 500,000 have been lost in the last two months, bringing the total to 1.2 million for the year so far.  The national Index of Leading Economic Indicators is signaling continued weakness in the months ahead as it has fallen in three of the last four months.  .

 October's decrease puts the USD Index of Leading Economic Indicators for San Diego County at 112.8, down from September's reading of 115.4.  Revised data for building permits and the national Index of Leading Economic Indicators led to the previously reported change of -0.8 percent to be revised to -0.7 percent.  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: