The outlook for the local economy remains bleak at this point. The length and the depth of the decline in the USD Index suggests that San Diego’s economy may remain weak through the end of 2009. There is no sign of any imminent turnaround at this point. Whether the recently passed federal stimulus package will be enough to stabilize the local economy remains to be seen. It should help some, as will the efforts to help homeowners avoid foreclosure. The final element that is needed is stability in the financial system to the extent that credit will start flowing again.

Highlights The weakness in construction carried into 2009 as residential units authorized by building permits fell below 100 in a month for the first time ever in January. There were only 82 single-family units authorized during the month, and multi-family units totaled a minuscule six units. Residential units authorized were at an all-time low of 5,155 units in 2008, and that record could be threatened in 2009. . . The outlook for the labor market remains grim. Initial claims for unemployment insurance topped 30,000 for the first time ever in January. By comparison, only about 10,000 initial claims were filed each month at the height of the boom in the local economy. There is no help on the hiring front, as help wanted advertising fell for the 29^th straight month. As of this writing, the local employment and unemployment numbers for January have not been released. But the unemployment rate is expected to approach 8 percent. This follows a year in which San Diego County lost 5,100 jobs, which was only the fifth time in the last 30 years where employment has dropped year-over-year. . . A big drag on the local economy is that local consumer confidence continues to sink. As consumers become more concerned about their futures, they cut back on their expenditures, which threatens to make a bad situation even worse. . . After losing more than a third of their value in 2008, local stock prices rebounded significantly in January.　.　. The national Index of Leading Economic Indicators has now been up for two months in a row. Could this signal a turnaround for the national economy? Economists usually look for three consecutive changes in a leading index as a signal of a turning point. This may be forecasting a bottom in the national in the second half of 2009, as many economists are expecting.

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