Leading Indicators Down in November

January 5, 1999--The University of San Diego's Index of Leading Economic Indicators for San Diego County fell 0.4 percent in November. Big drops in local stock prices and help wanted advertising were the main contributors to the decline. Consumer confidence was also down significantly. Building permits were virtually unchanged, although with a slight negative bias. On the plus side, the outlook for the national economy was up moderately, and initial claims for unemployment insurance were also positive.

	Index of Leading Economic Indicators  The index for San Diego County that includes the components listed below (November)  Source: University of San Diego	- 0.4 %
	Building Permits  Residential units authorized by building permits in San Diego County (November)  Source: Construction Industry Research Board	- 0.05%
	Unemployment Insurance  Initial claims for unemployment insurance in San Diego County, inverted (November)  Source: Employment Development Department	+ 0.32%
	Stock Prices  San Diego Stock Exchange Index (November)  Source: San Diego Daily Transcript	- 1.73%
	Consumer Confidence  An index of consumer confidence in San Diego County (November)  Source: San Diego Union-Tribune	- 0.83%
	Help Wanted Advertising  An index of help wanted advertising in the San Diego Union-Tribune (November)  Source: Greater San Diego Chamber of Commerce	- 1.31%
	National Economy  Index of Leading Economic Indicators (November)  Source: The Conference Board	+ 0.93%

November’s decline was the third consecutive decrease in the local Index of Leading Economic Indicators. The same components that contributed to the previous two declines--local stock prices, help wanted advertising, and consumer confidence--continued to drag the Index down in November, with the trends in the latter two components becoming increasingly negative. Joining these components on the downside were residential units authorized by building permits. As a result, November was the first month since February 1995 where a majority of the components in the Index were negative.

The positive move by the national Index of Leading Economic Indicators puts that measure on a diverging track from the local Index. In fact, November’s gain by the national Index was the largest move in that component since February 1996. The divergence in the local and national economies has been reflected recently in economic variables such as retail sales and home sales.

As has been mentioned in previous reports, economists usually look for three consecutive monthly changes in one direction by a leading index to indicate a shift in the direction of an economy. The three decreases in the local Index suggest negative news for the local economy in the future. Expectations are that the local economy will continue to be strong through the first half of 1999, and then slow down in the second half. The net result is a positive year for economic growth, but at a slower rate than has been recorded in recent years. Enclosed is the University of San Diego's forecast for various sectors of the local economy for 1999. As can be seen, a gain of nearly 20,000 jobs is forecast for the county for the year. In contrast, employment in November 1998 was roughly 29,000 higher than in the previous year, and 74,000 higher than two years before.

November's increase puts the Index of Leading Economic Indicators for San Diego County at 142.1, down from October’s revised reading of 142.7. Because of a revision in building permits, the previously reported change of -0.5% for October was modified to -0.4%. The fluctuations of the Index of Leading Economic Indicators for San Diego County for the last year are given below:

		Index	Change
1997	NOV	140.6	+0.7%
	DEC	141.4	+0.6%
1998	JAN	142.0	+0.4%
	FEB	142.6	+0.4%
	MAR	142.8	+0.1%
	APR	142.9	+0.1%
	MAY	143.1	+0.1%
	JUN	143.2	+0.1%
	JUL	143.5	+0.2%
	AUG	143.8	+0.7%
	SEP	143.3	-0.4%
	OCT	142.7	-0.4%
	NOV	142.1	-0.4%

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

The Index of Leading Economic Indicators is published by USD’s Real Estate Institute (REI). For more information about the REI, please contact Mark Riedy at (619) 260-4872.