New San Diego Economic Report Includes ‘Areas of Concern’

The University of San Diego Burnham-Moores Institute of Real Estate's Index of Leading Economic Indicators for San Diego County rose slightly in August compared to the month before, marking the 12th straight increase but also highlighting areas of concern.

The 0.4 percent increase was attributed to big gains in consumer confidence and the outlook for the national economy, and a small rise in local stock prices, which outweighed declines in initial unemployment insurance claims, help-wanted advertising and building permits, according to USD professor Alan Gin.

"August's gain means that the forecast remains for positive growth in the local economy in the year ahead," Gin wrote in the report released Friday. "However, there are some areas of concern. The breadth of the advance left something to be desired."

Gin said only three of the six components measured had increased, which marked the worst performance on that front since the index declined in August 2012. Also, he said, the number of building permits fell for the first time since January.

In addition, labor and market variables were down for the first time in about three years, which resulted in considerably slower job growth, according to Gin. Year-over job growth comparisons had weakened since the beginning of the year, with August's gain at only 14,800, Gin said.

Political turmoil regarding a potential government shutdown and/or extending the debt ceiling could also become problems, Gin said.

"Failure to do the latter in particular could trigger a financial crisis that would threaten to derail an fragile recovery, and the local economy is unlikely be able to avoid the fallout from that," Gin said.

However, he said consumer confidence continued to rise, with the measure up four months in a row.

The national Index of Leading Economic Indicators climbed in July and August, and had not dipped in five months, the professor said.

-City News Service