With local stock prices, building permits and consumer confidence all returning to pre-recessionary levels, San Diego County’s economic outlook has hit its highest point since the downturn officially began, according to an index of leading economic indicators released Thursday by the University of San Diego’s Burnham-Moores Center for Real Estate.
“With July’s gain, the outlook for the San Diego economy remains unchanged from what has been reported in recent months: a positive year ahead with solid growth in the local economy,” said economist Alan Gin, who compiles the index for the USD Burnham-Moores Center for Real Estate.
But Gin warned that job growth is slowing, partly because of the federal sequester’s impact on local government employees and contractors. Income growth also has stagnated, with many workers relegated to part-time and low-wage jobs.
“Consumers don’t have as much income as they normally do in this stage of a recovery, and that is adversely impacting consumer spending, which in turn impacts hiring and investment by firms,” Gin warned.
The index rose 0.7 percent in July to 126.6 points, its highest point since the recession officially began in December 2007. The index -- based on local hiring, joblessness, stock prices and construction as well as regional consumer sentiment and the national economic outlook -- has risen for 11 months in a row and 19 out of the past 20 months.
The following is how the county fared:
* Hiring -- The county’s job market continued to improve last month, but at a much slower pace than earlier this year. Help-wanted postings rose by their slowest pace since last November. The county had 19,900 more workers than in July 2012, but that compares to year-to-year growth of more than 30,000 workers earlier this year.
* Joblessness -- First-time unemployment claims have risen for three months in a row, which Gin said indicates “a surge in job loss in the local economy.” Even after adjusting for seasonal fluctuations in unemployment -- such as the temporary layoff of education workers during the summer vacation period -- Gin estimates that the local jobless rate rose from 7.1 percent in June to 7.3 percent in July.
* Home construction -- Building permits rose sharply in July. If the current trajectory continues, they could total almost 8,000 by the end of the year, which would be the best year since the housing boom began to falter in the summer of 2006. Construction employment in July topped the 60,000 mark for the first time since the summer of 2009, but well below the peak of 95,100 in June 2005.
* Consumer confidence -- Regional consumer confidence has risen to its highest level since September 2007. The Conference Board, a New York think tank that conducts the monthly surveys, said consumers are growing more optimistic about business conditions as well as the job market.
* Stock prices -- After dipping in June, local stock prices rebounded in July. A dozen local companies are now within 5 percent or less of their 52-week highs, led by Kratos Defense (Nasdaq: KTOS), Life Technologies (Nasdaq: LIFE) and Qualcomm (Nasdaq: QCOM). On Aug. 2, the Nasdaq index, where most local stocks are listed, hit its highest point since the collapse of the dot-com boom in 2000. But the index has since declined and is currently slightly below July's highs.
* National outlook -- The Conference Board’s national index of leading economic indicators rose for the third time in four months, with one month of flatness. Gin said that indicates positive growth for the national economy in the year ahead, “although the pace will likely lag that of the local economy.” On the other hand, growth will likely remain relatively weak. The advance estimate of second-quarter gross domestic product showed growth at an annualized 1.7 percent growth rate for the quarter -- less than half the growth rate that might be expected after a recession. But it is an improvement over the rates of 1.1 percent in the first quarter and 0.1 percent in the fourth quarter of 2012.