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USD predicts strong hiring in 2014

Despite a slight slide in December, spurred by declining confidence and weaker hiring, San Diego County's economy grew solidly in 2013 and seems poised for even stronger growth this year, according to an index of leading economic indicators released Friday by the University of San Diego's Burnham-Moores Center for Real Estate.

USD economist Alan Gin, who compiles the monthly index, forecast that the county will add 25,000 jobs this year, up from 23,000 in 2013, with particularly strong hiring. That would push the county jobless rate below 6 percent by the end of the year, compared to the current seasonally adjusted rate of 6.8 percent.

"The outlook for the local economy remains positive," Gin said, adding that he expects to see continuing solid growth in construction, leisure activities, tourism and health care.

Not all economists are so optimistic. Lynn Reaser, chief economist at Point Loma Nazarene University, forecasts that as few as 20,000 jobs may be added this year, resulting in a jobless rate of between 6.0 and 6.5 percent.

But Gin's predictions were bolstered by strong growth in residential housing permits and local stock prices, as well as a steady continuing decline in the jobless rate.

Here are how the various components of Gin's index performed in 2013:

* Employment -- Initial claims for unemployment insurance rose over the past three months and help wanted ads declined, but Gin was more encouraged by the year-long trend, which pushed the jobless rate below 7 percent for the first time since October 2008. Some of the weakness was tied to the federal budget sequester and temporary government shutdown, which led to job cuts at federal offices and local manufacturers. Most other sectors grew during the year, and Gin expects their growth to continue.

* Residential construction -- Home permits rose 46 percent last year to their highest point in 2006, although still well below the boom time from 1998 to 2004. Multifamily units rose 64 percent while single-family homes were up 17.6 percent.

* Stock prices -- As Wall Street climbed to record heights, the index of San Diego stocks rose 36 percent last year. That was slightly behind the 38.3 percent jump in the Nasdaq exchange, where most local stocks are listed, but outpaced the 29.6 percent rise in the S&P 500 index and the 26.5 percent growth in the Dow Jones Industrial Average.

* Consumer confidence -- After six straight months of rising optimism in the region, confidence fell in December, which Gin attributes to the problems with the Affordable Care Act as well as the lingering impact of the federal shutdown and budget debates.

* The national economy -- The national index of leading economic indicators has been pointing up for the past six months, bolstered by relatively strong growth of 4.1 percent in the third quarter and preliminary indications of 3.2 percent in the fourth quarter.

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