Southland Economic Indicator Falls
An indicator of the Southland’s economic growth fell for the second straight quarter, raising concern that the region’s already slow recovery is on the verge of stalling.
Cal State Fullerton said Monday that its Southern California index of leading economic indicators declined by 0.45% in the third quarter of 2002. It follows a revision to the index’s second-quarter performance showing a drop of 0.61% from April to June.
Adrian Fleissig, the creator of the indicator, said the back-to-back quarterly decline was worse than expected and bodes ill for the region’s economic prospects over the next three to six months.
“This suggests quite a bit of a slowdown,” Fleissig said. “If there is going to be improvement, it’s going to be toward the end of next year.”
The decline in the index mirrors other recent data showing the U.S. recovery is stumbling.
The Conference Board’s U.S. index of leading indicators dipped 0.2% in September. It marked the fourth straight month that index has declined, and has heightened worries about a so-called double-dip recession.
Three of the seven components of the Southern California index fell in the third quarter, led by a major decline in the Standard & Poor’s 500 stock index and a steep drop in the Pacific region consumer confidence index.
The Southern California index also reflected weakness in the region’s labor market, where unemployment has increased over the last year and payroll employment has declined in the major population centers of Los Angeles and Orange counties.
“It’s not clear at this stage where more employment is going to come from,” Fleissig said. “That is a major concern.”
The index projects regional economic activity for a six-county area consisting of Los Angeles, Orange, San Bernardino, Riverside, Ventura and Imperial counties.
It tracks seven national and regional components.
The national variables are money supply, interest rates and the S&P; 500 index. The regional components are nonfarm employment, the unemployment rate, building permits and Pacific region consumer confidence.
