Southern California leading economic indicator increases in the third quarter

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Economic activity should pick up in the next three to six months in Southern California, according to Adrian Fleissig, an economist and professor at Cal State Fullerton, adding more positive news to a slew of data released in the last two months that indicate the region is finally starting to recover.
The Southern California leading economic indicator increased by 0.22% in the third quarter of 2009. It’s the second consecutive increase in the indicator after nine consecutive decreases. The indicator looks at regional figures such as consumer confidence, building permits, non-farm employment and increases in unemployment, as well as national figures such as the money supply, inflation and changes in the S&P 500. It can be used to predict trends in the economy -- the leading economic indicator decreased significantly before the recessions of the 1990s and in late 2007.

“It’s showing that things are not getting worse,” Fleissig said.

The U.S. leading economic indicator increased “significantly” in the third quarter of 2009, Fleissig said, which also implied an increase in economic activity nationally for the next three to six months.

Positive signs included the increase in the S&P 500, Pacific-region consumer confidence and the change in the interest rate spread. Negative effects included the decline in the money supply, regional building rate permits and the unemployment rate.

The state posted its first month of job gains since April 2008 in October, and the country’s gross domestic product increased for the first time in a year in the three months ending Sept. 30. Exports at the Port of Los Angeles were up in October for the first time this year.

Yet the fact that the indicator increased by 0.22% rather than the 1% that indicates strong growth means the state still has a while to go, Fleissig noted.

“At this stage, we need to see a decrease in unemployment and a number of months where there’s an increase in employment growth,” he said.

-- Alana Semuels