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Fed activity helped boost California economy, indicator says

November 30, 2010 | 10:33 am

Money Southern California's economy will continue to improve in the next three to six months, according to a leading economic indicator released Tuesday morning by Cal State Fullerton.

This is the fourth straight quarter that the indicator has ticked up, signaling that Southern California is well on the way to recovery, said Adrian Fleissig, the economist who compiles the indicator.

"I think that at this stage, we're out of the recession in Southern California," he said.

The leading economic indicator for the United States economy also increased in the third quarter of 2010.

Fleissig uses components including regional building permits, the S&P 500 and regional unemployment to compile the Southern California leading indicator. In the third quarter, the positive components were an increase in the money supply adjusted for inflation, a change in the interest rate spread and a decrease in regional unemployment. The first two factors are directly related to actions by the Federal Reserve Bank to boost the money supply.

The indicator increased to 99.26 in the third quarter from 99.08 in the second quarter, Fleissig said.

-- Alana Semuels

Photo: An increase in the money supply boosted the leading indicator. Credit: kugelfish via Flickr