Transcript
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WITH THE LABOR DAY WEEKEND COMING UP, WE CHECK IN ON THE LOCAL ECONOMY. EVERY MONTH, ECONOMIST ALLEN GIN COMPILES THE UNIVERSITY OF SAN DIEGO'S INDEX OF LEADING ECONOMIC INDICATORS. PROFESSOR GIN JOINS US TODAY TO DISCUSS THE LATEST TRENDS IN THE LOCAL ECONOMY. WELL, ALLEN, YOU'VE BEEN WATCHING THE LOCAL ECONOMY FOR YEARS. HOW WOULD YOU DESCRIBE THE CURRENT STATE?
RIGHT NOW, OUR INDEX OF LEADING INDICATORS HAS INCREASED WITH 16 MONTHS ENROLLED. SO THAT'S POSITIVE. SOME PEOPLE ARE TALKING ABOUT A POSSIBLE DOUBLE DIP IN THE NATIONAL ECONOMY. I DON'T ANTICIPATE IT TO HAPPEN HERE IN SAN DIEGO. THE PROBLEM IS, THE LAST FEW MONTHS, THE GAIN HAS NOT BEEN VERY STRONG. SO ANY SORT OF RECOVERY WILL PROBABLY BE RELATIVELY WEAK.
THE GRAPHS THAT YOU PREPARED WHICH WE'RE SHOWING, IT REALLY IS RATHER DRAMATIC. THAT DRAMATIC DROP IN THE ECONOMY BETWEEN JULY 2007 AND JULY 2009, WHAT CAUSED THAT?
THE ECONOMY WENT INTO A DOWNTURN SO MOST OF THE INDICATORS WERE DOWN. CONSUMER CONFIDENCE IS DOWN, BUILDING PERMITS WERE DOWN AND THE HOUSING BOOM DEFLATED. THEN WE HAD SERIOUS PROBLEMS IN TERMS OF THE LABOR MARKET. AND THERE WERE A LOT OF LAYOFFS WHICH INCREASED INITIAL CLAIMS FOR UNEMPLOYMENT INSURANCE WAS THE NEGATIVE FOR THE INDEX.
THEN IT LOOKS AS THOUGH THE LOCAL ECONOMY IS STARTING TO TREND UPWARDS STARTING AROUND SEPTEMBER 2009. CAN WE ATTRIBUTE THAT TO ANYTHING SPECIFIC?
WHAT'S HAPPENED RECENTLY IS THAT THE HELP WANTED ADVERTISING HAD STARTED TO PICK UP, SO, YOU KNOW, WE HEAR ABOUT THE HIGH UNEMPLOYMENT RATE AT 10.8% HERE IN SAN DIEGO. THERE IS A LITTLE BIT OF HOPE IN THE SENSE THAT BUSINESSES SEEM TO BE HIRING A LITTLE BIT MORE. ON TOP OF THAT, CONSUMER CONFIDENCE IN OUR LAST REPORT HAS PICKED UP SOMEWHAT.
SO WOULD YOU CONSIDER THAT SOME OF THE MORE POSITIVE ECONOMIC TRENDS THAT WE'RE SEEING OVER THE LAST KIM OF MONTHS? WHEN YOU LOOK AT THEM ALL, YOU SAY THAT'S WHAT I CAN PUT MY FINGER ON?
THOSE ARE AMONG THE MORE IMPORTANT VARIABLES IN TERMS OF THE LOCAL ECONOMY. CONSUMER ACTIVITY IS ABOUT TWO- THIRDS OF ECONOMIC ACTIVITY, AND SO CONSUMER CONFIDENCE BEING UP IS GOOD. IT'S AT THE HIGHEST LEVEL IN ALMOST A YEAR. IF CONSUMERS ARE FEELING CONFIDENT ABOUT THEIR JOB AND INCOME PROSPECTS, THEY'LL PROBABLY GO OUT AND SPEND MORE MONEY. THAT'LL HELP THE ECONOMY IN THE SENSE THAT BUSINESSES WILL START HIRING MORE WORKERS. AGAIN, WE'RE SEEING MORE OF THAT IN THE HELP WANTED. THE PROBLEM,WE'RE SEEING A RELATIVELY HIGH RATE OF JOBS LOST. OUR INITIAL CLAIMS FOR UNEMPLOYMENT INSURANCE IS STILL NEGATIVE.
SO IT SOUNDS ALMOST LIKE THE CHICKEN AND THE EGG. WE SEE HIGHER CONSUMER CONFIDENCE IF THE ECONOMY LOOKS BETTER AND THE ECONOMY STARTS LOOKING BETTER WHEN WE SEE HIGHER CONSUMER CONFIDENCE.
IT IS A BIG SELF-REINFORCING CYCLE. RIGHT NOW, WE'RE ABOUT FLAT. WE STILL HAVE RELATIVELY HIGH UNEMPLOYMENT SO CONSUMERS ARE A LITTLE WORRIED. IT'S STARTING TO CHANGE, BUT IT COULD BE PRO IN THAT ONCE CONSUMERS START FEELING COMFORTABLE AND START SPENDING MONEY, BUSINESSES WILL HIRE AND MAKE CONSUMERS MORE CONFIDENT.
HERE WE ARE IN SEPTEMBER NOW. SEPTEMBER/OCTOBER, THIS IS SORT OF THE SEASON WHEN YOU HAVE A FEELING THAT BUSINESS WILL BE REINVIGORATED. WE'LL START LOOKING FORWARD TO THE SEASONAL SALES FOR THE HOLIDAY SEASON. DO YOU EXPECT THAT MAYBE WE ARE GOING TO SEE A DECREASE IN UNEMPLOYMENT NUMBERS IN THE NEXT FEW MONTHS?
I THINK WHAT'S GOING TO HAPPEN IN THE LOCAL ECONOMY IS THAT WE'LL HAVE SOME GROWTH THAT IT'S GOING TO BE RELATIVELY WEAK. SO I THINK WE WILL SEE THE UNEMPLOYMENT RATE EDGE DOWN BUT NOT AT THE RATE THAT MOST PEOPLE WOULD LIKE TO SEE. WE'D LIKE TO SEE A BIG DROP FROM THAT 10.8% UNEMPLOYMENT RATE. I THINK IT'S GOING TO TAKE MANY YEARS FOR TO US GET OUT OF THIS SLUMP THAT WE'RE IN.
OKAY. JUST VERY QUICKLY, HOW IMPORTANT IS GOVERNMENT SPENDING TO THIS WHOLE CYCLE IN SAN DIEGO?
I THINK IT'S VERY IMPORTANT. A REPORT CAME OUT RECENTLY THAT SAN DIEGO NOW IS THE LARGEST METROPOLITAN AREA IN THE COUNTRY IN TERMS OF PAYROLLS. ALL OF THIS MONEY KEEPS FLOWING INTO THE REGION REGARDLESS OF WHERE WE ARE IN THE BUSINESS CYCLE. SO EVEN THOUGH WE'RE IN AN ECONOMIC DOWNTURN, WE HAVE THIS MONEY POURING INTO THE REGION AND THAT HELPS IN TERMS OF GIVING SPENDING POWER AND HELPS LOCAL BUSINESSES.
THANK SO YOU MUCH FOR YOUR ANALYSIS. I APPRECIATE IT.
THANKS.
