New gauge for region's economy

By: ANN PERRY - Staff Writer | Monday, May 14, 2007 8:03 PM PDT ∞

There's a new gauge for testing San Diego County's economic waters, and its first reading shows that the temperature is growing chilly.

The gauge can be found in the first volumes of the San Diego Economic Ledger, a newsletter published every two months by the San Diego Institute for Policy Research (www.sandiegoinstitute.com).

The institute was set up in recent months by businessman Steven Francis, founder of AMN Healthcare Services Inc. in Carmel Valley, the nation's largest provider of temporary health care workers.

Francis, an unsuccessful candidate for mayor of San Diego in 2005, still has political aspirations.

But those don't affect the findings of the Economic Ledger, says Kelly Cunningham, an institute fellow and economist who formerly worked for the San Diego Regional Chamber of Commerce. The institute, says Cunningham, "is his way of having a say in the economic issues of San Diego."

In the Ledger's May edition, Cunningham said that three of five indicators he follows fell in February from the previous year: residential building dropped 54 percent, an index of San Diego stocks dropped by 1.1 percent, and new business licenses issued by the city of San Diego declined by 27 percent. The county's ultra-low unemployment rate stayed the same over the one year, at 4.2 percent.

And the fifth indicator is an economic consumer confidence index created for the institute in January by a local research company. It showed a drop of 9.2 percent from January to March, based on consumers' views of the local economy and their own financial situations.

Despite some downturns, Cunningham says he foresees no regional recession this year. "The San Diego economy is healthy," he says. "We do see it slowing down."

What worries him, however, is what he termed the county's "housing crisis."

High homes prices make it difficult for businesses to attract and retain skilled workers, he says.

While a slowdown in real estate prices could help ease this, Cunningham says that it puts other strains on the economy. For one, construction jobs fell by 6,100 between February 2006 and the same month in 2007. For another, the ability of homeowners to extract money from their homes by refinancing or tapping equity has declined, contributing to a drop in retail spending and jobs.

The institute's new gauge overlaps somewhat with an index of leading economic indicators published monthly by Alan Gin, through the University of San Diego's Burnham-Moores Center for Real Estate. Both Cunningham and Gin agree ---- not surprisingly, given that they're economists ---- that more information is a good thing.

-- Contact Business Editor Ann Perry at (760) 740-5444 or aperry@nctimes.com.

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