SAN DIEGO - San Diego County's economic outlook deteriorated again in October, according to the latest University of San Diego report. Even so, its author says an actual recession is unlikely despite the slowing economy.

Nationwide, the picture also looks gloomy with the ailing housing market and ongoing credit crunch slowing consumer spending, according to economic data released Friday by the U.S. Commerce Department.

The county's Index of Leading Economic Indicators, prepared by USD economics professor Alan Gin, fell by 1.2 percentage points.

Gin said that was third significant consecutive decline. A composite of local economic factors, the index stood at 140.7 in October 2006. Last month, it fell to 131.8. The trend is more important than the actual numbers, he said.

Kelly Cunningham, a veteran local economist, reiterated his earlier statements that the economy is likely to avoid a recession in technical terms, but the sharp slowdown would appear to be a recession to most people.

Technically, a recession is a decline in economic output for two consecutive quarters.

"It certainly will feel like a recession," Cunningham said. He is a senior fellow and economist at the San Diego Institute for Policy Research, a free market-oriented think tank.

Gin said he agreed with Cunningham's take on the local scene, noting that over the past several years, the local economy has outperformed the state and nation's.

"We've been kind of spoiled here in terms of our economy," Gin said. "A slowdown would feel like a recession to a lot of people."

In his report, he said San Diego is in a somewhat better position than other parts of the country because it doesn't have industries like auto and steel production that are hurt by a downturn.

The USD index was affected in October by a decline in help wanted advertising, a rise in unemployment insurance filings, and a drop in building permits. It has fallen for 18 of the last 19 months. In March, 2006, the index reached 144.2, then began its decline.

Cunningham noted that the only positive sign among the indices was a rise in the stock price of local publicly traded companies. But even that number looks likely to turn negative in upcoming reports, Cunningham said.

Local stock prices have been buoyed by the good performance stock in companies that recently held public offerings, he said. But that is not reflective of the local economy as a whole, he said.

Cunningham also noted that technology employment remains strong, providing good-paying jobs.

In the Commerce Department report, consumer spending nationwide edged up 0.2 percent in October, the weakest showing since a similar increase in June. Individual incomes grew by just 0.2 percent last month, the poorest showing in six months.

Meanwhile, a separate Commerce report showed that construction spending fell by 0.8 percent last month, the biggest decline since July. Activity in the stressed housing industry fell for a 20th straight month while nonresidential construction weakened as well.

The weakness in consumer spending, incomes and construction raised new worries about spreading economic weakness caused by the steepest slump in housing in more than 20 years and a widening credit crisis triggered by rising mortgage defaults. Consumers are also stressed by surging prices for gasoline and other energy products.

"Consumers are still spending, though not nearly at the pace they had been," said Joel Naroff, chief economist at Naroff Economic Advisors.

The Associated Press contributed to this report.

Contact staff writer Bradley J. Fikes at (760) 739-6641 or bfikes@nctimes.com.