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Saturday, July 21, 2007

San Diego Nears Recession

by Calculated Risk on 7/21/2007 07:38:00 PM

From the North County Times: Report: Job growth stalls in San Diego County

Job growth has nearly ground to a halt in San Diego County, raising the risk of a recession later this year, two economists who track the local business climate said Friday.

The latest monthly employment report shows that woes in real estate and construction have spilled over into the local economy, said the economists, Kelly Cunningham of the San Diego Institute for Policy Research and Alan Gin of the University of San Diego.
Gin, who compiles a monthly index of leading economic indicators, said last month that his numbers indicated a recession was possible. His index has been fallen in 13 of the last 14 months, signaling a steady deterioration in San Diego's economy.

The chance of a recession is "getting higher," Gin said. "I wouldn't say over 50 percent, but it's not infinitesimal.

"The culprit is real estate," Gin said....

Cunningham said that nonresidential real estate construction has also begun to slacken.

"The commercial side of it is starting to see slowing down," Cunningham said. "So both of those things together seem to reflect a slowing economy and perhaps pulling us into recession."
A couple of key points: the problems in housing have "spilled over into the local economy" and nonresidential real estate construction has "begun to slacken".

San Diego is probably still a good leading indicator for housing and any spillover effects. As David Streitfeld noted in the LA Times almost exactly one year ago:
San Diego had the wildest run-up among major California cities, with prices tripling since the mid-1990s. ... The market also began to fade first in San Diego. ...

Whatever happens here, optimists and pessimists agree, will happen later in the rest of the state.
Of course there are problems in all of California, from the LA Times: State's job growth hits the brakes and in Florida too, from Bloomberg: Miami Condo Glut Pushes Florida's Economy to Brink of Recession