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Building permits and unemployment insurance led the slight decline in the University of San Diego index of leading economic indicators. Seven straight months of declines support economist Alan Gin, director of the index, in his forecast of an economic slowdown this winter and in early 2007.

This month’s drops were smaller than some recent months. (Click to read more about the September or August indexes.) Two other negative indicators, though quite slight, were fewer employers posting help wanted ads and a slight rise in people filing unemployment insurance claims for the first time.

But the index showed some gains in stock prices for local stocks, consumer confidence and the national economic outlook. Those were enough to restrict the index’s overall decline to 0.1 percent, compared to the 0.2 percent decline in September and the 0.6 percent drop in August.

Gin had this analysis in the report:

In addition to being weighed down by a slowing national economy, the weak housing market will hurt the local economy in three areas: slow or negative job growth in construction and real estate-related jobs, weaker consumer spending due to lower home equity and a “reverse wealth effect” (people feeling poorer as the values of their homes decline), and more homes lost to foreclosures, particularly by those who stretched themselves to get into the housing market, many times with unconventional home loans.

Click to read a PDF of the index released today.


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