Economic forecast remains negative

Weighed down by instability in the housing market, the outlook for the San Diego region’s flagging economy remains negative through at least the first part of next year, a University of San Diego economist reported Thursday.

The Index of Leading Economic Indicators for San Diego County fell .8 percent in September, led by a surge in the number of initial claims for unemployment insurance, according to Alan Gin, who compiles the index for USD’s Burnham-Moores Center for Real Estate.

The number of building permits, local stock prices and consumer confidence were all down considerably last month, while help-wanted advertising suffered a more modest decline, according to Gin.

The only positive component of Gin’s index was the outlook for the national economy, which was up moderately.

It was the 29th time in 30 months that the USD index has dropped.

Gin said the outlook for the local economy remains negative through the first half of next year.

“What is needed to turn the economy around both locally and nationally is stability in the housing market,’’ he wrote. “Falling prices and a jump in foreclosures have hurt both the labor market and the financial markets and institutions.’’

According to Gin, a recent increase in home resales is a positive sign, but the housing market is not expected to bottom out until the end of 2009, and home prices are not likely to increase until 2010 at the earliest.