Note: The data in this report are based on our customary end-of-the-year
revisions. As a result, the various scales of index levels (the vertical axes on most of
the graphs below) may, in some cases, be substantially different from those appearing
in recent monthly reports. All of the percent change figures given are relative to the beginning of 2002
(December 2001 index levels). The Index of Economic Activity began with a value of
100 in January 1994.
Through November, the Humboldt County economy had grown a respectable 2.6 percent since the beginning of the year. Then a series of severe storms hit the North Coast in December. In addition to causing more than $7 million in reported damages countywide, the storms had a powerful impact on economic activity as well. The Composite Index fell sharply in December resulting in a net decrease of 1.5 percent for the year. This "weather effect" appears in several of the sectoral graphs below. The good news is that much of the lost ground has already been regained.
A record number of homes were sold in Humboldt County in 2002, and the Home Sales index reached its highest level ever, as a result. Because of the steep December decline however, this sector ended up 1.6 percent lower than last year.
The big story in the local economy this year was rapidly rising home prices. As the graph on the left illustrates, median home prices jumped a staggering 25.5 percent over the course of 2002. Since increases in residential rents have thus far kept pace with climbing home prices, it appears that the huge rise represents a real gain in value rather than the emergence of a housing bubble. While this is good news for homeowners, the trend is troubling for renters and many first-time home buyers. The Humboldt Association of Realtor's Housing Affordability Index, which represents the percentage of Humboldt County households that can afford to buy a median priced home, illustrates that income growth is falling behind home price appreciation at an alarming rate.
Retail Sales was the one sector that doesn't seem to have been affected by December's poor weather. Although the sector ended the year on a pronounced upswing, it was down a net 1.0 percent from the previous year. This is partly because of slower than usual growth in holiday sales. Much of the month-to-month volatility seen in the graph was due to flucuations in automobile sales. This sector remains higher relative to where the Index began nine years ago than any of the other five sectors.
The Hospitality sector experienced a nice growth spurt in the summer of 2002, but ended the year down a net 3.5 percent. Prior to the December slide however, activity was up a net 7.4 percent.
The Energy sector, as measured by electricity consumption, declined steadily through the first half of 2002, leveled off during the summer months and surged in the fall. Comparing this graph with the one for the Composite Index suggests that the downward trend early in the year was likely due to conservation efforts, while the later jump probably resulted from increased economic activity. The precipitous plunge in December reflects the fact that the storms left many PG&E customers without power for extended periods of time. This sector fell a net 4.0 percent over the year.
Employment climbed steadily in the winter and spring, then experienced minor flucuations throughout the rest of the year before dropping sharply in December. This sector ended the year up a net 3.5 percent.
Despite regularly registering monthly index levels among the lowest ever, Manufacturing was the only one of the Index's six sectors to end 2002 higher than when the year began. The local lumber industry, which has been undergoing structural decline for the past several years, appears to have bottomed out and may be beginning a slow recovery. This sector gained a net 7.9 percent in 2002.
We track four leading indicators to get a sense of the direction of change in the county economy in the near future. Our two employment-based indicators point towards a struggling labor market. Claims for Unemployment Insurance trended strongly upwards over most of the year and Help-Wanted Advertising has been on a down slide since mid-year. Our other two indicators are more positive. The slow, but steady upward trend in Manufacturing Orders is a welcome cause for optimism for the stressed lumber industry. The consistent growth in Building Permit activity since the spring reflects a response by the construction industry to opportunities in the local housing market.
The graphs in this section use a four-month moving average of seasonally adjusted Index values in order to "smooth" ordinary month-to-month volatility. In this way, any underlying trends present in the series become more apparent.
Employment-Based Economic Indicators:
A count of help-wanted ads indicates the number of new job openings.
Claims for unemployment insurance indicate the number of newly unemployed people in Humboldt County. Thus the number of new unemployment claims is a negative indicator of economic activity.
Manufacturing Economic Indicator:
Home Sales Economic Indicator:
