| Humboldt County | Seasonally Adjusted | ||
| Median Home Price* | Help Wanted Advertising | ||
| 30 Yr. Mortgage Rate (as of 5/23) | Building Permits | ||
| Average Hotel Occupancy Rate | Unemployment Claims | ||
| Unemployment Rate** | Manufacturing Orders | ||
| * Home price data are provided by the Humboldt Association of Realtors. MLS is not responsible for accuracy of information. The information published and disseminated by the Service is communicated verbatim, without change by the Service, as filed with the Service by the Participant. The Service does not verify such information provided and disclaims any responsibility for its accuracy. Each Participant agrees to hold the Service harmless against any liability arising from any inaccuracy or inadequacy of the information. | |||
| ** Preliminary EDD data (not seasonally adjusted). See the EDD Website for updates. | |||
| Sector | Seasonally Adjusted Sectoral Index Value (1994=100) | Previous Month | Same Month 2002 | Same Month 2001 | Same Month 2000 | Same Month 1999 | Same Month 1998 |
|---|---|---|---|---|---|---|---|
| ***** | ||||
| May 2003 | ||||
| * Estimated number of jobs gained/lost in May
relative to April's EDD preliminary estimate (rounded to the nearest 100). | ||||
| ** Correlation of model's estimates to the actual monthly levels
of total county employment over the period January 1995 to April 2003. | ||||
| *** Mean of the absolute values of the monthly deviation of
model's estimates from the actual monthly levels of total county employment over the period January 1995 to April 2003. | ||||
| **** Accuracy of model in correctly predicting an increase or
decrease in the level of total county employment from the previous month. Accuracy does not apply to the magnitude of any change. |
||||
| The model is a regression-based estimator of employment in the
current month, using lagged employment, help- wanted advertising and unemployment insurance claims data. All data are not seasonally adjusted. Click here for a detailed explanation. | ||||
Only two of the Index's six seasonally adjusted sectors registered positive growth relative to March's revised numbers, but the increases were enough to nudge the overall composite index upwards. Of these, home sales regained all of the ground it lost in March and then some. It's current index level is the second highest on record, which is even more remarkable given that rainy weather tends to reduce activity in this sector. The hospitality sector grew for a second straight month, though the current number is still lower than the same month in each of the last five years. Retail sales, one of the Index's most consistently strong sectors, has registered reduced month-over-month activity for four consecutive months. Lumber-based manufacturing came in slightly lower than the previous month's downwardly revised figure. This sector appears to have been affected more than any other by April's rain. The employment sector fell for a second straight month as weakness lingers in the local labor market.
The seasonally adjusted leading indicators are mixed once again this month. The encouraging news is that labor market conditions may be turning around after two or three months of poor performance. While New claims for unemployment insurance in April rose by a huge margin from March's number, help-wanted advertising for May registered a healthy increase as more seasonal employment opportunities become available. On a four-month moving average basis, however, the seasonally adjusted employment leading indicators are still trending negatively, and compare unfavorably with same month activity in each of the previous five years (help wanted ads are down by double digit percentages in each of these comparisons). Manufacturing orders improved slightly, though the four-month trend is downwards. Building permits fell, but the downward trend here appears to be leveling off somewhat.
The Humboldt County Employment Estimate, which is not seasonally adjusted, suggests the local economy will add jobs in May, but this is is what one would expect in an economy as seasonally sensitive as ours.
It appears that the record rainfall during April did little to dampen activity in the local housing sector. More homes were sold in the month than in any other April in the nine years of the Index's history, and the sector registered its second highest seasonally adjusted index level ever. With the continued reduction in interest rates, homes sales may well set additional records throughout the summer.
April's median home price remained unchanged from March's figure. This sometimes-volatile measure is 22.6 percent higher than it was in April 2002. The current statewide median sale price for existing homes rose once again in April, climbing 3.2 percent to $363,930 from March's downwardly revised number. The current figure is 14.8 percent higher than in April 2002, when it was $317,120. According to the California Association of Realtors, the median home price has increased by double-digit percentages for 17 consecutive months when compared to same month activity in the previous year, and is once again at a new record level (www.car.org). April's national median price for existing homes is up 0.2 percent from March's level to $163,400, and is 6.8 percent higher than it was in April 2002 (www.realtor.org). The similar figure for new homes fell 0.2 percent from March's upwardly revised $185,400 to $1885,100. This measure is down 1.1 percent when compared to April 2002 (www.census.gov).
Analysis of recently released national income data for 2001 reveals that housing is unaffordable for many working families across the country. A new study from the National Housing Conference, a non-partisan advocate for safe and affordable housing based in Washington D.C., finds that the typical wages of key service occupations are insufficient to afford median priced housing. The problem is particularly acute in the nation's 60 largest metropolitan areas where janitorial and retail workers are unable to rent a one-bedroom apartment based on the accepted standard of devoting 30 percent of income to housing. In several of the higher priced markets one-bedroom apartments cost more than 30 percent of two such salaries. Unaffordable housing is also a problem for better-paid occupations such as elementary-school teacher and police officer. According to the NHC report, police officers in 28 of the 60 markets studied do not make enough to qualify for a mortgage on a median priced home. Using the same criteria, teachers are priced out of the market in 32 of the 60 areas. The NHC claims this issue has serious economic and social implications for affected communities. For example, housing affordability for the labor pool is one of the top three considerations businesses face when deciding where to locate new facilities. Additionally, households that spend more than one-third of their income on housing obviously have that much less to spend on other necessities like food, utilities, health care, child care and education, and these workers often have less time to devote to family activities because of working more hours to lessen the shortfall (www.nhc.org).
How Does Humboldt County Compare?
We looked at several occupations including some within industries local leaders have targeted as being
the best bets for sustainable economic development. We then computed the percentage
of gross monthly wages an experienced, full-time worker in these occupations would have to pay to
buy or rent a median priced home. The results appear in the table below (the data used are from 2002):
| (1) Source: Employment Development Department, Labor Market Information Division. Based on data for Humboldt, Del Norte, Mendocino, and Lake Counties. | ||||||
| (2) Median hourly wage multiplied by 160 hours. | ||||||
| (3) The mean of the monthly mortgage payments on the median priced home (30 year fixed mortgage, no points, nothing down using interest rates as reported by Humboldt Bank) for the 12 months of 2002. | ||||||
| (4) The percentage of gross monthly income required to pay the mean monthly mortgage payment. | ||||||
| (5) The mean of the median monthly rents (based on a survey of Eureka Times-Standard classified advertisements) for the 12 months of 2002. | ||||||
| (6) The percentage of gross monthly income required to pay the mean monthly rent. | ||||||
| (7) Estimated, based on the median annual salary of $46,490 and a 2,000 hour work year. | ||||||
| (8) Based in part on the Prosperity Network's economic growth strategy for Humboldt County. The industries represented here include Information & Technology, Dairy & Specialty Agriculture, Food Manufacturing, Natural Resource Restoration, Tourism, and Lumber & Wood Manufacturing. | ||||||
When looking at this analysis, one should keep in mind that half of all homes available for sale cost less than the median price. Therefore, there are opportunities for lower-wage workers to find more-affordable housing. However, the current trends in housing prices and income present some troubling realities that need to be addressed sooner or later. A look at the graph below illustrates that from 2000, when price appreciation really began to accelerate locally, through the present, the median home price has increased 49.2 percent after accounting for inflation. At the same time, real personal per capita income growth for Humboldt County from 2000 to 2001, the most recent data available, was negative 0.2 percent. The county-wide per capita personal income level for 2001 (in inflation adjusted dollars) was around $24,275. This falls somewhere between the typical income levels for firefighters and truck drivers.
The Humboldt Association of Realtors' Housing Affordability Index further illustrates the recent slide in local housing affordability. The most recent release, which represents the percentage of Humboldt County households that could afford to purchase a median priced home in March, came in at 33 percent. This is a decline of 2 percentage points from February's level and it's 11 percentage points lower than in March 2002. The next graph shows the five-year tend:
According to the country's largest mortgage company, Freddie Mac, the nationwide average for a 30-year fixed rate mortgage as of May 22 was 5.34 percent with an average 0.7 points. Last year at this time, the average rate was 6.81 percent with an average 0.7 points (www.freddiemac.com).
The Commerce Department reports that national April retail sales were 0.1 percent lower than in March. The decrease was led by falling activity at gasoline stations (down 5.9 percent), clothing and clothing accessories store (down 3.2 percent) and department stores (down 1.4 percent). Sub-sectors gaining ground since March include auto and other motor vehicle dealers (up 2.9 percent), sporting goods, hobby, book and music stores (up 1.2 percent) and miscellaneous store retailers (up 1.0 percent) (www.census.gov).
The Conference Board's Consumer Confidence Index rose for a second straight month in May, though by a much smaller margin than April's nearly 20-point leap. The Conference Board's head of consumer research said “The post-war euphoria experienced last month has quickly given way and consumers’ focus has returned to matters on the home front. Labor market conditions continue to be of concern, but consumers anticipate a turnaround in the coming months.” The measure, which now stands at 83.8, is up from April's 81.0 but remains considerably lower than it was for most of 2002 (www.conference-board.org).
Average occupancy at the participating hotels, motels and inns rose substantially in April from the previous month's level as some of the region's resorts reopened from their annual winter closures. This resulted in a healthy increase in the seasonally adjusted index number, but the number is down slightly from same month activity in each of the past few years.
Promoters of the local tourism industry are predicting a banner year based on a record number of inquiries made to the Humboldt County Convention and Visitors Bureau during April. The number of unique visitors to the Bureau's web site also set a record. Don Leonard, the Bureau's executive director, says a concentrated media campaign marketing the North Coast to residents of Northern California appears to be paying off (www.times-standard.com).
The planned docking in Eureka of a cruise ship filled with European tourists in early May was cancelled when the necessary liability insurance failed to be secured. There was some confusion between the dock owner, the stevedore company and the city over who was responsible for taking out the policy. The economic impact of the snafu is uncertain, but area merchants, restaurants and tour organizers were almost certainly affected. Efforts are being taken to improve coordination between the concerned parties before August when another ship is scheduled to arrive (www.times-standard.com).
Gasoline Prices:
(cents/gal.) | |||
|---|---|---|---|
| Eureka | Northern CA | ||
| California | |||
| * Current average price per gallon of self-serve
regular un- leaded gasoline as reported by the American Automobile Association's monthly gas survey (www.csaa.com). | |||
After more than a year in planning, Costco opened a gas station at its Eureka store in early May. As the above table shows, Costco's $1.75 per gallon price for regular gasoline seems to be having an impact on the local gasoline market. Before the station opened, self-service regular unleaded was selling for around $2.00 per gallon. Afterwards, prices at most mid-county stations had dropped to the current level within a couple of days (www.times-standard.com). Establishing definite threads of cause and effect in an economic market is a difficult endeavor and beyond the resources of the Index. Nevertheless, the 20-cent per gallon drop experienced elsewhere in California since mid-April can be explained by increased supply now that refineries have completed the changeover to their seasonal reformulations and by the falling price of crude oil. One plausible explanation for the additional 15-cent decrease seen locally could be that the competition provided by Costco is reducing the higher than industry average margins Humboldt County fuel distributors may have been enjoying over the past several years. Since Costco faces the same transportation constraints as its competitors, it will be interesting to observe market price activity over the next several months. If the difference between local prices and those in other parts of the region remain lower, the allegation that gasoline distributors have been exerting market power in order to realize higher than expected profits becomes much more plausible.
According to the Environmental Protection Agency, the average fuel economy for 2002 model year cars and light trucks produced in the United States is at a 22-year low. The 20.4 miles to the gallon average is the lowest level since 1980's 19.2 miles per gallon. The peak fuel efficiency was attained in 1988 at 22.1 miles per gallon. Vehicles that are heavier, faster and more powerful on average are the cause of the decline. The automobile industry's chief lobbying group claims that there are 30 different domestically produced cars that get more than 30 miles to the gallon, but the 10 most fuel-efficient of these account for less than 2 percent of total sales by volume (www.nytimes.com). Sales over the past several years indicate that customers want bigger, faster cars, and that they feel they can afford the cost of the additional fuel these vehicles consume. This is one indication that the real price of gasoline is lower than most people generally think. Unfortunately, the real price of gasoline does not accurately reflect the real costs of gasoline consumption. If the actual costs of the environmental degradation associated with automobile use, the heavily subsidized transportation infrastructure and the military might used to secure crude oil supplies were included in the price of gasoline, its price would be considerably higher.
Estimated April consumption of electricity fell 4.7 percent from March's actual level.
The Bay Area Economic Forum, a business-oriented group of executives, politicians and academics, recently released a study saying that electricity shortages such as those occurring during the California energy crisis could return within the next few years if the state fails to adopt a cohesive energy policy and invest in its electricity and natural gas infrastructure. The group claims the policy uncertainty that still exists discourages energy companies from building new power plants in the state. It suggests, at the very least, establishing a varying rate schedule for electricity consumption based on the time of day of use so that peak demand will be limited somewhat by price. Californians are among the lowest-per capita energy consumers in the nation, but pay among the highest prices. Retail rates are 42 percent higher than the national average, while business rates are 71 percent higher (www.sfgate.com).
As if to punctuate the Bay Area Economic Forum's concern, the state agency responsible for operating the electricity grid declared a Stage One power emergency in the last week of May due to hotter than expected temperatures in the Central Valley and the resulting increase in demand for power. According to the California Independent System Operator, power reserves dipped below the 7 percent level triggering the alert. ISO officials stressed that conditions were a long way from those that resulted in rolling blackouts two years ago. They expressed concern, however, because this event occurred earlier in the year than expected. Only two Stage One emergencies were declared last year (www.sfgate.com).
Pacific Gas and Electric Company and the California Public Utilities Commission are still wrangling over how much regulatory power the government agency will retain once the utility emerges from bankruptcy. Lawyers for the two sides presented arguments before the Ninth U.S. Circuit Court of Appeals in May. At issue is PG&E's reorganization plan which conflicts with several state laws. PG&E claims that any state law that interferes with its plan is superceded by federal bankruptcy law. The PUC argues that the bankruptcy laws were not intended to allow utilities to avoid all state regulation. It is concerned that if PG&E prevails, environmental regulations that apply to the 180,000 acres surrounding the firm's hydroelectric plants would be weakened, and that looser federal energy regulations would ultimately result in consumers paying even higher rates for electricity. A Justice Department attorney filed a brief siding with the PUC saying that PG&E's argument, if accepted by the court, would exempt the company from a number of federal energy regulations including one that restricts the transfer of nuclear power plants. The case is being heard in the appeals court because a U.S. District Court judge ruled last August that the utility's bankruptcy plan was exempt from state laws (www.sfgate.come).
In their preliminary report for April, the EDD reported that 56,400 people were employed in Humboldt County. This is a 0.4 percent decrease over March's figure, indicating a net loss of 200 jobs over the previous month's downwardly revised number.
Preliminary EDD data indicate the following changes in Humboldt county employment:
April's unemployment rate for Humboldt County dropped six-tenths of a percentage point from March's upwardly revised 7.7 percent to a preliminary 7.1 percent. Meanwhile, the national rate (not seasonally adjusted) fell four-tenths of a percentage point to 5.8 percent and the state rate dropped three-tenths of a percentage point to 6.6 percent from March's upwardly revised figure.
Another 48,000 jobs were lost nationally in April. As a result, the national seasonally adjusted unemployment rate rose two percentage points to 6.0 percent, matching an eight-year high. The decline brings the total number of jobs lost over the last three months to 525,000. Since 1960, every loss of this magnitude has been taken place within a recession (www.nytimes.com).
Using the classic textbook definition of a recession--two consecutive quarters of negative gross domestic product growth--the U.S. economy is not currently in a recession. However, the National Bureau of Economic Research, the body responsible for setting the official dates marking the expansion and contraction of the business cycle, has yet to declare an end to the recession that began in March 2001. They use a broader definition that takes into account additional factors such has trade, income growth and employment conditions (www.nber.org). As noted last month, the current job market is the worst in 20 years.
The president signed legislation extending access to unemployment benefits to those people who have used up their state benefits. The extension, which runs through December 31, allows for an additional 13 weeks of benefits (26 weeks in a handful of states experiencing higher than average levels of unemployment). While the unemployment rate is not nearly as high as it has been in previous recessions, analysis by the National Employment Law Project, a liberal advocate for the unemployed based in New York City (www.nelp.org), shows the following:
According to Labor Department statistics, an additional 4.7 million people who wanted full-time work in April but could only find part-time work represent the highest level of under-employed people in nearly 10 years. This number has risen more than 50 percent since 2000 (www.nytimes.com).
The preliminary April Index value for this sector fell 0.2 percent from the prior month's level. The drop is more substantial than it appears given that March's level was revised downwards from 92.6 to 74.1. The revision leaves the March and April numbers at this sector's lowest level since the Index began in 1994.
A local industry source says "shipments were down in March and April due to mill downtime caused by log availability. The rainy spring has caused redwood volume to slow somewhat but has not impacted pricing. Douglas fir is still a tough business as the softwood market is over-supplied."
The temporary lack of logs due to the wettest April on record affected the local pulp industry, as well. Samoa Pacific Cellulose shut down its operation for four shifts because the lumber mills that supply its wood chips had none to sell (www.times-standard.com).
Around 250 people have applied for the 50 to 70 positions that will be available once Eel River Acquisition Corp. begins operations later this summer. The Nevada-based firm recently purchased Eel River Sawmills Mill A near Fortuna, and logs are schedule to begin arriving in mid-June. The acquisition corporation is also attempting to buy Eel River Sawmills' other three mills, its Fairhaven power plant and its timberlands. The proposed sale is contingent on the approval of the latter company's stockholders. Some 375 workers lost their jobs when the mills were shut down in late 2001 and early 2002 (www.times-standard.com).
Production at the nation's factories, mines and utilities fell 0.5 percent in April. This is the same magnitude of decrease that occurred in March. Slightly increased activity at mines and utilities was offset by a larger decline in manufacturing. The measure is 0.4 percent lower than in April 2002. Capacity utilization for total industry, the percentage of the nation's total industrial capability currently being used, decreased in April to 74.4 percent. This 0.5 percentage point below the rate from the previous month, and it's nearly 7 percentage points below the 1972-2002 average. (www.federalreserve.gov).
National manufacturing output in April, as measured by the Institute of Supply Management, contracted for a second consecutive month. The current ISM Index level of 45.4 dropped from March's 46.2 (a number higher than 50 indicates growth) (www.ism.ws).
Contraction in nationwide manufacturing employment accelerated in April to more than twice the average loss for the previous 12 months as around 95,000 people lost their jobs. Overall employment in this sector has shrunk for a staggering 33 consecutive months (www.bls.gov).
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:
Manufacturing orders are a leading indicator of activity and employment in the County.
Home Sales Economic Indicator:
Building permits are an indicator of both construction activity and the availability of new housing stock.
To be certain that the above analysis is not overly-influenced by a liberal bias, we also looked at a similar analysis performed by Deloitte & Touche, one of the country's largest accounting and business services firms. Here, a single person with no children making $530,000 per year typically paid nearly 28 times more in federal taxes under the old law than a similar person earning $41,000. Under the new law, that higher-income person's tax savings will be nearly 61 times greater than the lower-income person in 2003 and over 79 times more in 2005. Things are considerably more equitable for married people with dependent children. To make the bill more politically palatable, a provision raising the child tax credit from $600 per child to $1,000 was included during the legislative process (checks for the $400 difference will be sent directly to eligible taxpayers). For married couples with two children at the same income levels used above, the higher-income family will receive just 11 times more than their lower-income counterpart in 2003. However, following the 2004 election, this multiple increases to 39.5 times as much in tax savings when the child credit provision expires and the typical $41,000 per year family's tax cut shrinks from around $1,200 to $300 (www.nytimes.com). It should be remembered that the majority of this law's total benefits are paid out after 2004.
If you favor fairness, it gets worse. In order to keep the short-term accounting cost of the bill under $350 billion (estimates of the legislation's total cost over its entire lifespan are as high as $800 billion), families earning between $10,500 and $26,625 per year are not eligible for the child tax credit rebate. According to Citizens for Tax Justice, a non-partisan research group focusing on the impacts of federal, state and local tax policies, an estimated 16 million children will be affected. The president's spokesperson said that these people are ineligible because their federal tax liability is already zero (www.nytimes.com). While this may be true in some cases, the claim does not stand up to scrutiny. The average person in the $15,000 to $27,000 income range has an pre-tax income of $20,600 and a federal income tax liability of $3,255 (www.taxpolicycenter.org). This person could receive $400 checks for at least one or two children before their liability is exhausted.
So, will the tax cut stimulate the economy?
It appears as though the overwhelming consensus among economists is that any stimulus
provided will be insignificant, at best. This criticism is not limited to academic economists.
In testimony before the House Financial Services Committee earlier this month, Federal
Reserve Chair Alan Greenspan said that the economy was poised to grow without further
tax cuts, and that the resulting budget deficits, if not offset by comparable reductions
in government spending, could damage the economy. Most business economists
recognize that current conditions are the result of an over-investment in productive
capacity during the 1990s. The excess capacity will be worked off over time as demand for consumer
goods increase. However, the fact that most businesses are not investing much now when there is
already an abundance of cheap money available for borrowing is evidence that firms don't believe
demand will rise substantially anytime soon. While tax cuts are generally a good thing, one that places most
of the benefits in relatively few hands will likely do little to stimulate consumer demand in the near
term. Until this demand does grow at a sustainably higher rate, significant job growth is also unlikely.
Given the additional fact that these cuts are going to be paid for with borrowed money, the Financial Times, a
conservative British business publication characterized those responsible for this policy as the
lunatics in charge of the asylum (www.nytimes.com).
How has the economy fared since the last tax cut?
When it was passed, supporters of Mr. Bush's 2001 tax package--the benefits of which were
similarly skewed to upper income levels--assured everyone that its stimulating effect would
become apparent 12 to 18 months into the future. That future is now here, but the economy
continues to falter. More significantly, since its passage some 1.7 million jobs have been
lost.
We reiterate, tax cuts can be extremely beneficial even when they result in budget deficits, but the devil is in the details.
The Commerce Department's latest reading of first quarter 2003 gross domestic product growth improved slightly to a still tepid 1.9 percent. The previous estimate had been 1.6 percent. Upward revisions in consumer spending and residential fixed investment were mostly responsible for gain. Private business inventory investment was revised downwards. This level of growth is considerably lower than the 3 percent or more that economists generally believe to be needed to sustain improving standards of living. Current forecasts put second quarter GDP growth at around 1.8 percent to 2.0 percent (www.bea.gov and www.sfgate.com).
The Federal Reserve's Federal Open Market Committee issued the following statement at its early May meeting after voting unanimously to keep its target interest rate at 1.25 percent: "Although the timing and extent of that improvement remain uncertain, the Committee perceives that over the next few quarters the upside and downside risks to the attainment of sustainable growth are roughly equal. In contrast, over the same period, the probability of an unwelcome substantial fall in inflation [deflation], though minor, exceeds that of a pickup in inflation from its already low level. The Committee believes that, taken together, the balance of risks to achieving its goals is weighted toward weakness over the foreseeable future" (www.federalreserve.gov).
The fact that the Fed even obliquely referred to deflation is noteworthy. The cause for concern has been a marked deceleration in inflation over the last several months. When the general price level actually falls for a sustained period of time, consumers begin to postpone their purchases with the expectation that the prices of goods and services will be cheaper in the future. When firms aren't selling their products, they cut back on production. Income growth stagnates and unemployment rises as a result. With deflation, borrowers, including most homeowners, make loan payments with money that now has more buying power. This tends to redistribute wealth upwards. Moreover, as incomes fall, loan payments typically do not, so default rates increase, people lose their homes and lending institutions can fail. The last time this country experienced full-blown deflation was during the Great Depression of the 1930s.
In theory, deflation is preventable with appropriate monetary policy. The Federal Reserve can print more money and distribute it to banks by buying large quantities of bonds. This leads to lower interest rates, which in turn leads to increased economic activity along with inflationary pressures. Indeed, in his recent appearance before congress, Mr. Greenspan testified that the central bank is prepared to do whatever is necessary to avoid falling prices. The danger lies in falling into what is known as a liquidity trap. It is possible for interest rates to fall all the way to zero without stimulating activity in any meaningful way. When this happens, there is no incentive to lend money, monetary policy loses its effectiveness and the deflationary cycle is perpetuated. This has occurred recently in Japan, which has been languishing in the economic doldrums for a decade (www.nytimes.com).
Recent comments by Treasurer Secretary John Snow indicate that the United States might be abandoning a decade long policy of supporting a strong dollar in international currency markets. One reason for doing so is that a weaker dollar makes imported goods more expensive to domestic buyers and exported items less expensive to foreign consumers. Both of these factors would be a boon to domestic manufacturers. Since manufacturing employment has been contracting for almost three years now, this policy shift, if that's what it is, could be beneficial to the U.S. economy. But to be successful, there have to be available buyers in foreign markets. With Japan and Germany, the world's second and third largest economies, in recession (conditions in Germany are ripe for deflation, as well), and lingering antipathy towards all things American as a result of the Iraq conflict, growing international demand for U.S. goods is anything but certain (www.nytimes.com).
| Explanatory Note: For those of you who are new or less familiar with the Index, we have been tracking economic activity since January 1994. The composite indices plotted as blue and green lines in the diagram at the top of this page are weighted averages of each of the six sectors described in the table above. Each sectoral index, and the composite index, started at a value of 100 in 1994. Thus if the retail sectoral index value is currently 150, that means that (inflation-adjusted) retail sales among the firms that report data to us are 50 percent higher than in January 1994. We also seasonally adjust each sector, and the composite index, to correct for "normal" seasonal variation in the data, such as wet season vs. dry season, and so trends in the seasonally-adjusted composite index (the blue line in the diagram above) provide a better indication of underlying growth and fundamental change in the economy. This month's report reflects data gathered from the previous month, and so the "May 2003" report reflects data from April 2003. As is common, our initial report is preliminary, and as we receive final data we revise our reports accordingly. |
The Eureka Times-Standard web site
The San Francisco Chronicle web site
California Association of Realtors web site
National Association of Realtors web site
American Automobile Association web site
Institute of Supply Management web page
U.S. Bureau of the Census's home page
U.S. Bureau of Economic Analysis' web page
U.S. Bureau of the Census's Economic Briefing Room web page
U.S. Bureau of Labor Statistic's web page
The Federal Reserve Bank's Beige Book web page
Send us your comments
Comments will be posted on our
Reader Comments page unless otherwise requested.