INDEX OF ECONOMIC ACTIVITY
FOR
HUMBOLDT COUNTY
Featuring a special "Spotlight on the
Political-Economy of Our Environment" at the bottom of this report
Professor
Erick Eschker, Director
Jessica Digiambattista, Assistant Editor
Andrea Walters, Assistant Analyst
Laura Lampley, Assistant Analyst
This month's
report
is sponsored by
Six Rivers Bank
October 2004
Graphic description: The seasonally adjusted composite Index
is represented in the graph above by the blue area. The red
trendline shows the four-month moving average of the Index
which smoothes month-to-month volatility to show the long run trend.
Composite
Index and Overall Performance
The Index of
Economic Activity for Humboldt County measures changes in the
local
economy using data from local businesses and organizations. The data
are compiled into a seasonally adjusted Index that shows changes
relative to the base month (January 1994). The composite Index is a weighted combination of
six individual sectors of the local
economy. The current Index is
based on the most recently available data, which is generally data from
the previous month.
In September Humboldt County's economy rebounded slightly after two
months of decline. The composite Index of Economic Activity rose 1.9
percent to 109.6. While most of the sectors experienced growth
this month, retail sales and total county employment both contracted
slightly. The home sales index rose this month, pushed by an
increase in the number of homes sold. The home sales sector
continues to hold at higher than expected levels due to persistently
low interest rates. Home prices continued to trend upward,
setting a record high median selling price of $285,000.
Additionally, low investor confidence in the stock market is further
contributing to an increase in the demand for real estate.
Manufacturing also grew this month, rebounding by 10 percent to an
index value of 84.6. The hospitality sector also rebound to an index value of
99.1, after
falling below summer expectations the previous three months.
Quarterly electricity consumption data also indicated growth, with the
index for this sector rising 2.4 percent to 113.49. This is
indicative of the continued economic recovery seen nationally.
While the County unemployment rate dropped to 5 percent this month,
total employment did not meet seasonal expectations, and fell despite
an increase in raw numbers. Despite a 2.8 percent decline in the
retail sector this month, the index shows steady growth when compared
to previous years. The retail sales index now stands at
143.1.
|
Composite & Sectoral Performance,
Index
of
Economic Activity for Humboldt County
|
|
* * *
|
Percent Change From:
|
Index
|
Seasonally Adjusted Index Value (1994=100) |
Previous Month |
Same Month 2003 |
Same Month 2002 |
Same Month 2001 |
Same Month 2000
|
Same Month 1999 |
COMPOSITE
|
109.6
|
1.9
|
1.5
|
4.1
|
4.4
|
-0.6
|
-2.6
|
Sector
|
|
|
|
|
|
|
|
|
Home Sales
|
133.7
|
11.4
|
-6.3
|
13.6
|
52.3
|
25.2
|
18.6
|
|
Retail Sales
|
143.1
|
-2.8
|
2.4
|
2.6
|
15.2
|
20.1
|
9.8
|
|
Hospitality
|
99.1
|
4.4
|
4.7
|
8.9
|
2.1
|
-5.9
|
-8.0
|
|
Electricity Consumption
|
113.49
|
2.4
|
13.1
|
13.2
|
-16.6
|
-11.9
|
---
|
|
Total County Employment
|
102.9
|
-0.2
|
-0.9
|
-0.3
|
0.9
|
-1.0
|
-2.3
|
|
Manufacturing
|
84.6
|
10.0
|
-1.2
|
0.5
|
7.1
|
-22.8
|
-21.7
|
Leading
Indicators
The
Index tracks three leading indicators to get a sense of the direction
of change in
the
county economy in the near future. The three leading indicators
are (1) number of
claims for unemployment insurance, (2) building permits, and (3)
manufacturing orders. 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 and reveal underlying
trends.
Graphic description: The seasonally adjusted Index of Claims for
Unemployment Insurance is represented above by the blue area. The
red trendline shows a four month moving average which "smoothes" month
to month volatility.
The index of claims
for unemployment insurance is an indicator of negative economic
activity. This leading indicator decreased by 8.1 percent in
August, pulling the four month moving average downward slightly.
Graphic description: The seasonally adjusted Index of Building Permits
is represented above by the blue area. The red trendline shows
the four month moving average which "smoothes" month to month
volatility.
The index of building
permits issued gives insight to future home sales and
construction. The Index of Building Permits increased this
month. Since this
measure experiences a great amount of month to month variability, the
four month moving average is used to determine longer term
trends. As depicted in the graph above, the moving average ticked
upward in September.
Graphic description: The seasonally
adjusted Index of Manufacturing Orders
is represented above by the blue area. The red trendline shows
the four month moving average which "smoothes" month to month
volatility.
The index of
manufacturing orders shows expectations for future manufacturing
sales. This index increased 3.5 percent in September, to stand at
83.27. The moving average for this indicator shows a strong
unward trend.
|
Key Statistics
|
Leading Indicators
|
|
|
% Change From Previous Month
|
| Median
Home Price* |
$285,000
|
Manufacturing
Orders
|
3.5%
|
30 Yr.
Mortgage Rate as of 9/30
|
6.00%
|
Building
Permits |
21.1%
|
| Unemployment
Rate** |
5.0%
|
Unemployment
Claims |
-8.1%
|
| * 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. |
Individual
Sectors
Home Sales
The index
value of the home sales sector is based on the number of new and
existing homes
sold in Humboldt County each month as recorded by the Humboldt
Association of Realtors.
In September, Humboldt County home sales rebounded. The home
sales index is up 11.4 percent and
now stands at 133.7. Local home prices set a new record high this
month. A median priced home in Humboldt County now costs
$285,000. Increased purchasing power from low interest rates as
well as investor's weariness about the stock market are contributing to
the recent price jumps.
Statewide
home prices and home sales declined.
The median home
price in California is $465,540, down 1.7 percent from the previous
month, but up 12.0 percent from September 2003. "The higher
inventory of homes for sale has mitigated some of the upward pressure
on home prices," said Leslie Appleton-Young, C.A.R.'s vice president
and chief economist. "Year-to-date sales are up 4.5 percent, in line
with our expectation that sales for all of 2004 will post and increase
above 2003’s record levels."
(www.car.org)
A
study by the National Association of Realtors found that first time
home buyers are fueling the housing market. "Strong activity by
entry level buyers has provided solid and substantial growth to the
housing market over the last decade," said David Lereah, NAR's chief
economist. "The demographics of our country favor this trend going
forward because echo-boomers, the children of the baby boom generation
and almost as large, will be in the prime years for buying a first home
for the next decade. These findings demonstrate a fundamental
underlying demand that will be driving the housing market at a higher
plateau for the foreseeable future."
(www.realtor.org)
According
to the country's largest mortgage company, Freddie Mac, the nationwide
average for a 30-year fixed rate mortgage as of Novemember 4th, was
5.70
percent with an average 0.6 points. “The slight increase in
mortgage rates this week was due in large part to volatility in
long-term bond yields,” said Frank Nothaft, Freddie Mac chief
economist. “The uncertainty in bond yields reflected weakness in the
manufacturing industry that was offset by economic reports of strength
in the service sector. When taken as a whole, this week’s
economic data point towards both low mortgage rates and a growing
economy, both of which are good news for current homeowners looking to
refinance and for families hoping to become homeowners.”
(www.freddiemac.com)
Retail Sales
The
index value of the retail sales sector is based on the seasonally
adjusted dollar value of
sales each month from a cross section of local retail businesses.
Humboldt County's retail sector experienced a slight drop in
October. The retail sales index which now stands at 143.1, is
down 2.8 percent from the previous month, but up 2.4 percent from
October 2003
Nationwide retail sales, as reported by
The
Commerce Department, increased in September.
Seasonally adjusted
sales were $341.3 billion, an increase of 1.5 percent (±0.7%)
from the previous month and up 7.7 percent (±1.0%) from
September 2003. (census.gov)
The latest release from the
Conference Board shows that consumer confidence declined for the third
consecutive month in October.
The
Consumer Confidence Index, which now stands at 92.8 (100=1985), is down
3.9 percentage points from last month's figure. (www.conference-board.org)
Hospitality
The index
value of the hospitality sector is based on
seasonally adjusted average occupancy each month at a cross section of
local hotels, motels
and inns.
The
hospitality index rebounded in October and stands at 99.1. This
most recent figure is up when compared to
the same month in previous years. Please note that the index
numbers are seasonally
adjusted and relate back to the base month January 1994. This
seasonally adjusted index is different from raw occupancy
rates, as the expected seasonal variation is removed so that changes
over time can be compared more appropriately.
Gasoline
Prices
Amid political uncertainties at home and
in Iraq gas prices have fluctuated dramatically in the past month.
"It's relentless, the punishment consumers are being forced to endure
at the gas pump," said Sean Comey, spokesman for AAA of Northern
California. "Every day for the past two weeks the price goes up. At
this rate, we'll set a new record high before the end of the week." (www.csaa.com)
Average Price*
(as of 10/12 )
|
Change From Prev. Month
(cents/gal.)
|
| Eureka |
$2.49
|
18¢
|
| Northern CA |
$2.34
|
25¢
|
| California |
$2.34
|
25¢
|
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). |
Electricity
Consumption
The index value
of this sector is based on seasonally adjusted kilowatts-hours of
electricity consumed each
month in Humboldt County. Electricity consumption is a
somewhat mixed or ambiguous indicator that usually correlates with
economic activity. However, increases in energy efficiency
and conservation reduce the sector's index value. Because we
collect our data for this sector quarterly, values are estimated, and
are revised when the quarterly data are received.
The electricity consumption index for October is 113.49, up 2.4 percent
from the previous month's revised figure.
- The Revised electricity consumption index for August is 111.17.
- The Revised electricity consumption index for September is 110.81.
Total
County
Employment
The index value of the employment sector
is based on seasonally adjusted total employment as reported by the
Employment Development Department.
In the preliminary report for September,
the
EDD reported that 57,200 people were employed in Humboldt
County. This
number is up from August's revised figure, indicating a net gain of 200
jobs.
The total civilian
labor force decreased by 100 people to 60,300. The seasonally adjusted
total
county employment index fell 0.2 percent, and now stands
at 102.9.
Sectoral
changes in Humboldt County employment:
- Overall the service sector posted a net
gain of 600 jobs in September.
- Education and Health Services gained 100
jobs.
- Miscellaneous Retail lost 100 jobs.
- Trade, Transportation, and Utilities lost
100 jobs.
- Arts and Entertainment lost 100 jobs.
- Local Government gained 600 jobs.
- Overall goods production employment was
unchanged in September.
The unemployment rate
continued to decline in September. The measure which now stands
at 5.0
percent is lower than both the state average and the national
average. The fall in unemployment rate may be due in part to a
decrease in the size of the
labor force, and local government cutbacks which took effect in July,
when the unemployment rate began its recent descent.
Lumber
Manufacturing
The
index value
of this sector is based on a
combination of payroll employment and board feet of lumber production
at
major county lumber companies and is adjusted to account for normal
seasonal variations. Lumber-based manufacturing
generates about 60 percent of total county manufacturing employment.
In
September the lumber-manufacturing index increased 10.0 percent from
last
month's revised figure and now stands
at 84.6. While this does represent a slight rebound in
manufacturing, the index for this sector has not reached above the 100
level
since January 2001. This shows a continued decline in the local lumber
industry.
Graphic
description: The seasonally adjusted lumber-based
manufacturing index is represented by the blue area in the graph above.
The red line shows the four-month moving average of the lumber-based
manufacturing index which smoothes month-to-month volatility to show
the long run trend.
At the national level, the manufacturing
sector enjoyed its seventeenth consecutive month of economic
growth. The PMI registered 56.8 percent most recently, indicating
continued growth. "Strong growth continues in the sector, but at a
slower rate than in September. New orders and production remain strong,
and employment continues to expand. However, energy prices and
commodity price inflation are major concerns for manufacturing buyers,"
said Norbert J. Ore, C.P.M.,
chair of the Institute for Supply Management. (www.ism.ws.cfm)
The
Bigger Picture
Spotlight on the Political-Economy of Our Environment
Jessica Digiambattista
November 7, 2004
“I am a
firm believer in the people. If given the truth, they can be
depended upon to meet any national crises. The great point is to
bring them the real facts.”
-Abraham
Lincoln
The Presidential election of 2004 gave birth to the usual plethora of
discourse on national and global policy issues. But somewhere
amidst the debates on Iraq, Osama bin Laden, stem cell research, taxes,
and the classic “flip-flop candidate” arguments, something was
lost. In fact I’m not quite sure what, if anything was gained.
Environmental change due to poor resource management and unsustainable
consumption patterns was the “elephant in the room” during the 2004
election. America’s leaders and would-be leaders are well aware
of our environmental problems and the inevitable blow they will strike
to our landscapes, economy, and society at large. However, in the
race to the White House, short-term thinking prevailed and the
environment was ignored.
We have known for years that releasing greenhouse gases from our cars,
industrial complexes, and power plants causes changes in our
atmosphere. The debate has been over when, if ever, those changes
would begin to impact life on the ground.
In a new report released yesterday by the Pew Center on Climate Change,
the observable affects of global warming on North America’s environment
are documented. Observed
Impacts of Global Climate Change in the U.S., by Camille
Parmesan of The University of Texas at Austin and Hector Galbraith of
Galbraith Environmental Sciences and the University of
Colorado-Boulder, reviews over 40 separate studies that associate
global climate change with observable ecological impacts in the United
States. The studies varied in regions and species observed.
The one common factor among them is a consistency in the observed
ecological responses and expected change due to shifts in the U.S.
climate.
Specific findings range from measurable species migrations northward to
an alteration in the carbon cycle in the Alaskan tundra. The
ecological problems are further stressed by direct human impacts on the
land such as habitat loss and fragmentation. The researchers
assert that a link between anthropogenic (human-caused) global warming
and changes in the Earth’s natural systems is established by these
recent data. Furthermore, without a change in the current trend
the anthropogenic climate change will continue to degrade the Earth’s
natural systems.
Environmental degradation and natural resource depletion are important
issues for economists. The Earth’s ecosystems provide services
necessary to the existence of our economy. An incalculable amount
of value is taken out of the Earth’s natural systems each day and is
used in the manufacture and transport of the goods and services that
comprise our economy. Accounting for all of the costs of
production is how the capitalist system achieves efficient allocation
of resources. Our failure to account for the value of ecosystem
services has skewed the economy and led to the overproduction of
environmentally damaging goods and services.
The environment and the economy are interrelated systems. The
impacts that our economy has on the Earth’s natural systems are complex
and not fully understood. However, we should not avoid discussing
these problems simply because they will be difficult to solve. It
is my hope that in future elections the American people demand
discourse on all the issues, even the really tough ones.
| 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 red 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 provide a better indication of
underlying growth and fundamental change
in the economy. Each month's report reflects data
gathered from the
previous month. For example, the "August 2003" report reflects
data from July
2003. As is common, our initial report is
preliminary, and as we
receive final data we revise our reports accordingly. |
Cited References
The Eureka Times-Standard
web site
The San Francisco Chronicle web site
The New York Times web site
California Association of Realtors web
site
National Association of Realtors
web site
Freddie Mac web site
American Automobile Association web
site
The Conference Board 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
The Milwaukee Journal Sentinel
Send us
your comments. Comments will be posted on our Reader
Comments page unless otherwise requested.
