January 8, 2001

For the fifth consecutive month, the University of San Diego’s Index of Leading Economic Indicators for San Diego County fell 0.5 percent in November. As was the case in October, a sharp drop in local stock prices led the move to the downside.

Consumer confidence and help wanted advertising also were down moderately, while building permits and the outlook for the national economy decreased by smaller percentages. Initial claims for unemployment insurance declined slightly during the month, which registers as a positive for the index.

In each of the past five months, the decline has been broad, with at least five of the six components negative in each of those months. The outlook for 2001 remains positive overall, reports Alan Gin, creator and author of the index and economics professor at USD, but the local economy could experience some turbulence during the middle of the year.

This is similar to the outlook for the national economy, where a forecast by UCLA indicates a 60 percent probability of a recession starting in the second quarter of 2001. The recent cuts in interest rates by the Federal Reserve will likely reduce this probability and cushion the impact if a national recession does occur.

It is unlikely that these cuts in interest rates are the last this year by the Federal Reserve; another 0.50 percent decrease in interest rates is expected by the end of 2001, Gin says.

The sharp decline in local stock prices continues to put a strong drag on the Index for San Diego.

2000 was not a good year for stocks in general and technology stocks in particular, with the Nasdaq Composite Index down almost 40 percent for the year, its first yearly loss since 1994.

This decline has negative implications for the future of the local economy in a number of ways:

• It indicates that the financial markets are concerned with the future prospects of San Diego-based companies;
• It will affect some firms in terms of their ability to obtain capital through stock offerings;
• Individuals have seen their wealth reduced substantially.

Many have credited a wealth effect, due to rising stock prices, with fueling the expansion of the economy. Gin reports it is possible that a negative wealth effect, due to falling stock prices, will adversely affect the local economy in areas such as consumption and housing. This might be reflected in the decline in consumer confidence locally, which was the second big drag on the Index in 2001.

That component also was likely affected by sharp increases in energy costs and a very tight local housing market. The drop in consumer confidence is a concern because of the large role that consumption plays in any economy, including the local one.

November's decrease puts the index at 147.5, down from October’s revised reading of 148.3. Revisions in the building permit data from July on led to a revision of the previously reported change for September, and in the index levels for September and October.

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The San Diego World Trade Center has honored Leon Reinhart, president and CEO of First National Bank, with the William H. Curran Distinguished Service Award.

The award, announced at the center’s 23rd Annual Awards Gala, recognizes Reinhart for significantly advancing the nonprofit organization’s mission of increasing job prosperity through the expansion of international trade and commerce opportunities over the past year.

“Reinhart has devoted his time and expertise in international business and finance to help further our objectives of increasing international trade between the San Diego and Baja California regions,” says Kathy Ward, president and CEO of the center. “It is our pleasure to annually recognize those individuals and companies who have worked so hard to advance our cause.”

First National Bank has earned a strong reputation for its international business accomplishments. The bank successfully implemented a program for financing cross-border shipments of goods and services in and out of Mexico.

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MassHysteria Inc., a premier digital media infrastructure and solutions provider, will be expanding its current 18th Floor facilities to include the 19th Floor — a strategic move to better accommodate the company’s growing needs.

“With our 19th Floor expansion we’re trying to create a unique office culture by cross-pollinating departments into project teams focused on common goals,” says Scott Phillips, MassHysteria’s president and CEO. “Engineering, creative, production and QA will be working side-by-side surrounded with innovative office furniture, a panoramic view of downtown San Diego, and a fun and exciting work place environment.”

MassHysteria’s expansion supports San Diego’s claim as a burgeoning technology arena. San Diego, recently recognized as a growing platform on the worldwide technology stage, provides companies/individuals located in the region with a high quality of living, as well as an established business-oriented atmosphere.

Ranked 315 on the Deloitte & Touche Technology Fast 500, a ranking of the 500 fastest-growing companies in North America, MassHysteria grew 1,119 percent during 1995-1999.

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Castle Advertising, a full-service marketing/communications agency in San Diego, has added Aladdin Bail Bonds to its client roster.

Based in San Diego, Aladdin Bail Bonds operates 40 bail bond centers throughout California. Since the new television and radio campaign has been introduced, bonds written have increased by 50 percent in some markets, reports Aladdin Bail Bonds President Spencer Douglas.

The Castle Advertising campaign will include television, print, radio and Web design.

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Qualcomm Inc. has contributed $25,000 to assist the American Red Cross in providing disaster relief to the communities that have been impacted by the wildfire in San Diego’s East County.

"Qualcomm is pleased to make this contribution to the Red Cross to support their efforts to provide disaster relief for the communities, families and individuals affected by this unfortunate fire," says Daniel L. Sullivan, senior v.p. of human resources for Qualcomm. "The Red Cross will be able to use these financial resources in areas that are most needed. Qualcomm remains committed to the communities of the San Diego area, where the majority of our employees reside."

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