The Economic Data Global Express (e-EDGE)
v.4 n.49 Released Dec. 4, 2000
Produced
by the Los Angeles County
Economic Development Corporation as a public service to the global
community.
MEXICO'S OUTLOOK is FULL OF PROMISES AND CHALLENGES
President Vicente Fox brings hope to 97 million
Mexicans for a more stable, modern economy and democratic institutions
that would make the country more attractive to foreign investors.
His top Cabinet choices have been well received, especially Francisco Gil
Diaz as Finance Minister. He is a highly-respected and experienced
University of Chicago- trained economist. Mexico has been enjoying
a booming economy this year, lower inflation, and good marks for budget
discipline and management of its foreign debt; so anyone would find this
a tough act to follow. The challenge for Mr. Fox and Mr. Diaz is
to sustain this prosperity and avoid this becoming a transitory phenomenon.
While the new President's popularity is high
and the economic environment is positive, key challenges should be addressed,
including: (1) attracting maquildora investment to the interior of
the country, in order to narrow the income gap between the north and the
south; (2) stimulating bank lending to small and medium-size businesses;
(3) modernizing PEMEX, the state-owned oil monopoly; and (4) allowing competition
in telecommunications, oil refining, and electricity generation.
Getting reform legislation passed to accomplish these objectives will not
be easy, given the powerful opposition forces that are wedded to the status
quo.
We should not expect any miracles in the "first
100 days" or even six months. The prospect of a significant slowing
of the U.S. economy and lower oil prices are two developments outside of
the control of the new Mexican government next year. These factors
will make Mr. Fox's job all the more difficult. Notwithstanding, we are
optimistic about the Mexico's prospects as it begins this exciting period
in its history. (Ken Ackbarali)
LEADING INDICATORS FLASHING YELLOW
According to The Conference Board, the October
Index of Leading Economic Indicators (LEI) declined by 0.2% from September,
its fourth decline in the past six months (the other two months were flat).
Six out of ten indicators were down in October. The three biggest
contributors to the LEI's overall decline were orders for consumer goods
followed by stock prices and nondefense equipment orders. Consumer
expectations, unemployment claims, and the spread between long- and short-term
interests also showed up in the negative column. On the plus side
were vendor deliveries, real M2, the average workweek of nonfarm employees,
and building permits.
While the LEI picture for November is still
fuzzy, some things are clearly visible. On the negative side, unemployment
claims increased and stock prices continued to fall last month, while the
interest rate spread narrowed a bit further. Real M2 looks to be
a wash or slightly negative. Consumer goods orders may well have
dropped because of last month's decline in light vehicle sales. Only
two indicators are in November's plus column so far, consumer expectations
and vendor performance.
What is the LEI really telling us? At
a minimum, the U.S. economy is set to slow down. How much and for
how long is still unclear. So far, this episode of decline resembles
the index's performance in 1994-95, when the economy slowed temporarily
only to pick up again in 1996-97. However, we will worry more if
the index continues to fall by significant amounts in upcoming months.
(Nancy D. Sidhu)
PR: http://www.conference-board.org/search/dpress.cfm?pressid=LEI1200
SEPTEMBER TRADE VALUES STRONG (ALMOST)
The September U.S. Department of Commerce report
on trade values continued the string of strong gains at the state's three
customs districts (but with one exception). Los Angeles posted a
20.0% increase in exports over the year, while import values advanced 13.1%.
September's total of $20.3 billion was 15.3% above the year-ago value.
For 9 months, Los Angeles was at $167.6 billion, which was 17.8% ahead
of the like 1999 period.
At the San Francisco district, September export
values were up by 30.0% over the year, while imports posted a 16.9% increase.
The month's total trade value was $11.8 billion, an increase of 27.3%.
San Francisco's 9-month total was $93.2 billion, up 27.5% over last year.
The exception was found at the San Diego district, where exports in September
dropped 9.7%. Import values posted a 22.1% gain, and the month's
total trade value was $3.2 billion. This yielded a comparatively
weak year-to-year increase of 9.1%. For 9 months, San Diego's total
two-way trade value came to $26.1 billion, up 19.3% over the comparable
1999 period.
And what about the New York customs district's
9 month two-way trade total? It was $165.7 billion, still behind
you know where. (Jack Kyser)
CALIFORNIA EXPORTS: MORE THAN AN ASIA STORY
The Massachusetts Institute of Social & Economic
Research (MISER) just released data on California's exports for the third
quarter and first nine months of 2000. MISER's statistics provide
interesting details by country and industry. Overall, California's
exports increased by 22% in the third quarter compared to the same period
in 1999. The year-to-date increase was a similar 21.5%.
Over the past several years, California's
exports to the 10 major Asian nations have garnered the most headlines,
declining by 2% in 1997 and plunging by 20% in 1998 before turning up by
6% last year. The improvement has continued in 2000, with exports
to the Asia-10 surging by 29% in the third quarter and by 27% year-to-date.
The nine-month figures were headed by spectacular increases to Thailand
(up by 51%), South Korea (up by 47%), and Malaysia (up by 43%). Exports
to our NAFTA partners were no slouch either, rising by 22% in the quarter
and 23% during the first nine months. In particular, Mexico's intake
of goods from California producers soared by 32% year-to-date, helping
to fuel this year's strong economic growth in that nation. Finally,
California's exports to Western Europe rose by 21% in the third quarter
and 20% year-to-date. Only two nations (Finland and Norway) out of 18 in
this region registered declines.
Looking at the industry detail for the first
nine months of 2000, three of the top four industries registered strong
growth. Exports of industrial machinery (which includes computers
and peripherals) soared by 37%, while exports of instruments rose by 25%,
and electronic equipment (which excludes computers but includes component
parts) increased by 23%. Exports of transportation equipment declined
by 12%, mostly reflecting the loss of high-value aircraft shipped out of
Boeing's Long Beach operation. Among other industries, exports
of textiles & apparel increased by 11% year-to-date while the state's
agribusiness saw its exports increase by 8%. A final tidbit:
exports by other manufacturers rose by 16% during the first three quarters
of 2000, led by "Scrap and Waste," which increased by 41%. This category
includes scrap metals and paper products needed to feed Asia's steel and
paper mills. Now that is an Asia story! (Nancy
D. Sidhu)
PR: http://www1.miser.umass.edu/trade/stsep.html
QUICK STATS:
* BEA: US Gross Domestic Product (preliminary estimate) for 3Q00: +2.4%
(2Q00: +5.6%)
* BEA: US implicit GDP deflator (pre. est.) for 3Q00: +1.9% (2Q00:
+2.4%)
* BEA: US personal consumption expenditures (pre. est.) for 3Q00: +4.5%
(2Q00: +3.1%)
* BEA: US personal income for 10/00: -0.2% (9/00: +1.1%)
* BEA: US disposable personal income for 10/00: -0.4% (9/00: +1.1%)
* BEA: US personal consumption expenditures for 10/00: +0.2% (9/00:
+0.9%)
* Census: US new home sales for 10/00: -2.6% to 928,000 annual units
(9/00: +11.9% to 953K a.u.)
* Census: US new construction spending for 10/00: -+0.8% (9/00: +2.4%)
* Conference Board: US Consumer Confidence Index for 11/00: 133.5 (10/00:
135.8)
* Conference Board: US Help-wanted Advertising Index for 10/00: 79
(9/00: 78)
* Conference Board: US Index of Leading Economic Indicators for 10/00:
-0.2% (9/00: +0.0%)
* Natl Assn of Purchasing Mgmt: Purchasing Managers' Index for 11/00:
47.7% (10/00: 48.3%)
* US vehicle sales for 11/00: -1.2% to16.6mil. seasonally adjusted
annual rate (10/00: -5.6% to 16.8mil.s.a.a.r.)
The Economic Data Global Express (e-EDGE) is a free service of the Los Angeles County Economic Development Corporation (LAEDC). Permission to quote any proprietary part of this release is granted given proper credit. Distribution is allowed provided that no modifications are made to the original content. Sponsors of this service do not necessarily endorse all opinions stated herein. For more information, please e-mail to research@laedc.org. To contact LAEDC, please call 213-622-4300.
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