The Economic Data Global Express (e-EDGE)
v.6 n.39 Released Sep. 30, 2002
Produced
by the Los Angeles County
Economic Development Corporation as a public service to the global
community.
IMF DOWNGRADES ITS FORECAST FOR THE GLOBAL ECONOMY
In preparation for the annual joint meeting with
the World Bank in Washington D.C. last weekend, the International Monetary
Fund (IMF) released its revised forecast for the world economy--and a gloomy
picture it was. Citing falling investor confidence, losses in the
stock market, disappointing corporate earnings, and political uncertainties
over armed conflict, the IMF shaved nearly a full percentage point from
its April 2002 forecast for the United States economy in 2003--and is now
expecting GDP growth of 2.6%. The new forecast for Eurozone economies
has been scaled down to an anemic 0.9% increase in GDP this year, and recovery
in 2003 is projected to raise growth to 2.3%. The United Kingdom's
growth expectations have been lowered by 0.4 percentage points to 2.4%
for 2003.
The IMF's forecast for Japan in 2003 was raised
slightly to 1.1% from its April projection. Emerging market economies,
in the aggregate, are projected to outpace industrialized economies in
2003--their aggregate GDP growing by 5.0%-5.75%. These two upbeat changes
tempered the downward revision of the IMF's forecast for the world economy
next year to 3.7% (GDP growth) from its 4.0% projection in April.
U.S. monetary officials received support from
the IMF for their "stand-pat" posture on interest rates last week, but
were exhorted to stand ready to ease some more. America's looming
fiscal deficits were roundly criticized A strong appeal was made
to Japanese officials to clean up their banking system, and to ease
monetary conditions more aggressively.
In a special interview with the Financial
Times (London), timed with the release of the IMF forecast, Horst Kohler
(IMF Managing Director) made a strong appeal to delegates attending the
weekend meetings to support globalization and trade liberalization.
He defended the recent decision of the IMF to lend $30 billion to Brazil
and underscored the IMF's role in crisis management.
Whether the IMF's "gloomier" forecast for
the world economy for next year turns out to be overly pessimistic or too
optimistic will depend, to a considerable degree, on whether the
U.S. launches a strike against Iraq--with or without U.N. approval, either
"going it alone" (with the U.K. and Israel) or with a broad coalition.
Turbulent times these! (Ken Ackbarali)
IMF book: http://www.imf.org/external/pubs/ft/weo/2002/02/index.htm
CALIFORNIA RESALE HOUSING SOMEWHAT MIXED IN AUGUST
The August report from the California Association
of Realtors contained mixed messages about the state's resale housing market.
While unit sales in the state increased from July to August, they were
down by 1.5% over the year. However, the median price continued to
steam ahead, up by 18.3% over the year to $334,100. The CAR's unsold
inventory index (the number of months needed to deplete the supply at current
sales rates) also continued on the lean side, 2.7 months compared with
3.1 months last year.
In Southern California, unit sales in Los
Angeles County during August dropped by 13.5% over the year, but the median
price was up by 19.0% to $297,010. In Orange County, unit sales declined
by 9.8%, while the median price advanced by 17.0% to a region-leading $437,360.
In the Riverside-San Bernardino area, unit sales were up over the year
by 4.4%, while the price increased by 14.1% to $179,910. Unit sales
in San Diego County advanced by 1.7%, while the median price zipped ahead
by 20.9% to $378,830. Ventura County saw unit sales increase by 4.9%
in August, while the median price moved ahead by 13.3% to $388,690.
In the "San Francisco Bay" area, unit sales
during August declined by 2.8% over the year, while the median price moved
ahead by 10.8% over the year to $527,320. In the San Jose area, unit
sales slipped by 11.5% over the year, but the median price increased by
4.7% to $540,000. However, the latter measure evidently peaked at
$578,000 in May. (Jack Kyser)
PR: http://www.car.org/index.php?id=MzEyNzI=
MORE OF THE SAME IN AUGUST AIRLINE TRAFFIC
The August numbers from airports around the region
indicated little change in trend. At LAX, total passenger traffic
was down by 14.6% over the year, while international traffic was off by
14.5%. There has been little change in these figures since May.
Air cargo tonnage at LAX was down by 3.1% over the year, after recording
positive growth in June and July. At Ontario, passenger traffic in
August was down by 7.8% over the year, but air cargo tonnage was up by
a stunning 57.2% over the year.
August traffic at the Burbank-Glendale-Pasadena
airport was down over the year but by just 0.4%, the smallest decrease
since last May. At Long Beach, the enplaned passenger count in August
rumbled ahead by 160.4 %. At the John Wayne/Orange County airport,
traffic in August was even with last year, after 4 months of year-to-year
gains. Palm Springs saw passenger counts drop by 5.9% in August, the smallest
decline since the declines started in September.
The August international air cargo results
from LAX were mixed. Export tonnage was down by 8.5% over the year
(after two months of increases), but import tonnage was up by 11.1%, the
4th month in a row of gains. Total air cargo tonnage in August was
up by 2.9%. (Jack Kyser)
LAX data: http://www.lawa.org/statistics/tcom-0802.pdf
ECONOMIC IMPACTS OF THE PORT LOCKOUTS
The Pacific Maritime Association (PMA) has locked
the ports across the Pacific Coast in response to the alleged work slowdown
by the dockworkers belonging to the International Longshore and Warehouse
Union (ILWU). The dockworkers' contract expired on July 1, and the
two sides have not been able to reach a new contract despite months of
negotiations. The economic impacts of these actions are widespread
and can hit everyone in the nation if conditions do not improve soon.
First, now it is the time of holiday shipments, and delays might cause
some product shortages on retailers' shelves. This may cause prices
to be higher than otherwise (i.e. less mark-downs during December).
Second, any cargo flow disruption (e.g., strike, slowdown, or lockout)
has severe trickle-down effects on logistics companies (e.g., trains, shippers,
and trucking), wholesalers, and ultimately retailers and consumers.
This, however, is hardly an unforeseen development.
Many merchants ordered holiday cargo ahead of time as evident in the record-breaking
container traffic at the twin ports last month (see last week's e-EDGE,
"ONE
MILLION TEUs IN AUGUST"). Others are bringing in cargo through
the Gulf or East Coast ports. Thus, product shortage should be less
than anticipated. Nonetheless the retailers' and wholesalers' bottom
lines are at risk because of higher inventory costs and difficulty in raising
prices in this economic environment. Finally (in the silver lining
department), at least for today you can expect lighter traffic on the 710,
10, and 60 freeways. (George
Huang)
Two-way trade through California customs districts, 2001: http://www.e-edge.org/special/CA_customs_districts.htm
PMA website: http://www.pmanet.com
ILWU website: http://www.ilwu.org
CALIFORNIA: SHOW ME THE MONEY..... PLEASE
The biggest state in the union faces the same
issue that most families deal with all the time: cash flow management.
State Controller Kathleen Connell wants the State to borrow $12.5 billion
next month through short-term bond issues to cover the State's fiscal needs.
The urgency and the unusual size of the cash flow difficulty came mostly
from the $11.9 billion in energy bonds originally scheduled for June 2001
issuance but were never executed due to various technical and legal issues.
Some $6.6 billion of the energy bond proceeds were to be repayment for
monies borrowed from the State's General Fund. Worse yet, this won't
be the last issue of revenue bonds we'll see. The Controller's office
believes the Governor's revenue projections are overly optimistic, by a
magnitude of $3 billion for the first six months of 2003 alone.
Potential investors are nervous about the
State's budget problems and demand higher risk premiums (read: higher bond
yields/interest rates). State Treasurer Phil Angelides has had to
increase the cash reserve on the energy bonds (when they finally are sold)
to appease Wall Street, but anxiety remains. Given the State's past
actions of negating contracts and payments to power generators, investors'
concerns are not totally baseless. They will ask for higher rates
of return (i.e. higher cost to the State) or may not buy State's bonds
at all.
What does this all mean? First, unless
the State's structural budget gap is closed, still more bonds will have
to be issued and the bond yields demanded by investors will only go up.
With more money going into paying interest, less is available for the State's
many urgent needs (e.g., infrastructure and health care). Second,
the State's money woes will squeeze already financially strapped local
governments even more. Suddenly your credit card bills don't look
too bad after all. (George
Huang)
LAO report on the State Budget: http://www.lao.ca.gov/2002/spend_plan_02/0902_spend_plan.pdf
7TH ANNUAL EDDY AWARDS DINNER -- A night to share in the lives of some
of the great visionaries of our time. (Repeat announcement)
The Eddy Awards are in recognition of excellence
in economic development. The Eddy Award recipients this year have
all played an essential role in the evolution of the new downtown LA --they
have changed its landscape and made it rich with culture, architecture,
opportunity, entertainment and spirit. More than anything, they've
given Los Angeles the vitality necessary to become the thriving metropolitan
center that anchors the economy surrounding it. Please join us on
October 10th at the new Cathedral of our Lady of the Angels when the LAEDC
awards seven outstanding honorees: Eli Broad, Timothy J. Leiweke, James
A. Thomas, Cardinal Roger Mahony, Andrea L. Van de Kamp, Stephan D. Smith
and Tonian Hohberg. Please visit http://www.laedc.org/events/7th_eddy.shtml
for more information.
AUTO INDUSTRY IN SOUTHERN CALIFORNIA
"What auto industry?" you may ask. It's
another one of those "stealth" industries in the L.A. area. Come
find out the unnoticed auto design and research capabilities of Southern
California, along with other manufacturing and supporting operations.
The breakfast conference "California: the New Motor Capital" will be held
on Wednesday, Oct. 16 at the Anaheim Convention Center. Please visit
http://kfwb.com for more information.
AeA FINANCING CONFERENCE
The AeA presents a conference focusing on financing.
Issues related to financing and the current trends will be discussed.
AeA members will have opportunities to meet with potential investors.
The conference will be held at the Skirball Cultural Center on Wednesday,
Oct. 9th. Please visit http://aeanet.org/events/lavn_capsourcesconf.asp
for more information.
LAEDC ECONOMIC REPORTS AVAILABLE ONLINE
In case you missed the notice last week: you can
now download LAEDC's various economic reports free-of-charge now at http://laedc.info
(yes, ".info" is a valid web address extension). LAEDC.info is our
latest effort to bring you up-to-date, useful, and locally focused economic
information that can help your business expand.
TRADE SHOWS LISTINGS (Repeat announcement)
LAEDC is now compiling a comprehensive listing
of trade shows in Southern California. Please send us such information.
Thank you so much.
Our current listing includes fashion/apparel,
textiles, shoes, home furnishings & giftware, and manufacturing.
It's available at http://www.laedc.org/trade_shows.html
QUICK STATS:
* BEA: US Gross Domestic Product (final) for 2Q02: +1.3% (1Q02: +5.0%)
* BEA: US implicit GDP deflator (final) for 2Q02: +1.2% (1Q02: +1.3%)
* BEA: US personal consumption expenditure (final) for 2Q02: +1.8%
(1Q02: +3.1%)
* BEA: US fixed nonresidential investment (final) for 2Q02: -2.4% (1Q02:
-5.8%)
* BEA: US personal income for 8/02: +0.4% (7/02: +0.0%)
* BEA: US disposable personal income for 8/02: +0.4% (7/02: +0.2%)
* BEA: US personal consumption expenditure for 8/02: +0.3% (7/02: +1.0%)
* BEA: US personal savings rate for 8/02: 3.6% (7/02: 3.5%)
* Cal Assn of Realtors: California existing home sales for 8/02: +4.1%
(7/02: +1.3%)
* Cal Assn of Realtors: California median home sale price for 8/02:
+3.6% to $334,100 (7/02: +0.1% to $322,500)
* Cal Assn of Realtors: LA County existing home sales for 8/02: +1.1%
(7/02: +4.0%)
* Cal Assn of Realtors: LA County median home sale price for 8/02:
+3.8% to $297,010 (7/02: +1.9% to $286,100)
* Census: US new home sales for 8/02: +1.9% to 996,000 annual units
(7/02: +1.9% to 977K a.u.)
* Census: US new durable goods orders for 8/02: -0.6% (7/02: +8.6%)
* Census: US durable goods shipments for 8/02: -1.3% (7/02: +3.3%)
* Census: US unfilled durable goods orders for 8/02: -0.4% (7/02: +0.1%)
* Census: US durable goods inventories for 8/02: -0.2% (7/02: -0.4%)
* Conference Board: US Consumer Confidence Index for 9/02: 93.3 (8/02:
94.5)
* Conference Board: US Help-wanted Advertising Index for 8/02: 41 (7/02:
44)
* Natl Assn of Realtors: US existing home sales for 8/02: -1.7% to
5.28 million annual units (7/02: +5.3% to 5.37mil.a.u.)
* Univ of Michigan: US Consumer Sentiment Survey for 9/02: 86.1 (8/02:
87.6)
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