The Economic Data Global Express (e-EDGE)

v.6 n.43       Released Oct. 28, 2002
Produced by the Los Angeles County Economic Development Corporation as a public service to the global community.

FEDERAL BUDGET--SUMMARY OF RESULTS

     The U.S. budget ran a surplus of $41.7 billion in September compared to a $35.2 billion surplus in September 2001.  Tax revenues soared by 21.6% this year, while government spending increased by a whopping 22.6%.  Most of this year's apparent improvement in the budget was due to a series of non-economic factors.  In particular, changes enacted last year in the tax laws (1) pushed corporate profits tax payments from September into October 2001; and (2) paid out about $10 billion in rebates to individual income taxpayers.  Also, (3) an extra business day this year brought in about $5 billion more in revenues.  Calendar issues made this year's increase in spending look unduly large.  Adjusting for all of these factors would make most of the year-to-year improvement disappear.
     September was the final month of the federal government's fiscal year 2002.  The U.S. government posted a budget deficit of $158.5 billion during the past year, a distinct about face from the surplus registered in fiscal year 2001, which was more than $127 billion.  Rising government outlays--up by $148 billion compared to fiscal 2001--and falling receipts--down by $138 billion--shared responsibility for the budget's $285 billion negative swing into deficit territory.
     Several factors are involved in the deterioration of the budget.  A sharp decline in payments of "non-withheld receipts" accounted for $105 billion of the revenue drop.  [These are the non-wage income items you report for the first and only time on your IRS 1040 form.]  It's too soon to say exactly which types of income had the largest shortfalls, but the betting is on capital gains. Lower rates of tax withholding on wages and salaries accounted for another $30 billion in lower receipts.  On the spending side, just about every kind of outlay was up except interest payments, which fell by $27 billion.  Defense Department military outlays rose by $14 billion, while Social Security payments were up by $22 billion.  Outlays for Medicare and Medicaid increased by almost $33 billion.
     The Administration's current forecast for the fiscal year 2003 budget calls for federal spending to rise by $126 billion while receipts increase by almost $176 billion.  The resulting deficit is supposed to shrink to $109 billion.  Keep your fingers crossed!  (Nancy D. Sidhu)
PR: http://www.fms.treas.gov/mts/mts0902.pdf
 

CALIFORNIA BUDGET UPDATE

     It is not easy for an outsider to track California state government spending, except when the Governor issues budget messages.  However, the Department of Finance does report revenues on a monthly basis.  Here's what's been happening:
     Total state receipts fell by 1.4% during the first three months of fiscal year 2002-2003 (otherwise known as July September 2002) compared to the same three-month period last year.  Personal income tax revenues, the most important source of revenue for the state's general fund, dropped by 7.4%.  However, sales and use tax receipts were up by 7.0%, and the take from bank and corporation taxes increased by 4.0%.
     The monthly revenue report also showed that so far, overall receipts have been coming into the state's coffers about as expected.  Actual receipts were only 0.4% below the department's forecast for the third quarter.  Personal income taxes have been running about 7.4% below forecast, a worrisome trend though other major tax revenues were in the black.   (Nancy D. Sidhu)
 

HOUSING MARKETS STABILIZING?

     California's resale housing markets may be leveling off.  The median resale price of single-family homes in the State was $323,310 in September, 2.9% lower than in August but still 17.3% higher than a year ago.  Sales volume declined by 12.3% compared to August and was just 3.9% higher than a year ago.  The median condo price rose by 8.1% last month (compared to August) and was 20.7% higher than 9/2001.  Sales volume, however, was down 15.3% from August, though 13.4% above the year ago level.
     Locally, Orange County had the highest median price at $450,520, up 3.0% from August and 24.7% above a year ago.  Sales volume fell by 18.4% and was 7.3% below the year-ago level.  Ventura County's median price of $393,440 was 1.2% above the August level and 14.5% higher than a year ago.  Sales volume fell by 24.6%, though it's still 5.3% above the year-ago level.  LA County's median price of $292,000 was 1.7% below August  but still 16.5% higher than a year ago.  Sales volume was down by 1.6% but 3.8% above the year-ago level.  The Inland Empire area saw a 1.3% increase in the median price ($204,580 in September), but compared to a year ago the median price was just 12.2% higher, the lowest appreciation rate in Southern California.  Sales volume dropped by 22.6%, but it was still 12.1% above the 9/2001 count.
     Down South, San Diego's median price of $383,080 was up by just 1.1% over August (but 21.8% higher than in 9/2001).  Sales volume was down by 18.9% (but still 10.2% higher than in 9/2001).  To the north, the San Francisco Bay Area's median price of $524,050 was just 0.6% lower than in August (and 13.1% higher than in 9/2001).  Sales volume fell by 13.5% but was 9.9% higher than a year ago.  Santa Clara County's median price of $549,000 was up by 1.7% over August and 9.8% higher than a year ago.  Sales volume was 8.6% lower than in August but 5.8% above the year-ago level.
     The red-hot housing market helped support the US and California economy through the last recession and into the current recovery.  Low mortgage rates lured many into refinancing, often taking cash out for consumption or debt repayment on higher-interest liabilities.  Low mortgage rates also helped boost the resale market, and the subsequent "wealth effect" partly cushioned the losses in equity markets.  Now it seems the housing markets may be "stabilizing" at a healthy level and may not be the growth engine for much longer.  The economy may have to look elsewhere for support until business investment recovers.  (George Huang)
PR: http://www.car.org/index.php?id=MzE0MDQ=
 

SEPTEMBER AIRLINE TRAFFIC

     Almost all airports around Southern California will be reporting year-to-year gains in passenger traffic for September, due to the shut down of air service for part of the month last year.  LAX's September total was up by 18.7%, with the international component ahead by 14.9%.  To put some perspective on it, we also looked at the September 2000 numbers.  Total traffic at LAX was down over the two-year period by 20.5%, with international activity down by 20.3%.  This no doubt reflects capacity reductions by major airlines.
     The Burbank-Glendale-Pasadena Airport was up over the year by 50.2%, but the change over September 2000 was a rather modest 2.8%.  Activity at the John Wayne Orange County Airport was up by 50.4% over last year, but was ahead of September 2000 by just 0.4%.  The Palm Springs Airport was up by 41.2% over the year, but was below September 2000 by 15.0%.
     The Long Beach Airport is a special case, due to increased service by JetBlue.  However, we don't have their September data yet.
     As to international air freight activity at LAX in September, "departure" tonnage was down by 6.3% over the year, while "arrival" tonnage was ahead by 12.4%.  Total air freight tonnage during the month was up by 5.1%.  September was the fifth month in a row of double-digit increases in import tonnage.  The month may have also seen a little bump in activity due to the port problems.  October definitely will.  (Jack Kyser)
LAX data: http://www.lawa.org/statistics/tcom-0902.pdf
 

AUGUST INTERNATIONAL TRADE VALUES

     The August data from Department of Commerce indicated continued improvement in these measures of trade value.  At the Los Angeles Customs District, export values were down over the year by 1.1%, while imports were ahead by 10.6%.  The month's total of $19.5 billion was up over the year by 7.0%, the fifth increase in a row.  The 8-month total for Los Angeles was $140.1 billion, down by 1.2% from the comparable period of last year.  At the San Francisco district, exports were off by 10.4%, but import values moved into the plus column, with a gain over the year of 1.3%.  This was the first positive reading for this measure since January of last year.  The total two-way trade value was $7.0 billion, off by 4.4% from last year, while the 8-month total was $52.9 billion, down over the year by 22.9%.  However, the year-to-year differences continued to narrow.
     The best trade value news in August came from San Diego, where export values were ahead by 8.0%, and import values were up by 1.6%.  The month's total of $3.2 billion was up by 3.9%, while the 8-month total increased by 6.3% over last year.  (Jack Kyser)
 

SEPTEMBER CONTAINER TRAFFIC

     Container activity at the two local ports in September was a mixed bag, with the tail end of the month impacted by the "lockout."  The recent movement of one shipping line from Long Beach to Los Angeles also has to be recognized.  The number of loaded import containers handled at Long Beach was down over the year by 14.2%, but Los Angeles recorded an increase of 19.8%.   The number of loaded export containers moved at Long Beach was also down over the year by 29.7%.  Again, Los Angeles was ahead, this time by 16.7%.  The total number of containers handled at the two ports combined in September was ahead of last year, up by 6.5% to 929,581 TEUs.  Since May, the TEU count at the twin ports has been consistently above the 900,000 mark, with that jump to over one million last month.
     The October numbers will reflect the effects of the 11-day lockout, as well as the post-lockout congestion problems.  (Jack Kyser)
Port of LA data: http://www.portofla.org/statistics/detailmonth.htm
Port of Long Beach data (9/02 data not posted on the web yet): http://www.polb.com/html/2_portStats/teus.html
 

ALL QUIET ON THE WATERFRONT?  NOT!

     Is the court-mandated cooling-off period working out for the ILWU and PMA?  Although containers are moving, both sides don't seem to be "cooling off."  The PMA filed documents with the US Dept. of Justice claiming that dockworkers are engaging in a slowdown (considered illegal under the court order issued on Oct. 9).  Productivity, PMA claims, is down ranging from 34% in Oakland to 9% in Los Angeles and Long Beach.  The ILWU counters by laying blame on the PMA for not being able to manage the massive backlog.  This 80-day period may end up heating up rather than cooling down the two sides.  But at least the holiday shipping season will be over.
     We've started keeping track of the number of ships in and around the LA/LB ports.  The number of ships at the twin ports (and outside the twin ports because they are full) was 117 last Monday (10/21) and 102 this morning (10/28).  The number of ships arriving at the ports, however, may be declining.  The number of ships "arriving next day" were 21 last Monday (10/21) and 16 today (10/28).  The reason may be quite simple.  The shutdown disrupted the shipping schedules which used to run like clockwork.  Now with nearly two hundred ships still stuck at West Coast ports, none are able to keep their regular schedules and return to Asia.  Ships currently in Asia may delay leaving for the U.S. because they cannot unload in a timely fashion.  Large container ships are unable to pass through the Panama Canal, and the ports in Mexico and Vancouver are not able to absorb all the traffic.  Therefore, we can expect disruptions to cargo flow for many more weeks to come, even if there's no shutdown/strike after the 80-day cooling-off period.
     In the meantime, air cargo carriers are doing brisk business.  United Airlines reported no extra flights, but they are maximizing the cargo loads on their trans-Pacific runs.  So expect tougher luggage restrictions on those flights (United no longer flies cargo-only flights to Asia).  China Airlines, which has cargo-only flights, is running four extra flights (of their largest planes, the Boeing 747-400F) per week even though the ports are now open.  Other air cargo carriers are probably doing the same--adding flights and using bigger planes if available.  Some companies are finding it necessary (and if they're lucky, profitable) to fly in the high-value products in order to keep their shelves stocked or factories running.  Merchants dealing in low-margin goods are really hurting, and for many there are few alternatives in the short term.  (George Huang)
PMA PR: http://www.pmanet.org/html/news_list.cfm/id_subcat/35/id_content/2142588586
ILWU response: http://www.ilwu.org/solidarityday/20021024PressRelease.htm
Vessel traffic data: http://www.marexlalb.org/vtssr/index.html
 

ELECTION 2002 -- ABSENTEE BALLOT APPLICATION DEADLINE IS TOMORROW!

     Today is the deadline for absentee ballot application.
Early voting sites:
     LA County (touchscreen voting; 10/22-11/1): http://lavote.net/voter/touchscreen/
     Riverside County (10/15-10/29): http://www.co.riverside.ca.us/election/current.htm
Absentee ballot application: http://www.ss.ca.gov/elections/Outreach/absentee/links/english_fill_out.pdf (must be received by Oct. 29)
Polling place locator: http://www.ss.ca.gov/elections/elections_ppl.htm
 

SOUTHERN CALIFORNIA INTERNATIONAL TRADE CONFERENCE

     The 2002 Southern California International Trade Conference will be held on Friday, Nov. 15th, from 7:30am to 2:30pm at the Hilton Universal.  It is presented by Port of LA, LA World Airports, Valley Int'l Trade Association, and Economic Alliance of the San Fernando Valley.  Please call 818-379-7000 for more information.
 

BIOMED NETWORKING FORUM

     You are invited to the Southern California Biomedical Council's 30th Biomedical Industry Networking Forum.  It will be held at the Wilshire Grand Hotel on Tuesday, October 22nd, from 5pm to 9pm.  Please visit http://www.socalbio.org/Calendar/october2002.htm 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:

* Cal Assn of Realtors: California median home sale price for 9/02: -2.9% (8/02: +3.6%)
* Cal Assn of Realtors: California existing home sales for 9/02: -12.3% (8/02: +4.1%)
* Cal Assn of Realtors: LA County median home sale price for 9/02: -1.7% (8/02: +3.8%)
* Cal Assn of Realtors: LA County existing home sales for 9/02: -1.6% (8/02: +1.1%)
* Census: US new durable goods orders for 9/02: -5.9% (8/02: -0.6%)
* Census: US durable goods shipments for 9/02: -1.1% (8/02: -1.6%)
* Census: US durable goods inventories for 9/02: -1.3% (8/02: +0.5%)
* Census: US durable goods unfilled orders for 9/02: -0.2% (8/02: -0.2%)
* Census: US new home sales for 9/02: +0.4% to 1.021 million annual units (8/02: +6.8% to 1.017mil.a.u.)
* Natl Assn of Realtors: US existing home sales for 9/02: +1.9% to 5.4 million annual units (8/02: -1.3% to 5.3 mil.a.u.)
* US Treasury: US Treasury Budget surplus/deficit for 9/02: +$41.7 billion (8/02: -$54.7bil.)

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.

Subscribe to e-EDGE and receive current economic news and major developments.  Your e-mail address will not be disclosed to any outside party (including e-EDGE sponsors) under any circumstances.

To send us comments regarding e-EDGE, please e-mail to research@laedc.org.