The Economic Data Global Express (e-EDGE)

v.6 n.52       Released Dec. 30, 2002
Produced by the Los Angeles County Economic Development Corporation as a public service to the global community.

FLIGHT-TO-QUALITY DRIVE BOND RATES TO NEW LOWS

     The yields on U.S. Treasury securities (bonds, notes, and bills) have been dropping for the past five weeks and reached 41-year lows last week. Yields on the10-year T-note dropped to 3.86% (4.83% in July 2002), and 2-year T-note yields slipped to 1.64% last Friday (2.84% in early July 2002). The list of factors causing this recent falling rate scenario are:
     * An increasingly nervous geopolitical situation, as tensions with both Iraq and North Korea have escalated, the strike of oil workers in Venezuela, which has disrupted oil supplies (now over $30/barrel), and the stock market, which continues to be shaky.
     * Weak data on the manufacturing sector of the U.S. economy continues to disappoint.  Durable goods orders fell in November by 1.4% in the face of market expectations of an increase of 1.0%.  Making this even worse is the downward revision  of the October figure from +2.4% to + 1.7%.  (See details in story by Nancy Sidhu).
     * An underlying perception that the national economy has slipped into a low growth mode, as expectations of 4th quarter GDP growth have fallen to roughly an annual rate of 1.0%.
     Other peripheral factors affecting the Treasury securities market in recent weeks include the run-up in gold prices, which reached $350/oz at the London Friday afternoon London fix.  This follows a lengthy period during which the gold price hovered around $300/oz.  International tensions in the Middle-East as well as the unsettled Venezuelan oil supply have contributed to oil prices rising over $30/barrel.  In addition the dollar has taken a few lumps, falling to 119.98 yen and $1.034/euro last Friday.
     The impacts of "record" low interest rates are many.
     * First, homebuyers are relishing "refi fever", as 30-year fixed mortgage rates have dropped to 5.93%--the lowest level in 37 years.
     * Second, banks are more eager to lend to consumers, as business loans have diminished.
     * Third, unfortunately, retired individuals and others depending on interest income from their bond investments are feeling the pinch from lower interest rates, and
     * Finally, if tensions heighten even more when the New Year unfolds, we can still see Treasury bond rates and mortgage rates finding new lows.  Who would have believed this time last year that millions of homeowners would refinance two to three times this year?  (Ken Ackbarali)
Federal Reserve's interest rates data: http://www.federalreserve.gov/releases/h15/update/
 

DURABLE GOODS SLOWDOWN CONTINUED IN NOVEMBER

     New orders for manufactured durable goods fell by $2.3 billion, or 1.4%, in November. Last month's decline wiped out most of October's 1.7% increase.  Declines were experienced in most sectors.  Orders for motor vehicles & parts, which dropped by $1.7 billion or 4.5%, accounted for much of the overall decline.  However, manufacturers of machinery, primary metals, and computers & related products also ended up in the negative column.  Only makers of defense capital goods, communications equipment, and "other" durable goods registered gains over the month, up by 28.6%, 1.4%, and 0.1% respectively.
     Last month's new orders looked a little better when compared with November 2001, which was close to the recession's bottom (we think. The Cycle Dating Committee has not yet declared that the recession is officially over).  Overall, durable goods orders were up by 2.8%.  Defense aircraft & parts and "other" durable goods, both up by 7.2%, registered the biggest gains over the year, followed by computers & related products (+6.6%), machinery (+2.0%), and motor vehicles & parts (+1.6%).  Orders were still down over the year for communications equipment (-3.0%), primary metals (-1.5%), and fabricated metal products (-0.2%).
     The nation's manufacturing sector is still in the doldrums.  The only real sign of life is in the defense aircraft sector, where orders and shipments are growing and backlogs have risen by 7.3% since last November.  However, a significant pickup elsewhere is unlikely in the near term.  For one thing, automotive production will be flat at best as vehicle manufacturers wrestle their inventories back down (have you noticed all the new "0%" ads lately?).  Makers of vehicle components, metals, chemicals, textiles, and glass also will feel the impact. In addition, while many firms' orders and shipments are up some from last year, most durable goods-makers' order backlogs are still declining, down by 6.8% overall.  Unfilled orders for commercial aircraft & parts are in the worst shape, down by 11.8% compared to a year ago.   (Nancy D. Sidhu)
PR: http://www.census.gov/indicator/www/m3/
 

NOVEMBER CONTAINER TRAFFIC UP

     The port of Long Beach just reported their November TEU counts, and the total for the month was down by 9.9% over the year to 335,149 containers.  Loaded import containers declined by 7.4%, while the number of export containers dropped by 14.4%.  This all reflects recent moves of large port tenants to Los Angeles.
     However, total container traffic at the Long Beach-Los Angeles port complex in November was up by 6.5% over the year to 881,128 TEUs.  This reflects an on-going recovery from the early October lockout.  The latter month's TEU count was down over the year by 17.8%.  (Jack Kyser)
POLB PR: http://www.polb.com/html/1_about/news1.html
POLA data: http://www.portofla.org/statistics/detailmonth.htm
 

OCTOBER TRADE VALUES HIT BY LOCKOUT

     The value of imports and exports passing through the state's 3 customs districts in October definitely reflected the 11-day lockout at the ports.  At the Los Angeles customs district, export values declined by 14.1% over the year, while import values slipped by 7.4%, after 4 monthly increases.  Total two-way trade value at Los Angeles in October was $17.0 billion, down over the year by 12.4%.  The 10- month total of $175.9 billion was 1.8% behind the like period of 2001.
     At the San Francisco district, October export values fell by 16.4% over the year, but  import values increased by 2.7%.  Total two-way trade value for the month declined by 6.2% to $6.5 billion.  The 10-month total for San Francisco of $66.4 billion was 19.4% below the comparable 2001 period.
     It was a much different story at the San Diego customs district in October, since it is more oriented to trade with Mexico.  Moreover, several ships were diverted to Ensenada, where their containers were off-loaded and trucked into the U.S.  Export values for the month were up by 7.5%, while imports advanced by 6.9%.  The month's total of $3.4 billion was up over the year by 7.1%, while the 10-month total of $30.1 billion was ahead by 6.9%.  (Jack Kyser)
 

WATER WARS

     Come Wednesday, California may lose its ability to get and use surplus water from the Colorado River.  For decades, California has drawn more water from the river than the amount allocated to it in a 1930's multi-state agreement.  Under that agreement, California is entitled to 4.4 million acre-feet (MAF) of water per year.  For years, the State has drawn 5.2MAF/yr.--more than its share--because other states have not needed all their allotments.  Now the other states are growing rapidly, that "surplus" is disappearing.  The Dept. of Interior is demanding that California come up with a plan to reduce its draw from the Colorado River or face an immediate cut back to 4.4MAF on Jan. 1, 2003.
     Since farmers in Imperial, Coachella and Palo Verde valleys have first claim on 75% of the Colorado River water allocated to California, a "conserve-and-transfer" agreement between rural and urban users represents one of the few solutions to this crisis.  Such a deal between San Diego and the Imperial Irrigation District (IID) fell apart earlier this month.  The two parties have until tomorrow to come up with a plan to avoid the threatened cut in water allotment.
     Seeking to force the Imperial Valley to reach some sort of agreement, Interior Secretary Gale Norton made it clear that the IID will share the reduced allotment with the Metropolitan Water District (MWD).  IID had previously assumed that it would receive its full allotment.  In any event, Southern California's urban water supply won't be affected immediately because MWD has a two-year surplus in reserve.  Still, it wouldn't hurt to pray for rain in Northern California.  (George Huang)
Sec. Norton's speech to Colorado River Water Users Association: http://www.doi.gov/news/front_current.html
Dept. of Interior's 2003 Water Order Approvals: http://www.lc.usbr.gov/pao/2003orders/pressrelease.pdf
Colorado River Water Users Association:  http://crwua.org
 

2002 ECONOMIC CENSUS LAUNCHED

    The Economic Census, which is done every five years, is an important source of business data for government agencies, economic development & research institutions (such as LAEDC), and private businesses.  The 2002 Economic Census forms will be mailed out in the coming weeks, and we encourage all recipients to accurately report their business information.  All firms' data are kept confidential.  Your participation helps LAEDC do its job and fulfill its mission of serving the business community.
PR: http://www.census.gov/Press-Release/www/2002/presskit_2002_EconomicCensus.html
 

NEED CAPITAL FOR YOUR TECH VENTURE?

     If your company is involved in the development of innovative and cutting-edge, proprietary, ready for market technology, we have an event for you to reach potential investors.  The 9th annual Venture Forum (formerly the Southern California Technology Venture Forum) will be held on Thursday, April 3, 2003, at the Regent Beverly Wilshire in Beverly Hills.  It's a place where venture capitalists and other investors meet entrepreneurs.  Companies chosen to present will get intense mentoring by our group of industry and financial experts so they'll be ready to attract investors.  In the past 8 years, over $500 million of investment were generated as a result of these conferences.  The application deadline for presenting companies is January 8, 2003.  Please see http://www.theventureforum.com/Presenters_Apply.htm for more details.  The website for the conference is http://www.theventureforum.com .
 

TRYING TO REACH SMALL AND MID-SIZED BUSINESSES?

     LAEDC may have the right channel for you.  LAEDC's Business Resource Guide (BRG) is full of free resources that serve small and mid-sized businesses and is seen as an indispensable reference book for these businesses.  An advertisement in the BRG can reach these businesses at a fraction of the cost of radio and billboard ads.  Our 2003 edition is nearing completion and a few ad spots are still available.  Please call Beverly Dill at 213-236-4820 or e-mail to bdill@laedc.org for more information.
 

MERRY CHRISTMAS OR KWANZAA OR SIMPLY HAPPY HOLIDAYS

     The e-EDGE editorial staff wish all our readers a happy holidays season and a prosperous 2003 .  We apologize for not sending each one of you a customized Christmas card--there are only around 3,000 of you on our list!  Here's our generic e-card (in PDF format) for you: http://www.e-edge.org/special/e-card.pdf
 

HOLIDAY NOTICE

     LAEDC offices will be closed on Wednesday in observance of New Year's Day.
 

VARIOUS EVENT CALENDARS

     To prevent the e-EDGE from listing too many events, we encourage you to visit our events pages:
LAEDC events: http://www.laedc.org/data/events/index.shtml
World Trade Center Association events: http://www.wtcanet.org/index_event.htm
LAEDC's economic development-related events: http://www.laedc.org/events/calendarevent.asp
 

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:

* Census: US new durable goods orders for 11/02: -1.4% (10/02: +1.7%)
* Census: US durable goods shipments for 11/02: -1.3% (10/02: +1.4%)
* Census: US unfilled durable goods orders for 11/02: -0.9% (10/02: -0.9%)
* Census: US durable goods inventories for 11/02: -0.2% (10/02: -0.2%)
* Census: US new home sales for 11/02: +5.7% to 1.069 million annual units (10/02: -4.0% to 1.011mil.a.u.)
* Conference Board: US Help-wanted Advertising Index for 12/02: 40 (11/02: 40)
* Natl Assn of Realtors: US existing home sales for 11/02: -3.5% to 5.56mil.a.u. (10/02: +5.9% to 5.76mil.a.u.)

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