Index of Economic Activity for Humboldt County

1. Index of Economic Activity for Humboldt County Tracking the Local Economy Since 1994 www.humboldt.edu/~indexhum

2. Composite Index

3. Currently Sponsored By:

4. Sectors • Electricity Consumption • Employment • Home Sales • Hospitality • Lumber-based Manufacturing • Retail sales

5. Electricity Consumption • Pacific Gas & Electric Company • Provides kilowatt-hours consumed in all market sectors (residential, commercial, industrial, etc.) • Quality of the data is excellent (100% correlation), but… • Data are received quarterly, so the Index’s sectoral value is estimated two out of three months • The series is updated as actual data become available • PG&E also provides data for natural gas consumption

6. Electricity Consumption

7. Employment • Employment Development Department • Provides total county employment figures • Quality of data is excellent (100% correlation) • The Index reports preliminary numbers each month • The series is updated as revised data become available • EDD also provides employment levels by industry and the countywide unemployment rate

8. Employment • The large drop in retail employment in late 2002 was due to a change in how EDD classifies this sector • The drop in manufacturing employment was mitigated by the addition of classifications

9. Employment • Major differences between the old classification system (SIC) and the new (NAICS): • Retail (establishments no longer included) • Restaurants and Bars • Any retailer that also manufactures or alters product on site now listed under manufacturing (i.e., bakeries, tailors, furniture…) • Pawnshops • Manufacturing (other added establishments) • Photocopying moved from Business Services Source: Census Bureau (http://www.census.gov)

10. Home Sales • Humboldt Association of Realtors • Provides number of existing homes sold • Quality of data is excellent (100% correlation), but… • New housing activity is not captured • HAR also provides sale price information and the Humboldt County Housing Affordability Index

11. Home Sales

12. Home Sales • From Jan 1998 – Apr 2003: • Typical Mortgage Payment has risen 30.8% • Typical Rent Payment has risen 30.9% • This parallel movement suggests the increase in median home price over the past 5 years represents an actual gain in value

13. Home Sales • From Jan 2000 – Dec 2002: • Real Median Home Price has risen 42.6% • From 2000 – 2001: • Humb. Co. Real Per Capita Personal Income has fallen 0.2% • Preliminary 2002 data suggest that real per capita personal income decline has continued

14. Home Sales Percentage of households that can afford to purchase the median priced home

15. Home Sales -Based on 2002 data from EDD, “median” mortgage payment of $1076.80, “median” rent of $916.25 -The traditional standard is to devote no more than 30% of income to housing

16. Hospitality • We collect occupancy rate data from a small sample of hotel, motels and inns • We tested our series against the similar series generated for the CA Division of Tourism…

17. Does the price of gasoline have an effect on the local hospitality sector? If so, one would expect a negative correlation Positive 33.1% correlation Therefore, no discernible effect exists Hospitality

18. Lumber-based Manufacturing • We collect data on lumber shipped and payroll from a small sample of local firms • We tested our series against data collected by the Board of Equalization

19. Lumber-based Manufacturing

20. Retail Sales • We collect total sales data from a fairly wide variety of retailers • We tested our series against data collected by the Board of Equalization

21. Retail Sales

22. Leading Indicators • Lumber-based Manufacturing • Manufacturing Orders • Home Sales • Building Permits • Employment • Help-wanted Advertising • New Claims for Unemployment Insurance

23. Manufacturing Orders • We collect data from the participating firms • We tested our manufacturing orders series against the following month of our manufacturing sector

24. Building Permits • We collect counts of permits for new single-family residential construction from three local building departments • We tested our series against data compiled by the Census Bureau (1996 – 2002, all Humb. Co. jurisdictions) • Quality of the data is poor • Correlation of –4.2% • Additionally, building permits are not comparable to our home sales sector because one series counts new homes built while the other counts new and existing homes sold

25. Help-wanted Advertising • The Eureka Times-Standard Classifieds • We count the number of ads appearing on the second and fourth Sundays of the month • Quality of the data is good, but… • Help-wanted advertising reflects only a portion of total activity in the employment sector • Correlation of the number of ads to the following month’s employment level is 51.6%

26. Help-wanted Advertising

27. New Claims for Unemployment Insurance • Employment Development Department • Provides a count of new claims • Quality of the data is excellent (100% correlation), but… • Unemployment claims also only tells part of the story • Correlation of new claims to the following month’s employment level is –57.2%

28. New Claims for Unemployment Insurance

29. A regression-based model using lagged employment, help-wanted advertising and unemployment claims data We’re able to post estimated activity one month before the EDD data are available We estimate roughly 600 jobs were added in May Humboldt County Employment Estimate

30. Humboldt County Employment Estimate

31. Effectiveness of the Index

32. Staff • Since July 2003 • Professor Erick Eschker, Director 826.3216 ee3@humboldt.edu • Jessica Digiambattista, Assistant EditorGarrett Perks, Assistant Analyst • Before July 2003 • Professor Steve Hackett, Executive Director and co-founder (in 1995) • John Manning, Managing Director