Spokanes economy may have bottomed out and begun a move into more positive territory, according to the most recent Leading Economic Activity Index compiled by Washington State University professor Don Epley.


The index, one of two Epley developed last year to track Spokanes economy using methods tailored to the metropolitan areas economic makeup, was up 0.43 points (read like a stock market index) in his May report, which used local and national economic data from February, March, and April of this year. In Epleys February report, the indexwhich is intended to predict the direction in which the economy here is movingwas up a paltry 0.16 points.


Though still showing gains, the index numbers had been going up by declining amounts over Epleys last three reports, representing a negative trend. Epleys fall report, which reflected the months just prior to the Sept. 11 terrorist attacks, showed a 0.57 point gain. His index last summer was up 0.67 points.


This change in direction means that the nine indicators (used in the index) have a cumulative impact on the local economy that is positive, says Epley in his new report. The zero or small increase in several national indicators means that the economic trends that we have witnessed recently may have reached a turning point.


Epley is an urban economist and a professor of real estate and finance at WSUs Spokane campus.


His Leading Economic Activity Index uses moving averages from three local indicators and six national ones that he chose based on Spokanes economic makeup. Two of the three purely local ones, both tracking building permits here, showed generally positive trends, Epley says in his report. The third, based on his other index, which focuses on employment, exhibited a downward trend. On the national side, the indicators were a mixed bag, though all contained some modest positive movement, including the U.S. Index of Leading Economic Indicators and the U.S. Index of Consumer Sentiment.


The indicators give mixed signals, which can be a sign that the local economy has reached a turning point, Epley reiterates in his report.


Epleys other index is called the Economic Growth Activity Index (EGAI) and is modeled after the Consumer Price Index, but rather than tracking the price of goods, it monitors job data, weighted on the values that differing wages and salaries paid to workers here provide to the Spokane-area economy. Essentially, it tracks the value a worker adds to the economy through his or her purchasing power. Because it relies on dated government employment data, the index released this month reflects the areas economic condition during the third quarter of 2001.


The index for that quarter, which was mostly past prior to the terrorist attacks, was 109.93, down 0.52 percent from the year-earlier quarter, which itself was up a strong 2.21 percent from the third quarter of 1999. The most recent index shows that actual spending power here last summer fell compared with a year earlier, Epley says.


He acknowledges in his report that readers might find the slight decline noted in the most-recent EGAI to be less of a falloff than would be expected, given headlines during the past year about the heavy loss of manufacturing jobs here. Epley says, however, that the index reflects Spokanes reliance on such sectors as retail and wholesale trade, finance and insurance, and real estate and construction, rather than manufacturing.


The report also shows that the EGAI for all of Washington state fell 1.19 percent in the third quarter of 2001, compared with the year-earlier quarterplunging much more dramatically than the Spokane areas 0.52 percent decline. Still, the state had farther to fall. In the five years leading up to the third-quarter of 2001, Spokanes economy had grown 7.1 percent by Epleys index, compared with the states 13.2 percent growth.