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Nevada Economic Conditions

There are more negatives than positives for the current monthly indicators. Both Reno (Washoe County) and Las Vegas (Clark County) continue to experience an economic slowdown. We find negative values for most of the same month year-ago percentage changes. Current indicators show that 8 of 9 for the Reno metro area and 7 of 9 for the Las Vegas metro area have weakened. Moreover, unemployment rates for Nevada and its two metro areas have exceeded the U.S. rate. Job growth has stalled-no longer do we find the Silver State creating more jobs than those entering the work force.

Conditions in Reno, where the unemployment rate has jumped to 6.2 percent, have worsened more than in Las Vegas, where the unemployment rate has increased to 5.6 percent. With more people looking for work, it is not surprising that other measures of well-being have also softened. Taxable sales, a reflection of overall spending, is down sharply for Washoe County (15.1 percent) and down moderately for Clark County (3.1 percent). Nevada gaming revenue is down 3.9 percent from the same month a year ago. These losses in major state revenue sources have the Nevada state government scrambling to balance revenues and spending.

Housing conditions remain weak. Reno and Las Vegas housing markets remain imbalanced. Excess supplies of housing have sellers upside down-that is, the going market price for housing is less than the previous purchase price. Real-estate market activity has softened, except but for bargaining hunting for foreclosures. In addition, credit markets grapple with less solvency and greater illiquidity than in the past. Deflation has reduced wealth holdings and efforts to correct past financing excesses have increased lending standards. Over time markets will correct these conditions. In the meantime, however, economic performance will remain weak.

U.S. housing starts and auto and truck sales continue to post negative rates of change. Still, real gross domestic product (GDP) posts marginally positive rates of change, keeping us out of an official declaration of a national recession. The U.S. unemployment rate is hovering at the 5 percent level, a long ways from the peak of the 1973-1974 recession when unemployment reached near 9 percent. It will take far greater depth of economic travail and longer duration of economic misery before conditions in the Silver State become the worst since the adversity of the 1930s as some have suggested.

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