The Center for Business and Economic Research
University of Nevada, Las Vegas
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The Center for Business and Economic Research University of Nevada, Las Vegas
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The Center for Business and Economic Research released its Annual Economic Outlook at a conference on December 11, 2008. The following press was provided by Hubble Smith with the Las Vegas Review-Journal. Copies of the complete Annual Economic Outlook: 2009 publication are available through the Center.
Southern Nevada's economic recession is expected to worsen from mild to bad in the next couple of years, though most indicators are forecast to show growth relative to a weak 2008, UNLV economist Keith Schwer said Thursday.
A mild recession has an unemployment rate of 7.5 percent or less, while a bad recession is defined by unemployment of 7.5 percent to 15 percent. That's where Las Vegas is headed, topping 10 percent at some point, Schwer told about 200 businesspeople at his annual economic outlook.
"This is not going to be a mild recession," the executive director of the Center for Business and Economic Research at University of Nevada, Las Vegas said. "This is going to look like the bad recessions of the '70s and '80s in terms of unemployment."
Schwer's forecast for Southern Nevada shows 9.9 percent growth in hotel and motel rooms in 2009, 4.5 percent growth in housing permits and 3.7 percent increase in visitor volume. Only one of the seven categories -- personal income -- is forecast to be negative, down 2.5 percent.
Population and job growth, the drivers of Las Vegas' economy in the 1990s and early 2000s, have slowed dramatically. They're projected to grow 1.6 percent and 2.6 percent, respectively in 2009.
The story line for Las Vegas is "decoupling the myth" that the local economy is somewhat immune to what's going on nationally, he said. That's not true.
Now that gaming is widely available throughout the country, people who get the gambling itch have high-quality casino choices closer to home. Gaming and tourism are discretionary spending, and although Las Vegas weathered down cycles in the past 25 years, the scene is changing, Schwer said.
The question is how will travel trends change.
"What happens here, stays here. That may not be what people are looking for," he said in reference to Las Vegas' advertising slogan. "They may want value. Maybe people are not looking for top shelf. We may have missed our brand here. Our brand used to be value."
Schwer presented charts and graphs on Southern Nevada's leading economic indicators, most of which generally showed steep downward trends from 2006 to 2008.
The construction, tourism and business activity indexes compiled by the UNLV economic research center have all declined from their peaks, though the construction index has turned back up from its low point in January 2008.
Consumer confidence is low and people aren't spending, Schwer said. Big-ticket items such as automobiles and furniture have seen double-digit sales declines. Stores such as Oak World Furniture and M&T Furniture have gone out of business.
Economic pessimism is widespread, according to a business outlook survey conducted by the research center. At the end of November 2007, 28.4 percent of responding companies expected to add employees within the next three months. That fell to 7.2 percent at the end of November this year.
Commercial real estate broker Perry Muscelli said he wasn't surprised by what he heard at the outlook.
"It's interesting to see actual concrete data that substantiates the actual experience in the business community," he said. "Most shocking was 50 percent of homes in Nevada have negative equity. That's a staggering statistic that puts the economy at great risk."
Since the Southern Nevada economy took such a big hit this past year, it has nowhere to go but up. At least, that's the forecast from Thursday's Economic Outlook Conference.
UNLV's Center for Business and Economic Research (CBER) is predicting gaming revenue, visitors, and the area's population will all increase slightly in 2009.
Even so, analysts think the Southern Nevada economy will stay in a recession until the end of '09, possibly longer.
A drop off in residential and commercial construction, fewer flights and tourists coming to Las Vegas, and the housing crisis are all part of the problem.
The most recent unemployment numbers for Nevada rose to 7.6 percent - an indicator that we're in a "bad" recession. To be considered a full on depression, unemployment would have to hit 15 percent. That's something economists don't anticipate happening here, although CBER director Dr. Keith Schwer said a 10 percent unemployment rate in the next year and a half isn't out of the question.
His prediction was echoed by results from the Center's annual Business Outlook Survey. Nearly two thirds of local businesses expect the economy to get worse over the coming year, and only about 7 percent plan to add new employees in the next 3 months. A whopping 50 percent say they won't be hiring additional employees at all.
The news is a little bit better when talking about the housing market. Existing home sales are starting to creep back up, while at the same time home prices are falling back to pre-boom levels. Still, there's clearly a long way to go - half of all households in Nevada are upside down on their mortgages, and the percentage of homeowners with past-due payments is rising.
Of CBER's seven economic indicators, only one - total personal income - is expected to change for the worse in 2009. With the local economy tied to what's going on nationally, however, Nevadans may see their economic forecast change over the coming year.
Established in the mid-1970s, the Center for Business and Economic Research at UNLV is a leading source of economic and demographic data, analysis, and forecasting for southern Nevada. In addition to its annual Economic Outlook reports, CBER regularly publishes reports on the state of the local economy, with particular attention to housing and migration patterns. The Center also performs survey research and analysis for the publications of its public, private, and non-profit clients. These include the annual Las Vegas Perspective and Nevada Kids Count, and topical projects such as Projection 2003: A Report on the Future of the Southern Nevada Commercial Real Estate Industry and Health Insurance Coverage of Nevadans.
The complete Economic Outlook may be purchased for $40 (+ $3 for shipping) online through the CBER website, by email, and by fax or telephone from
For further information about the data and methods used in creating these forecasts, contact Drs. Keith Schwer at the Center.
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