Business Indicators - January 2005

Business Indicators

by R. Keith Schwer

Nevada remains atop the list of states with favorable economic performance. Gauging performance by the utilization of labor resources, one would be hard pressed to envision a better situation. Nevada’s unemployment rate for October dipped to 3.4 percent, well within the desired range. Despite the good news for the Silver State, the U.S. unemployment rate holds at 5.5 percent, leaving questions about U.S. job losses, layoffs, displacement and downsizing. In short, not all areas of the U.S. are doing as well as Nevada, and those looking for employment have a greater opportunity in Nevada’s labor market.

The most recent recession (2001) was different. The U.S. economy continued to shed jobs well past the beginning of economic recovery. The recession and the "cocooning effect" after 9/11 slowed the Nevada economy, but after a longer-than-usual period for a rebound, the prospects of economic opportunity returned. The expansion in Nevada is at a faster pace than elsewhere. As a result, construction employment as a percentage of total employment has reached 10.1, 10.6, and 9.6 percent, for Nevada, Clark County and Washoe County respectively, compared with 6.5 percent for the U.S. All in all, spending and employment in Nevada have been favorable and the prospects remain bright for 2005.

Predictions for the U.S. economy in the year ahead are less optimistic than for the Nevada economy. National labor markets have been slow to improve, and although better employment rates are expected, they will probably not be sufficient to return conditions to the levels of the late 1990s. In addition, the U.S. balance-of-trade deficits have passed $50 billion a month, signaling weakness for the dollar in currency markets. Still, these challenges should not prove a sufficient problem to halt the current U.S. expansion. Indeed, the prospects for 2005 call for continued growth for the nation as a whole, but not on as robust a scale as in Nevada.