Business Indicators - February 2005

Business Indicators

by R. Keith Schwer

Nevada continues to post robust rates of growth. Taxable sales, gaming revenue and air passenger volume grew at double-digit rates over year-ago levels. Moreover, these rates have held throughout 2004. It is hard to believe the expansion could be better. Therefore, it will be nearly impossible to sustain such rates of growth much longer, unfortunately. Still, though slower growth is expected, prosperity continues.

Las Vegas and Reno job levels grew at rates well above the national rate. Job growth in Nevada’s urban centers were up 5.2 and 4.0 percent, respectively, above year-ago levels for Clark and Washoe counties. In contrast, the U.S. job level grew at 1.6 percent, having remained tepid since the last expansion, which began in November 2001. In short, the Nevada economy has had a great year and the U.S. economy has only been so-so, at least as measured by job growth.

The U.S. economy, which slowed during mid-2004, has returned to faster growth, up 4.0 percent as measured by the annualized growth rate of Gross Domestic Product for the fourth quarter of 2004. The recent drop in oil prices and a return to greater consumer optimism give reason to anticipate continued expansion in 2005.

Future economic success will, no doubt, require more business-investment spending. To be sure, consumers comprise the largest part of aggregate spending. But, consumers have limited ability to increase spending, since almost all income is being spent and income growth is likely to be steady at best. Businesses, for a host of reasons, have remained hesitant to step up spending levels. Perhaps, with greater optimism, businesses will also invest more and add to aggregate spending.