Business Indicators - March 2004

Business Indicators

by R. Keith Schwer

Productivity growth and continued strength in consumer spending, particularly for big-ticket items such as homes and cars, buoyed spending levels over the past couple of years. Still, the last half of 2003 proved far better than the first half of the year. The national GDP numbers grew robustly, up by more than 4.3 percent on an annual basis from the 3rd quarter of 2002 to the third quarter of 2003.

For the third quarter alone, on an annualized basis, GDP growth exceeded 8 percent. To be sure, tax rebates and other special circumstances underpin this one-time large bump-up. Indicators of future spending by U.S. consumers and producers suggest spending growth in 2004. Increased business spending is the key to this forecast. Increased demand and slower productivity growth will create demand for jobs.

A strengthening national outlook will surely benefit Nevada. Still, economically vulnerable households and businesses in Nevada have experienced difficulties. The recent closures of the Castaways and Horseshoe Casinos in Las Vegas are examples of the "winnowing and sifting" that recessions and weak recoveries bring.

Recent gaming-revenue numbers continue to show modest gains. On a year-to-date basis, the state gained 1.76 percent, Clark County gained 2.79 percent, and Washoe County declined 4.28 percent for. Other key indicators of overall economic health are generally better. Taxable sales continue to post gains, and job growth in the Silver State continues to outpace other states. The state’s employment level rose 4 percent over the past year. Nationally, over the same period, employment declined 0.1 percent. Nationally, we have had a jobless recovery. In Nevada, we have had a recovery with job growth. Favorable interest rates and the expectation of future returns have kept construction activity at full swing. Strong permitting activity foretells future growth.

All in all, the state of Nevada has passed through a recession. We now see a future with a quickening in the pace of spending.