Business Indicators - May 2004

Business Indicators

by R. Keith Schwer

The U.S. economy continues to experience the weakest job recovery since World War II. Jobs remain below the last peak level of spring 2001. Jobs increased by only 0.1 percent over the past year. Productivity gains, shifting global manufacturing operations, shortage of raw materials, political uncertainties and rising fuel prices have kept U.S. job growth off its historical recovery path. To be sure, spending adjusted for inflation, as measured by real GDP, is up 4.3 percent from year-ago levels. Without improved outlook for jobs, however, sustaining growth at this rate will remain a concern.

Nevada’s economy shows different characteristics than the U.S. economy. Job growth continues in the Silver State, up 4.3 percent from year-ago levels, and the unemployment rate is lower, holding near the 5 percent level. Also, the remaining five indicators we follow (Taxable Sales, Gaming Revenue, Passengers, Gasoline Sales and Visitor Volume) all show growth over year-ago levels. Continued job growth in 2004 is expected. As long as the national economy continues to recover, with the job picture showing some improvement – even if modest – Nevada should experience job growth. A reversal in the national picture – an unlikely event – would be needed to derail the state’s job expansion.

Nevada’s investment and construction opportunities, fueled by favorable borrowing costs and good fundamentals for the future, have kept construction activity brisk, making up for some of the slower growth in travel and tourism. Travel and tourism stands to gain with an improving national economy in 2004, however. The sharp upward movement in metal prices has improved the outlook for rural Nevada. All in all, 2004 should be a good year for the Silver State.