Business Indicators - July 2005

Business Indicators

by R. Keith Schwer

Nevada continues to experience favorable economic conditions. Jobs are up by 6.4 percent over the last year in the Silver State. In addition, taxable sales and gaming revenue are up by more than 10 percent on an annualized basis. Not surprisingly, Nevada’s unemployment rate is at 4 percent, a full 1.2 percent less than the rate for the U.S. In comparison, U.S. job growth is up 1.7 percent.

More recently, however, employment growth has softened. U.S. payroll employment grew by 75,000 jobs in May. A generally accepted norm is that it takes a growth of 150,000 jobs a month to assimilate new labor-force entrants. Thus, job growth remains an issue of importance.

Oil prices in excess of $50 per barrel have not had an appreciable overall impact to date. Indeed, a nominal price of $50 today is still less than prices more than 20 years ago, when adjusted for inflation. Still, a heavy summer driving season in the U.S. and stepped-up use of oil in the growing Asian economies could keep demand at a high level, so that a supply setback could push prices up. Price shocks, and the increased risk of such disturbances, may still soften future performance.

Even with slower growth, U.S. prospects remain bright for the remainder of 2005. Inflation-adjusted gross domestic product grew at an annual rate of 3.7 percent for the first quarter. As such, it is highly probable that growth in 2005 will exceed 3 percent, well within the expected bounds for sustaining an economic expansion at this stage of the business cycle.

R. Keith Schwer
R. Keith Schwer - UNLV Center for Business and Economic Research