Business Indicators - September 2007

Business Indicators

by R. Keith Schwer

Housing’s rebalancing, as reflected in the sharp decline in permitting activity relative to year-ago levels, has created an economic drag, resulting in more modest change of late. For example, Nevada’s employment growth has slowed to 1.7 percent as measured by the June 2007 level relative to June 2006. Over the same period, Las Vegas (Clark County) posted a 2.1 percent gain and Reno (Washoe County) grew by 1.4 percent.

Overall, indicators for Nevada, Clark County, and Washoe County are mixed. This assessment also holds for the U.S., where employment growth is trending at a 1.5 percent rate. First-quarter GDP was down markedly from 2006. Expectations call for growth to pick up in 2007, but growth should remain modest for 2007. Again, national housing markets and other indirectly related industries should perform at subpar levels in the months ahead. For example, auto and truck sales, big ticket items are down 3.6 percent on a year-ago basis and expectations are that this trend will continue for the remainder of 2007.

Housing and international trade continue to rebalance, a reflection of market adjustments. During periods of rebalancing, slower growth often occurs. But, after resources have moved to more productive endeavors, stronger growth is likely. How long adjustments will take to put the Nevada economy in a higher growth place is uncertain. Still, investors continue to express long-term confidence in the Silver State, one good indicator of state prospects.