Business Indicators
by R. Keith Schwer
The recession continues. Business contraction has sent unemployment rates to the highest levels in decades. In Nevada the unemployment rate is at 13 percent, compared with a national rate of 9.8 percent. Since job markets lag during economic recovery, more job losses are expected. It would not be out of order to believe that the U.S. rate will reach 10.5 percent and the Nevada rate to reach 15 percent in 2010. Moreover, the headline unemployment rate counts part-time workers as employed, giving a view of the job situation that may be shaded to the optimistic side. More part-time work and less full-time work cuts into household budgets. Definitional issues aside, we still have a clear picture of the severity of the current recession.
The indicators at the national level are more of a mixed bag than those for the Silver State. Generally we see some signs of improvement for the national economy, though each business cycle has its own track which often leaves surprises about the timing and magnitude of a recovery. Conditions in the Silver State, particularly its urban areas of Reno and Las Vegas, are worse than the national economy and show signs of recovery after the national economy turn up. The greater use of consumer discretionary income in Nevada accounts for the greater adversity seen in this recession. No, the Nevada economy was never decoupled from the U.S. economy and was never recession proof.
Over a number of the Silver State indicators we do see a slowing in the rates of decline, however. This appears in the smaller percentage declines measured on a month-over-month basis when compared with changes measure over a year ago. This observed pattern gives hope for the forming of a bottom of the business cycle. Economic expansion begins with a switch in the signs of the percentage changes, but for many people economic recovery will be measured in reference to a return to measurably higher levels of performance, not a small percent change.
In the recovery ahead, travel and tourism indicators will surely recover earlier than construction activity. Having overbuilt housing, commercial real estate, and hotel rooms, construction opportunities have shrunk greatly. This factor alone gives reason for a return to more modest growth once the recession comes to an end. The Silver State has enjoyed a period of great prosperity—the baseline for future business growth will likely be lower and more challenging.
R. Keith Schwer
R. Keith Schwer - UNLV Center for Business and Economic Research
Print
Like this article? Subscribe to Nevada Business Journal
|
Website designed by MaximoMedia Inc.