The Federal Reserve has worked through word and action during the first half of 2000 to push the full range of interest rates upward, thereby attempting to trim the rate of growth and hopefully reduce the risk of future economic difficulty. Treasury bill rates under the tight rein of the Fed are up over year-ago levels, but the market-determined rates have not moved accordingly. Still, signs of slower growth may be found amid tight labor markets and restrained inflation.
Admittedly, the Fed’s course has been questioned, primarily by those who believe that continual strong growth without the disruptions of inflation is possible because of increased worker productivity. Yet, with economic expansion, measured by inflation-adjusted GDP, having remained above 4 percent for four years and without confidence that inflation can be kept at bay as labor markets remain tight, the Fed opted for slower growth and the prospects of less inflation.
With prospects of slower growth, the Fed, at least for the near term, has left short-term rates under its control unchanged, signaling that conditions are just about right. And though some sectors are expanding at slower rates, overall economic performance remains exceedingly favorable. The U.S. unemployment stands at 4.1 percent measured over year-ago levels.
Favorable U.S. conditions bode well for Nevada, with the statewide unemployment rate at 4 percent (4.3 percent for the Las Vegas and 2.8 percent for the Reno metro areas). But, not all sectors of the Silver State’s economy have prospered. Most noticeably, depressed prices for gold and other minerals continue to restrain local economies dependent on mining. Furthermore, higher fuel prices during 2000 cut into spending patterns that will likely have a slowing effect in the months ahead. All in all, strong but more modest growth is expected for the last half of 2000.