The longest economic expansion on record continues to set records, bringing prosperity to the U.S. and the Silver State. The U.S. and Nevada economies continue to grow at strong rates. Unemployment rates remain favorable, 4.1 percent nationally and 3.9 percent in Nevada. Inflation, though recently pushed upward by higher oil prices, remains at 3.5 percent as measured by the Consumer Price Index.
Experience over the past few years reveals a greater willingness than has historically been the case to hold prices, even in the presence of tight labor markets and resource constraints. Still, the Federal Reserve has remained cautious of possible overheating of the economy during 2000 and has followed a policy of monetary restraint, pushing up the interest rates it has under its control. At the last meeting of the Federal Open Market Committee (the Fed group that sets the discount rate and the federal funds rate), rates did not change. By most accounts, people believe the current levels of monetary restraint and expectations of future economic activity are just about right to keep things on track.
Gaming revenue, a key indicator of Nevada’s tourism economy, jumped in July, reflecting a good summer season. Revenue was up by 12.81 percent for July 2000 over the same month a year ago. The numbers were slightly higher for Las Vegas than Reno, though both areas experienced double-digit growth. All in all, visitor volume and revenue have grown during 2000 at rates reflecting the state’s large increase in capacity during the past few years.
The sectors of the economy that are interest rate-sensitive have slowed as the Fed has attempted to take the steam out of the economy. Nationally, housing starts were down 8.6 percent for August, although total construction activity was up 3.84 percent over year-ago levels. Permitting activity for residences slowed for both Las Vegas and Reno, growing at a modest 0.07 percent and declining 10.6 percent, respectively. Though changes from one month to the next do not establish a trend, slower rates of expansion in the housing and construction sectors should reduce the capacity stress in tight markets and lower demands for complementary consumer expenditures, such as home furnishings. Still, even the most sensitive sectors of the economy should grow and prosper in the months ahead.