With this issue we introduce a new format. The format identifies recent growth rates, computed as the percentage change over the last two observations, and trend, computed as the percentage change for the latest period over the same period a year ago. We have added some new national indicators to round out our list of the most often watched indicators. In addition, we include a short comment column to indicate our overall assessment of the indicator’s status.
Some key national indicators, namely equity markets (we use the S&P 500 index as a broad-based stock market indicator) and expenditures for interest-sensitive products (auto and truck sales and housing starts) show declining trends of 10.1, 11.6, and 11.0 respectively. In addition, other indicators, (consumer confidence and business investment for information technology) have also shown a sharp decline. Not surprisingly, this recent reversal in economic fortunes has received extensive news coverage. Indeed, President Bush has pushed his tax reduction proposal as a policy alternative to stimulate economic growth. Still, even with an outlook for slower growth in 2001, the current economic conditions remain healthy as measured by the unemployment rate (4.1 percent) and inflation (2.2 percent measured by the core CPI rate (consumer prices less food and energy).
U.S. economic conditions for at least the first half of 2001 are likely to fall well below the strong growth of the last three years. Indeed, the Federal Reserve nudged interest rates upward during 1999 and 2000 for the purpose of slowing the economy. In March 2000, rising interest rates and concern for high price/earnings ratios for equities, particularly the dot-com securities, set off a marked drop in asset prices. After sensing that a credible market correction was underway, consumer spending plans also downsized. Currently, we find consumer’s still holding more measured plans for future spending. As a result, the national economy’s growth has slowed.
Nevada is not immune to a slower U.S. economy. For example, Nevada gaming revenue, which grew rapidly during 1999 and 2000, has stalled — down 3.9 percent in November 2000 from October and down 3.3 percent from the same month a year ago. With no new major gaming property openings in Nevada’s key markets, expectations are for modest economic performance in 2001, particularly during the first half of the year.
