Weakening economic conditions continue across the nation. Most notably, the latest employment numbers show higher unemployment rates compared with year-ago levels. Both the national and state unemployment levels have drifted upward in recent months. Still, the number of jobs is growing, albeit at slow rates nationally and at healthier rates in Nevada’s urban centers. Most importantly, however, unemployment levels still remain below 5 percent, the lowest level once thought to be compatible with an acceptable inflation outlook.
Most national indicators show modest or flat expansion or weakening conditions. Among those economic sectors with the weakest conditions are the information-technology sectors. These sectors have suffered sharply lower stock prices, reflecting worsening revenue expectations. Other stock prices have declined, but not as much as the previously high-flying tech stocks. Stock market prices comprise one of the ten data series in the index of leading indicators, and have been a major factor in the index’s generally weak performance in 2001.
Beginning in January 2001, the Fed steadily brought down the key interest rates that they control — the discount and federal funds rates — in expectation of buoying an otherwise slowing economy. Conditions remain fluid six months later. This makes it impossible to state with credible confidence that the state of economic concern has past.
Conditions in Nevada also remain in a state of moderation. Nevadans, accustomed to rapid growth, now see less construction in hotel capacity, increased competition impacting Reno tourism, depressed gold and silver prices and slower national growth. All in all, Nevada faces a more moderate growth path and greater vulnerability to adverse economic shocks than in the past. Until investment in the state’s exporting sectors rebounds, sustained strong growth opportunities will remain limited.
Having said all this about the economic conditions in the state, most other regions in the country are still not keeping up with Nevada’s growth.