The Federal Reserve continues to push the “signaling” short-term interest rates downward, having cut the federal funds target rate and the discount rate six times already in 2001. This aggressive activity at lowering the cost of borrowing is likely to take some time before yielding significant results. Historical experience suggests that the impact of interest-rate adjustments is highly variable, with the most significant effects occurring within a window of six months to 18 months after implementation.
The economy has already weathered a long list of adversities without sinking into a recession over the past six months as the Fed has leaned against the wind. Generally speaking, most believe the outlook is optimistic for a pickup in the pace of activity by year’s end. Still, it is not time to break out the champagne. The shocks from the excesses of the high-flying technology firms, the weakening of international markets with Japan and Europe and continued stagnation of business-investment spending could still create problems in the months ahead.
Travel, tourism and entertainment at the national level have been off a bit. Recent data point to lower hotel occupancy rates as well as revenue per available rooms. Year-to-year estimates of Nevada’s monthly visitor volume, however, show it is holding its own, up 4.4 percent. The Las Vegas area (Clark County) reports a modest gain of 0.8 percent for the last reporting period. Monthly gaming revenue growth rates for the state of Nevada continue to move forward at a modest pace. Washoe County (Reno) gaming revenue is, however, down for the year, but up for the last reporting period. Clark County (Las Vegas) gaming revenue is up, both on a trend basis and for the last reporting period, but recent monthly data show frequent changing signs.
All in all, both the national and Nevada economies show overall desirable levels of performance in terms of inflation and unemployment rates. Unemployment remains below 5 percent and the core rate of inflation, average price increase less oil and farm prices, remains below 3 percent. Still, sufficient uncertainty remains, as reflected in stock-market volatility, to raise concerns that more adverse impacts could occur.