Economic activity slipped in the latest Nevada indicators, clearly showing overall softening since the terrorist attacks of September 11th. The state’s visitor volume dropped by a double-digit rate compared with the same month a year ago. Expenditures, as gauged by gaming revenue, were also down, but not by as much as visitor activity. Expenditure-per-visitor rose slightly. Most notably, weaker economic performance has pushed Nevada’s unemployment rates up, now in excess of 6 percent.
Further layoffs resulting from the initial shocks could add to the economic adversity in the months ahead. By most accounts, however, the most severe impacts have already occurred. However, it remains too early to begin dating the bottom of the current decline, either at the national or state level. Just how long the current downward drift will continue is debatable, but the primary factors to successful recovery remain improvements in homelandsecurity and the performance of the national economy.
Progress on security and recovery from the national recession is ongoing. U.S. military and security efforts have accomplished a number of important objectives. On the economic front, the Federal Reserve has pushed the federal funds and discount rates downward through 11 rate cuts during 2001. This action nudges other market rates lower and acts over time to stimulate expenditures.
Not all efforts to right the economy have been successful. A national stimulus package has floundered in Washington, due to political in-fighting. In addition, state and local governments have tightened their belts, further contributing to the sluggish state of affairs. Slowing world economies and economic disruptions in Argentina do not help the outlook for 2002. All in all, though no longer enjoying the fruits of economic expansion, Nevada and its major metropolitan areas have withstood strong economic adversity. Having done so, resilience in the face of efforts to harm the U.S. economy may give way to greater optimism in the months ahead.
Industrial production, having trended downward since 2000, remains the weak link in the national economy. Most noteworthy have been weaknesses in key industries. These industries include high-tech, aircraft manufacturing, textiles, steel and automobiles. More recently, travel and tourism have been impacted by weak business travel as well as security concerns. Early signs of recovery might appear with strong run-ups in asset prices for major firms in these industries. Even if the bottom in the current decline comes quickly, few foresee 2002 being a year of U.S. economic robustness.