Nevada’s economy shows resilience from the events of September 11. A national recession and markedly changed behavior for travel and entertainment, to be sure, leave the Silver State on a more measured pace than in the past. Though adversity from the disruptions continues, signs of change are appearing. The movement of monthly employment levels, for one, shows that sharp drops in employment have ceased. Nevada’s employment level stabilized for December and November.
Some improvements, however, occurred as a result of temporary employment for the holiday season. One would not be surprised if some slide in employment occurred in the months ahead as a result of layoffs of seasonal workers. In addition, marginally profitable firms may still face difficulties in the near term. As a result, a full recovery and a return to levels of activity prior to 9/11 remain sometime in the future.
Spending activity, as measured by gaming revenue, is down over the same month a year ago by 7.5 percent for Nevada – 8.4 percent for Clark County and 3.4 percent for Washoe County. Permitting activities (the first step in construction activity) for Clark and Washoe counties were also down, suggesting possible sluggishness in the future. On the other hand, taxable sales continued to grow, up 1.6 percent, 0.5 percent and 4.2 percent for Nevada, Clark and Washoe counties, respectively.
Just-released national income data for the fourth quarter of 2001 also offer some hope for recovery. At a minimum, consumers’ rebounding confidence and favorable pricing for autos and other consumer durables during the fourth quarter have resulted in preliminary estimates of slight growth. This welcomed information reveals that consumption expenditures, the largest component of the economy, remain strong.
Further evidence of recovery ahead may be drawn from the lack of a rate decrease by the Fed’s Open Market Committee at its January meeting. Though further rate declines are possible, the Fed’s aggressive rate reductions during 2001 leave it with fewer options than would be the case if rates were higher. In short, the Fed is coming to the end of policy options for further rate reductions at about the time one would expect past rate reductions to begin stimulating the economy. All in all, the national conditions hint at the end of the current decline, though one quarter of slight improvement does not conclusively mean the recession has ended. The outlook for 2002 calls for the economic slide to subside and conditions to begin firming up.