Amid sharp declines in stock-market prices, conditions along Main Street USA remain buoyant and show little adversity from Wall Street’s difficulties. Indeed, consumer spending continues to trend upward, not turning down as it typically does during a recession. Since the recession began in March 2001, a torrid level of consumer spending has kept this recession mild. Furthermore, there is every indication that the recession will be of short duration. It is highly likely that the recession may already have ended.
Falling stock prices continue to be of concern, however. If the bear market causes consumer expectations to shift sufficiently, consumer spending and investment expenditures could stall the recovery. A crisis of confidence could reverse the generally favorable current conditions.
The most recent national indicators reveal the economy improved measurably during the first half of 2002. Gross domestic product (GDP) grew at an annual rate of 6.1 percent after adjusting for inflation. This performance, with more than half the growth reflecting inventory-restocking activity, signaled a pronounced rebound to a short recession. Without the fallout of Sept. 11, the economy would most likely have passed through 2001 with an even milder slowdown in activity. A reading of the stock market and other leading indicators would suggest the annual growth rate for this overall measure of activity will be close to the 2.5 percent to 3 percent range.
Activity in the Silver State has been improving, but is still not back to the levels of last year. Unemployment remains below 6 percent – 5.1 percent, 5.3 percent and 4.3 percent for Nevada, Clark County and Washoe County, respectively. These levels are higher than the good levels of a year ago, but not as high as some projected. In addition, pockets of adversity have also befallen some of the counties in Nevada where mining activity has slowed as a result of falling mineral prices. Taxable sales and gaming revenue – major state revenue resources – continue to track below forecasted levels. Nevada is one of 45 states that have reported some fiscal adversity.
All in all, Nevada’s economy seems to be coming back from the twin problems of security concerns and a national recession, and faces the prospect of a brighter future in 2003 than was experienced during the fall of 2001.