Generally speaking, U.S. economic indicators during the first quarter of 2002 suggested a bright outlook with economic expansion. Yet, a series of accounting scandals slowed the expansion. Consumers, having confidence in the future, continued to spend. However, inability to measure business earnings with any degree of confidence, as well as uncertainty about whether more revelations of impropriety might be lurking, caused stock prices to trend sharply downward, and consumer confidence followed.
By the third quarter of 2002, the national outlook has clouded. Some indicators generally thought to predict economic expansions remain weak, suggesting the possibility of a double-dip recession. On the other hand, the level of employment is growing very slightly and the unemployment rate has improved, now at 5.7 percent. Amid indicators showing strong cross-currents, one can take heart that the bottom of an economic downturn often shows such a pattern.
Nevada’s tourist economy has struggled since the Sept. 11 attacks. Yet, looking at the most recent comparisons of current visitor volume and gaming revenue with year-ago levels, one would conclude that the Silver State’s economy is back. Though overall visitor and gaming activity has returned to previous September levels, key bottom-line numbers remain weak in comparison with pre-Sept. 11 conditions.
Still, conditions are better than they might have been. Nevada, Clark County (Las Vegas) and Washoe County (Reno) experienced visitor-volume growth from August 2002 to August 2001 of 2.0, 10.0, and 10.1 percents, and gaming-revenue growth of 4.4, 6.0, and 5.7 percents, respectively. No doubt, monthly figures for the fourth quarter of 2002 will be up in comparison with the same months a year ago. Over the longer view (2003 and beyond), annual gaming and visitor numbers are likely to range from down to flat at best, resulting in price competitiveness, higher costs and weaker earnings.
The unsettled Middle East and a heightened probability of war cast a shadow on future travel and tourism conditions. However, during periods of uncertainty, prices for gold and other precious minerals tend to move upward. Nevada’s other major exporting sector, mining, would stand to gain from such a movement. Having experienced lower prices for some time, Nevada mining firms would gain from higher prices, but the likelihood of a sustained period of price improvement for Nevada minerals seems uncertain. Thus, all in all, events outside the customary course of business activity cloud the short-term outlook.