With a step-up in federal deficits and investment spending, especially for computers and related high-tech equipment, consumer spending did not have to bear the brunt of keeping the economy afloat in the third quarter. As a result, U.S. spending picked up in the third quarter over what had been expected, posting a solid 3 percent growth rate.
Consumer spending during the third quarter, however, showed mixed signs. Housing continues to flourish. The rise in housing demand has pushed prices up, outstripping the growth of income in many major U.S. markets. Las Vegas and Reno have shared in the housing-market boom, though price appreciation has not been as torrid as major East and West Coast markets.
On the other hand, some other big-ticket consumer items have slowed. In particular, auto and truck sales were down 12.6 percent for September. Moreover, the outlook for autos has weakened in recent months. Strong price competition and widely available credit at zero interest have kept spending up, but profits have suffered. All in all, the mixed signals from key consumption and investment sectors may signal the end of an economic slide and the beginning phase of a return to expansion.
August visitor volume dropped 2.3, 1.3 and 10.5 percent, respectively, while gaming revenue grew 1.8, 2.3 and 2.2 percent for Nevada, Las Vegas and Reno. For the same period, taxable sales posted a modest gain of 0.6 percent for Nevada and 1.6 percent for Las Vegas, while Reno experienced a modest decline of 1.4 percent. These spending results suggest activity at or near year-ago levels.
Hidden beneath the generally mild expansion of recent months are some signs of less robustness. For example, maintaining visitor volume has come at the cost of increased marketing expense and promotions offering lower prices. Profitability has waned in the aftermath of Sept. 11.
In looking to the upcoming year, further prosperity will depend on world events, continued resurgence of business-investment spending, and a willingness of consumers to remain active.