Prices for bond futures have declined recently, job numbers are up and spending continues unabated – all suggesting economic expansion. Federal Reserve Chairman Greenspan recently announced that interest-rate hikes on federal funds should be expected. In short, the evidence points to stronger growth in 2004.
Since national economic recovery began in November 2001, many sectors have recovered. Job levels, however, have not, giving rise to the term “jobless recovery.” March data, however, show 0.2 percent gain over February, stronger growth than the annual increase of 0.5 percent.
Stronger demand is apparent in recent price movements. As the U.S. and other world economies grow at faster rates, raw-material prices have been bid up. As producers pass along costs, consumers face higher prices. The consumer price index jumped 0.6 percent in one month, largely influenced by food and oil. Still, the era of favorable price levels may be coming to an end.
Nevada and its major urban centers continue to experience job growth. The Silver State is again out in front. To be sure, the events of Sept. 11 kept the Nevada economy on a downward slide longer than the U.S. economy, but Nevada has not suffered from the lack of job growth. After the economy bottomed out in the spring of 2002, job recovery has been steady. Current Nevada job levels stand above the peak of 2001. Job growth year-over-year for the month of March is up 4.2 percent, 4.3 percent and 3.5 percent respectively, for Nevada, the Las Vegas MSA and the Reno MSA.
The expansion with job growth in Nevada and a jobless recovery for the nation has seeded housing-price escalation in Las Vegas. A continuation of the trend of late 2003 and early 2004 bears scrutiny. Permitting activity, up 31.2 percent year-over-year for March, suggests supply increases adequate to house new residents. Housing prices have taken off almost everywhere, but Nevada ranked third among the states during the fourth quarter of 2003. It remains to be seen whether Nevada’s advantage in housing affordability will hold.