Nevada indicators generally reveal expansion. Only gaming revenue and visitor volume are below year-ago levels for July. Otherwise, the other indicators show positive performance. Most notably, the total number of jobs is up, growing at a 4.4 percent rate in the Silver State compared with 1.3 percent for the U.S. Moreover, Nevada has seen solid growth rates over the past year and a half, whereas the U.S. economy has been lukewarm on job growth. U.S. job levels have not returned to the level of the last economic-expansion peak in March 2001. Nevada’s recovery from the national recession of 2001 and the tourism fallout of 9/11 was complete by the end of 2002. In short, the Nevada expansion has been stronger and more job intensive than the nation’s.
The Nevada recovery in 2003 did not occur with sufficient robustness to right the state’s fiscal affairs, and consequently, new taxes were passed. By midyear 2004, some old taxes, namely sales taxes and gaming taxes (long the mainstay of the state’s general fund) had posted strong increases. After posting strong double-digit growth rates through much of 2004, recent state revenues are down 1.6 percent from year-ago levels and down 5 percent from June to July. On the other hand, taxable sales collections are up 8 percent from June to July, and up 15 percent from July a year ago.
Part of the strength in taxable sales collections comes from a robust construction sector. Permitting activity, subject to significant month-to-month change, shows a reversing to more normal activity in August for Clark County, where residential permitting slipped to 2,583 units (down from a recent period of permitting in excess of 3,000). Washoe County also has seen a decline from earlier rapid rates. Even as the Federal Reserve has begun pushing short-term rates upward and suggesting future increases, construction activity remains strong.
All in all, the combination of robust construction and tourism sectors for urban areas and strong mineral prices for rural areas puts Nevada on target to experience solid economic expansion in 2004.