Having weathered sharp price increases for energy, inflation-adjusted Gross Domestic Product (GDP) is up 3.2 percent on an annual basis, though fourth-quarter numbers were down as a result of disruptions tied to hurricane impacts. After a slow recovery, job growth nationally shows signs of a breakout from the doldrums which set in during 2001. As a result, the U.S. economy continues along its upward path, with expectations of sustaining the expansion.
The Nevada economy continues to outperform the national economy as reflected in a comparison of unemployment rates. Nevada’s recent unemployment rates were at 3.9, 4.5 and 4.0 percents for Las Vegas, Reno and Nevada, respectively. The U.S. unemployment rate is at 4.8 percent, down from 5.4 percent a year ago. Nevada and Arizona continue to rank first and second among the states in the rate of job growth. Nine of the top 10 states in job growth in 2005 were in the West.
Looking ahead, we now see a slowing in the torrid pace of U.S. housing activity and major consumer purchases such as automobiles. Both housing and autos were down for February, whereas auto and truck sales were up slightly for the same month year-over-year. Having been strong for some time, this softening in housing and autos is not unexpected. Still, a bright future for profitability in other business sectors suggests only modest slowing in U.S. growth in the months ahead. That is, modest declines in these two sectors and continued expansion in other key sectors should only shave a fraction off the recent growth rate.
Key Nevada business sectors – namely, travel and tourism and mining – will surely do well in the months ahead. Most recently, gaming revenue is up by double-digit rates and commodity prices have posted sharp upward swings. All in all, these conditions favor further growth in the Silver State for 2006.