We’ve been looking for a slowdown in the high-flying Nevada economy – and the most recent data show a more measured pace of activity. To be sure, housing activity, as reflected in monthly permitting, is down markedly in both Las Vegas and Reno (down 40 percent and 61 percent, respectively, for residences).
A slowdown in housing has some benefits, however, helping other construction sectors find needed workers. Still, amid much discussion about “bubbles” and “economic recessions,” things are adjusting without catastrophic effects. Sectors exclusive of housing show continuous prosperity. Most importantly, overall activity remains upbeat.
Evidence of more moderate rates of change in the Silver State may be found in a number of indicators. For taxable sales, up 3.5 percent above the same level a year ago, it is now less than the sum of the growth in population and prices. Indeed, most of Nevada’s growth indicators point to modest rates of change.
Though some have speculated that we may have already made substantial headway in addressing housing-market imbalances, it is highly likely that further adjustments will occur in Las Vegas and Reno. How long these adjustments will act as a drag on growth depends on evolving conditions, but most economists believe that slower growth is ahead for 2007.
Nationally, housing starts also show a double-digit slowdown, suggesting slower overall growth ahead. Currently, third-quarter 2006 GDP is now growing at an annual seasonally-adjusted rate of 2.9 percent. Again, depending on evolving conditions, we might expect future GDP growth to continue at or below the current level.