Nevada indicators continue to soften, a reflection of rebalancing in housing construction and slower spending for consumer durables. Nevada April taxable sales is down in the short-run (compared with the previous month) and the trend (same month year ago). Still, job growth continues to trend up, suggesting expansion at slower rates.
The picture in Las Vegas and Reno looks about the same, though tourism is weaker in Reno. On the employment front, job growth is up for May (same month year-over-year) at 2.3 and 2.1 percents, respectively. The unemployment rate is 4.3 percent for both of Nevada’s urban centers, a favorable rate for a period of economic readjustment. In short, nonhousing business sectors continue to do well, softening the adverse effects of housing.
Housing remains the one weak business sector. Moreover, it is highly likely that this situation will continue through the second half of 2007 and into 2008. In short, housing’s decline and recovery will be U-shaped rather than a drop that hits a bottom and quickly recovers, a V-shaped perspective suggested by very optimistic people.
National conditions, having seen a marked drop in overall activity in the first-quarter 2007, also continues to grow, albeit at slower rates than in 2006. Housing and consumer durable spending remain soft. Other sectors remain strong. Consumer spending, the largest part of our economy, shows signs of strength. Retail sales are up by 4.7 percent on a trend basis. So, housing, having taken about 1 percent from U.S GDP growth, has slowed growth, but growth for 2007 should still be in excess of 2 percent.