The numbers are bad. Last year at this time things looked pretty good, at least in Nevada. Even though the U.S. had started to experience difficulties in the credit markets and the housing bubble had already started deflating, things were holding up. We did, however, see storm clouds on the horizon.
A year later, however, conditions have deteriorated markedly. Job levels are down and unemployment rates are up. Moreover, the unemployment rate in Nevada is greater than the U.S. average. One anomaly is that the October job count is up slightly for Clark County, but this is the only metric showing improvement. Data revisions may make even this one slightly positive count an aberration. Also, the job picture grew weaker over the past few months. All in all, we find that most Las Vegas and Reno measures show double digit declines, a continuation of our findings over the past few months.
Further evidence of the economic weakness appears in the Silver State’s unemployment rates, standing at 7.4, 7.2 and 6.9 for Nevada, Las Vegas (Clark County) and Reno (Washoe County), respectively. We see continued weakness in labor markets for the remainder of 2008, suggesting further hardship.
Nevada, along with more than 40 other states, finds state revenues failing to meet projections, a difficult situation. The taxable sales and gaming revenue continues to perform poorly and the tax collections remain below their normal trend. Consumers, comprising about 70 percent of total spending, are simply spending less. Using data for the same month a year apart, enables comparisons adjusted for seasonal spending patterns. The most recent performance shows declines for taxable sales ranging between five and 10 percent among Nevada’s major markets for September 2008 against September 2007. The decline for gaming revenues ranges from three percent to 20 percent measured from the same perspective.
With national conditions continuing to spiral down, we have a pessimistic short term view for the economic fortunes of the Silver State. Actions of the Federal Reserve show some early signs of progress, but this will, in all likelihood, not be enough. Fiscal policy, the combination of cutting taxes and increased spending from Washington, will be needed to make up for consumers’ reluctance to spend. We anticipate new federal spending will work to turn the economy around, probably in late 2009.
