We find little improvement in the most recent economic indicators—for example, the unemployment rate rose nationally and in the Silver State. Unemployment rates in Nevada climbed rapidly over the past year and reached double-digit levels—10.5 percent, 10.4 percent, and 11.2 percent respectively for Nevada, Clark County (Las Vegas), and Washoe County (Reno) by April. The rates exceed the U.S. rate of 8.5 percent.
Rising unemployment, job uncertainty, and possible income losses have resulted in more conservative spending, particularly for large ticket items such as autos, housing, and home furnishings and discretionary spending items such as travel and tourism. Past downturns since the early 80s were less severe and shorter duration than the current one; consumers did not realign their spending and visitation to Nevada as they are now. It looks like this recession, that is, the decline from peak to trough, will pass the 18 month level at the end of June, resulting in the longest recession since the 1930s.
Tourism spending in Nevada eroded by double-digit rates and across many sectors over the past year. Construction, finance, real estate, tourism and dependent jobs have encountered the most difficulties. Nevada gaming revenue is down 18.1 percent for February 2009 over the same month a year ago. Taxable sales show a similar decline, down 18.9 percent measure for the same month a year ago. Moreover, we see similar declines for Las Vegas and Reno. The momentums of the sharp drops shown in the spending indicators will likely carry forward in future months, even if the national economy turns up.
Most states have not been as adversely affected as the housing bubble states (Nevada, California, Arizona, and Florida) or the big-ticket manufacturing states (Michigan, Ohio, and Indiana). It is, therefore, more likely that we will not see the first signs of a national recovery in Nevada. Some early signs that the momentum of decline may be waning include some strength in first quarter national income accounts around consumer spending, a rising stock market, and replenishing of inventories by purchasing managers. We will see if this is sustainable.
As this recession ages and the prospects get better, it bears remembering that each business cycle has its own path and that the future expansion could be different from the past—nevertheless, we foresee some roadblocks ahead to regenerating vigor in the Nevada economy.