The national recession continues, though some signs of recovery give heart that things are on the move. For one, the U.S. Index of Leading Indicators, a six-month-ahead forecast, has been on the upswing over the past five months, suggesting that spring 2010 may see the end of the national recession.
On the other hand, the Southern Nevada Index of Leading Indicators, constructed similarly to the national index, but using Nevada data, shows no shift in economic fortunes. The index continues a downward drift, giving no signal of an end to the severe recession affecting the Silver State. The severity of the recession shows in the 13.1, 13.9 and 13.5 unemployment rates, for Washoe County (Reno), Clark County (Las Vegas), and Nevada, respectively. Keep in mind that these rates count part-time workers as full-time employment; and, as a result, these rates overestimate the strength of the labor market.
As the recession has increased in intensity, more layoffs have occurred and hours of work are reduced, resulting in less take-home pay and subsequent spending. But less spending cascades into further spending losses. We look to a recovery of the natural economy to bring the cycle of contraction to a halt.
Severe recessions bring hardship–lost jobs, depleted savings, sold assets, lost homes, fewer hours of work. Not a pretty picture, especially following a long period of growth and prosperity that year after year left Southern Nevada on top of lists of regional growth centers.
Prospects have changed. Having lived on growth–we overbuilt, over-lent, and over-borrowed–now we pay for our mistakes.
In the recovery ahead, travel and tourism indicators will surely recover earlier than construction activity. Having overbuilt housing, commercial real estate, and hotel rooms, construction opportunities have shrunk greatly. This factor alone gives reason for a return to more modest growth once the recession comes to an end. The Silver State has enjoyed a period of great prosperity–the baseline for future business growth will likely be lower and more challenging.