The US economic recovery softened in the first quarter of 2010 as measured by growth in real GDP of 2.7 percent, down from 5.6 percent in the fourth quarter of 2009. The June 2010 employment report indicated that the economy lost a net 125,000 jobs. The change in the employment levels included the loss of 225,000 census-worker jobs and a gain of 83,000 private-sector positions. Sales grew by 5 percent year over year, but actually fell slightly over the previous month. This is the second consecutive monthly drop since the beginning of the economic recovery in September 2010. Meanwhile, Congress is still debating the targeted, limited fiscal stimulus of extending unemployment benefits and aid to state and local governments.
Nevada with its large exposure in the tourism and construction sectors will continue to lag the US recovery, since the current recession was driven by the dramatic contractions in tourism and construction. The May unemployment rate for the state stands at 13.8 percent on a not-seasonally-adjusted basis. When seasonally adjusted, Nevada’s unemployment rate of 14.0 percent is the highest in the nation. Taxable sales fell by 1.4 percent in April from March, but rose by 2.0 percent from the previous year. Gaming revenues, on the other hand, rose 4.5 percent in April, but fell 5.7 percent from the previous year. Taxable sales and gaming revenue produce more than two-thirds of the state budget revenue. At the moment, these two numbers suggest that we may have reached the bottom. That said, if the national economy experiences a double dip recession, then all bets are off on the bottoming of the local economy.
The picture in Clark County does not dramatically differ from that in Nevada as a whole. Employment increased by 0.4 percent from April, but decreased by 3.7 percent from last year. Taxable sales rose by 3.5 percent over 2009 levels and gaming revenue fell by 4.4 percent. Residential permitting is frozen below 500 permits a month reflecting continued difficulty for the construction sector. Visitor volume rose by 1.3 percent from April and 1.1 percent over a year ago. This is hardly an indication that the local economy is improving. It does, however, suggest that we have reached the bottom.
Taxable sales in Washoe County fell on a month-to-month and year-over-year basis. The labor market data show less severe conditions in Washoe County with a lower overall unemployment rate, although still very high at 13.3 percent. Likewise, there was a slightly higher month-to-month increase in employment of 0.6 percent and a slightly lower year-to-year decrease of 2.4 percent.
The large overhang in residential and commercial investment means that the construction sector will not likely improve for many months, if not years. The leisure and hospitality sector must lead us out of recession, but that sector continues to show weak progress.