Signs of further slowing in the U.S. economy are increasingly evident, and a second downturn seems possible, though not yet likely. The advance estimate for real GDP growth in second quarter was 2.4 percent at an annual rate, down from the 3.7 percent revised estimate for first-quarter 2010. U.S. nonfarm employment fell by 131,000 jobs in July, though private employment rose by an anemic 71,000 jobs. Personal consumption spending fell at an accelerating rate in June. Reflecting these woes, measures of consumer confidence and sentiment dipped in July.
As it has since 2008, the Fed continues an expansionary monetary policy stance in which it holds the real Fed funds rate in negative territory. That means that the expected rate of inflation is greater than the interest rates that banks are paying to borrow reserves from each other. By itself, however, monetary policy is not creating enough traction for sustained economic growth.
Repeating an all too familiar theme, the Nevada economy continues to lag the national recovery. Nevada’s unemployment rate remained the highest in the nation. Taxable sales continue to slide, with the May figures 4.5 percent below those of April and 1.9 percent less than a year earlier. Gaming revenue fared poorly in June, falling 9.8 percent. On a somewhat brighter note, visitor volume was 4.1 percent above a year earlier.
Dominating state data, the Clark County economic picture is quite similar to that for the state as a whole. The local economy is showing some renewed signs of slowing. Rising to a record 14.5 percent in June, the Las Vegas unemployment rate remains one of the highest in the nation. Clark County employment dipped slightly in June and was 2.9 percent below a year earlier. Taxable sales fell by 6.5 percent in May, but were only 1.4 percent below a year earlier. Residential-construction permits bounced upward in June but are more than 30 percent below a year earlier. Gaming revenue was up 3.6 percent in May, before falling by 10.4 percent in June, as some casinos took big losses. Visitor volume fell by 4.2 percent in June but was 3.5 percent above a year earlier.
Economic activity in Washoe County shows similar patterns to those in Clark County. The Reno-Sparks unemployment rate rose to a record high of 13.6 percent in June. Washoe County employment fell by 0.6 percent in June and was 2.8 percent below a year earlier. Taxable sales rose a robust 7.6 percent in May, but were 3.8 percent below a year earlier. Visitor volume rose sharply in June, but gaming revenue was down.
Until the U.S. economy shows significant progress in employment, disposable income, and personal consumption spending, the Nevada economy will remain stagnant.