The pace of U.S. economic growth slowed noticeably in first quarter 2011, with real GDP growth dropping to 1.8 percent at an annualized rate—considerably weaker than the 3.1 percent figure posted for fourth quarter 2010. Providing evidence of continued economic weakness, U.S. non-farm employment rose by a meager 54,000 jobs (seasonally adjusted) in May. As a result of poor job growth, the U.S. unemployment rate ticked up to 9.1 percent. With weaker job growth, falling house prices and higher food and energy costs, consumer confidence slipped in May. The Kansas City Financial Stress Index edged downward in May and remained below its long-run average, suggesting that the financial headwinds to U.S. economic growth remain low. In contrast, small businesses reported somewhat increased difficulty obtaining loans.
With U.S. consumption spending slowing, the Nevada economy shows mixed signs. Although visitor volume was up in April compared to a year earlier, gaming revenues were down. Taxable sales were up by 9.6 percent. From March to April, Nevada employment rose by 3,600 jobs (0.3 percent) , and the unemployment rate fell from 13.2 percent to 11.9 percent—the latter mostly the result of declining labor-force participation.
The pace of economic growth in Clark County seems to have slowed a bit in April. Compared to a year earlier, April visitor volume was up by 4.5 percent, and gaming was down by 1.0 percent. In April, taxable sales were 9.6 percent above those for the same month a year earlier. Residential construction permits slipped in April. Las Vegas employment rose by 1,100 jobs (0.1 percent) in April, and the unemployment rate fell from 13.3 percent in March to 12.1 percent, as labor-force participation declined.
Washoe County’s economic indicators remain mixed. Compared to a year earlier, April visitor volume was up down by 1.1 percent and gaming was down by 0.6 percent. Residential construction permits slipped in April. Reno-Sparks employment rose by 300 jobs (0.2 percent) in April, and the unemployment rate fell from 13.1 percent in March to 11.7 percent, as labor-force participation dropped.
Despite concerns that higher food and energy prices and lower housing prices are slowing the national economy and reducing discretionary spending, the Nevada economy is still showing signs of recovery—albeit at a bit slower pace than during the first three months of 2011. With the U.S. economy downshifting, the continued growth of Nevada’s tourism, hospitality and gaming depends more heavily on a continued economic recovery in the West. Nevada’s real estate and construction sectors still show signs of weakness.
Professor Stephen P. A. Brown, PhD
UNLV Center for Business and Economic Research