The pace of U.S. economic growth slowed noticeably in first quarter 2011, with real GDP growth slowing to 1.9 percent at an annualized rate—a considerably weaker pace than the 3.1 percent figure posted in fourth quarter 2010. Providing evidence of continued economic weakness into second quarter, U.S. nonfarm employment rose by only 25,000 jobs (seasonally adjusted) in May and 18,000 jobs in June. As a result of the poor job growth, the U.S. unemployment rate rose to 9.2 percent in June—marking the second straight month of increased unemployment. With weak job growth, falling house prices and high food and energy costs, consumer confidence slipped in both May and June. Real personal consumption spending slipped for the second straight month in May, and retail sales also fell in May. Sales of existing homes slipped in April and May, and sales of new homes fell in May after rising in April. The Kansas City Financial Stress Index edged upward in June but remained below its long-run average, suggesting that the financial headwinds to U.S. economic growth remain subdued. Nonetheless, small businesses report somewhat increased difficulty obtaining loans, which suggests that uncertainty continues to dog investment.
With U.S. consumption spending slowing, the Nevada economy shows signs of slow growth. Visitor volume was up modestly in May compared to a year earlier, but gaming revenues rose sharply as the result of much stronger baccarat play than was seen last May. Sports books also fared better. Taxable sales in April were up by 2.3 percent above a year earlier. From April to May, Nevada employment rose by 1,500 jobs (0.1 percent), and the unemployment rate rose upward from 11.9 percent to 12.1 percent.
The pace of economic growth in Clark County remains slow. Compared to a year earlier, visitor volume was up by 2.9 percent in May. Taxable sales for May were 0.9 percent above those for the same month a year earlier. Residential and commercial construction permits rose in May, but remain at historically low levels. Las Vegas employment fell by 100 jobs in May, and the unemployment rate rose from 12.0 to 12.4 percent.
Washoe County’s economic indicators are mostly downbeat. Compared to a year earlier, May visitor volume was down by 2.8 percent and gaming was down by 6.6 percent. Residential construction permits rose in May but remain at historically low levels. Reno-Sparks employment rose by 100 jobs in May, but the unemployment rate ticked up to 11.8 percent as labor-force participation increased.
With the U.S. economy in the doldrums, the continued growth of Nevada’s tourism, hospitality and gaming industries depends more heavily on foreign visitors and a continued economic recovery in the West. Nevada’s real estate and construction sectors are showing some signs of life.