U.S. real GDP grew at an annualized rate of 1.3 percent during second quarter 2011, up from the revised first quarter estimate of 0.4 percent. U.S. non-farm employment increased by an anemic 117,000 jobs (seasonally adjusted) in July, which represents an improvement over the May and June figures of 25,000 and 18,000, respectively. Mostly as a result of declining labor-force participation, the U.S. unemployment rate fell to 9.1 percent in July. Sales of existing homes slipped for the third straight month in June, but sales of new homes held steady in June after falling in May. Highlighting a weak second quarter, real personal consumption spending slipped for the third straight month in June, while retail sales rose. The Kansas City Financial Stress Index edged upward in July but remained below its long-run average, suggesting that the financial headwinds to U.S. economic growth remain subdued. Nonetheless, small businesses report continued difficulty obtaining loans.
The Nevada economy continues to show mixed signs of growth. Visitor volume was up in June compared to a year earlier, and gaming revenues rose sharply as the result of much stronger baccarat play than was seen last June. Sports books and slot machine play also fared better. Taxable sales in May were up by 7.2 percent above a year earlier. From May to June, economic weakness drove a decline in Nevada employment of 2,900 jobs (0.3 percent), and new entrants to the labor force helped drive the unemployment rate from 12.1 percent up to 13.5 percent.
The pace of economic activity in Clark County remains uneven. Compared to a year earlier, visitor volume was up by 6.0 percent in June. Taxable sales for June were 5.6 percent above those for the same month a year earlier. Residential construction permits rose in June but remain at historically low levels. Commercial construction permits fell. The unemployment rate rose from 12.4 to 13.8 percent with new entrants to the job market.
Washoe County’s economic conditions show some improvement. Compared to a year earlier, June visitor volume was up by 5.9 percent, but gaming was down by 1.7 percent. Residential and commercial construction permits fell in June and remain at historically low levels. Reno-Sparks employment fell by 400 jobs in May, and the unemployment rate rose to 13.0 percent as labor-force participation increased.
Although the national economy was particularly weak during the first half of 2011, Nevada’s tourism, hospitality and gaming industries showed considerable improvement. That segment of the Nevada economy is likely to show continued gains as U.S. economic conditions improve in the second half of 2011. Nevada’s real estate and construction sectors are showing signs of reaching bottom.
Professor Stephen P. A. Brown, PhD
UNLV Center for Business and Economic Research