The “advance” estimate for U.S. real gross domestic product (GDP) for the second quarter of 2018 expanded by a strong 4.1 percent annualized rate, the fastest pace in almost four years. Consumer spending, which accounts for two-thirds of real GDP, also grew strongly, which probably reflected somewhat the tax cut. U.S. nonfarm employment added a lower-than-expected 157,000 jobs in July. May and June employment, however, was revised upward by a total of 59,000 jobs. The unemployment rate edged down to 3.9 percent, while July average hourly earnings rose by 2.7 percent year-over-year, slightly outpacing the core CPI inflation of 2.2 percent despite a tight labor market. Retail sales growth in June accelerated to 6.6 percent year-over-year, the strongest pace since February 2012. June housing starts decreased by 4.2 percent compared a year ago, while the seasonally adjusted U.S. housing price continued its gain. Although the Federal Reserve decided not to increase the federal funds rate in the August meeting, strong economic indicators should lead the Fed to engineer another two interest rate hikes in 2018. The recent uncertainty about a potential tariff war, however, may provide a significant headwind.
The Nevada economy showed robust economic activity based on the most recent data. The unemployment rate ticked down to 4.7 percent, the lowest level since the Great Recession. Taxable sales and gasoline sales (in gallons) in May rose by 4.7 and 2.5 percent, respectively, compared to last year.
Clark County experienced generally positive signals in local economic activity. The unemployment rate dropped to 4.5 percent, the lowest level in nearly 13 years. June visitor volume to Clark County declined by 0.9 percent year-over-year. Total McCarran Airport passengers and gaming revenue in June, however, experienced year-over-year gains, up by 2.7 and 3.5 percent, respectively. Clark County taxable sales and gasoline sales in May posted 5.6 and 2.3 percent year-over-year growth rates, respectively. Residential housing permits/units in June decreased significantly by 39.3 percent compared to a year ago.
Washoe County also posted favorable economic signals. The unemployment rate fell to 3.4 percent, the lowest level since July 2000. May taxable sales for Washoe and Storey Counties contracted by 1.7 percent year-over-year. June visitor volume was relatively flat, up slightly by 0.9 percent year-over-year. Total airport passengers exceeded the level from last year by 8.7 percent. Residential housing permits in May experienced a year-over-year loss, decreasing by 23.0 percent due to reduced activity in Sparks.
Stephen M. Miller, Director, Jinju Lee, Economic Analyst, UNLV Center for Business and Economic Research