The “advance” estimate of U.S. real gross domestic product (GDP) for the first quarter of 2020 fell by 4.8 percent at an annual rate, the steepest drop since 2008 Q4. The sharp decline reflected the nearly stalled economy due to the COVID-19 pandemic that started in mid-March as state governments issued stay-at-home orders. U.S. nonfarm employment experienced a record contraction, losing 20.5 million jobs in April with a particularly large plummet of 47 percent in the leisure and hospitality sector. The unemployment rate skyrocketed to a record high of 14.7 percent. The average hourly earnings surged, which implies that low-wage workers were disproportionally hit more severely by stay-at-home orders. Retail sales in March slipped by 6.2 percent from last year, the largest drop since September 2009. Despite prevalent stay-at-home orders after mid-March, housing starts experienced a 1.4 percent gain year-over-year.
The Nevada economy experienced negative signals with the release of the most recent data. Seasonally adjusted statewide employment lost 4,900 jobs in March. The unemployment rate rose sharply to 6.3 percent from its lowest record level of 3.6 percent. March gaming revenue and air passengers plunged by 39.6 and 53.0 percent, respectively, year-over-year, mainly due to closed nonessential businesses in response to COVID-19. February taxable sales climbed by 4.9 percent from last year.
Clark County posted highly unfavorable signals in local economic activity. Seasonally adjusted employment lost 4,100 jobs in March. Total McCarran Airport passengers and visitor volume in March dropped significantly by 53.1 and 58.7 percent, respectively, from last year. March gaming revenue also plummeted by 38.1 percent over the same period. Residential housing permits/units in March, nevertheless, were strongly up by 51.4 percent year-over-year. The local economy, which just began the reopening process, will go through a “new normal” this year with expected decline in tourism revenue. Oxford Economics forecasts a 45 percent decrease in tourism industry revenue in 2020.
Washoe County also reported largely negative economic signals. The Reno-Sparks seasonally adjusted employment lost 500 jobs in March. The unemployment rate rose sharply to 5.1 percent after hitting an all-time low of 2.9 percent. March visitor volume and gaming revenue experienced significant losses of 49.6 and 52.9 percent, respectively, year-over-year.
Stephen M. Miller, Director
Jinju Lee, Economic Analyst
UNLV Center for Business and Economic Research
The views expressed are those of the authors and do not necessarily represent those of the University of Nevada, Las Vegas or the Nevada System of Higher Education.