The “second” estimate of U.S. real gross domestic product (GDP) for the first quarter of 2020 contracted by 5.0 percent at an annual rate, lower than the advance estimate of a 4.8 percent contraction. The revision reflected a deeper decrease in private inventory investment, which was partly offset by upward revisions to consumer spending and nonresidential fixed investment. The sharp decline reflected the nearly stalled economy with extremely expansive monetary and fiscal policy measures as state governments issued stay-at-home orders to mitigate the virus. U.S. nonfarm employment experienced an unexpected upward surge, adding 2.5 million jobs in May, benefitting from gains in the leisure and hospitality, construction, health care and social assistance, and retail trade sectors. The unemployment rate also declined to 13.3 percent from 14.7 percent. Retail sales in April plummeted by 21.6 percent from last year, the largest drop on record despite a surge in personal income boosted by the CARES act, which resulted in an all-time high 33.0 percent saving rate. Housing starts in April also decreased by 29.7 percent from last year due partly to stay-at-home orders.
The Nevada economy experienced highly negative signals with the release of the most recent data. Seasonally adjusted statewide employment experienced a record-high loss of 244,800 jobs in April. April gaming revenue and air passengers plummeted by 99.6 and 96.3 percent, respectively. March taxable sales and gasoline sales (in gallons) also decreased sharply by 19.5 and 18.3 percent from last year.
Clark County also posted highly unfavorable signals in local economic activity. The unemployment rate in April skyrocketed to 33.7 percent, the largest percentage change among large metro areas. Total McCarran Airport passengers and visitor volume in March dropped significantly by 96.4 and 97.0 percent, respectively. April gaming revenue also plummeted by 99.5 percent over the same period. Residential housing permits/ units in April decreased by 37.7 percent year-over-year, showing better performance than originally thought.
Washoe County reported less reduction in local economic activity compared to Clark County, benefitting from its more diversified economy. The unemployment rate rose sharply to 19.7 percent. April residential permits unexpectedly gained 11.3 percent year-over-year, while April visitor volume and gaming revenue experienced significant losses of 83.2 and 100.1 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.