The “third” estimate of U.S. real gross domestic product (GDP) for the fourth quarter of 2021 expanded by 6.9 percent at an annual rate, which was revised down by 0.1 percent from the previous estimate. The revision mainly reflected downward revisions to consumer consumption and exports, which were partly offset by a larger private inventory investment than previously reported. The better-than-expected growth in the fourth quarter mainly reflected a surge in inventory investment as businesses restocked depleted inventories caused by high demand and supply disruptions. The average hourly earnings from last month and last year climbed strongly by 0.4 and 5.6 percent, respectively, but were below the rate of inflation. Retail sales in February rose by 0.3 percent month-over-month amid escalating inflation. The most recent data indicate that the U.S. economy will continue its expansion, but consumer sentiment continues to decline with pessimism rising as real household income decreases. To control inflation, the Federal Reserve will likely increase rates more aggressively to near 2 percent this year and begin to reduce its asset holdings by up to $95 billion per month beginning in May. The Fed raised the federal funds rate by 25 basis points to a target range of 0.25-0.50 percent in March, lower than a much talked about 50 basis point increase due to the uncertainty of the Russian-Ukraine war.
Nevada’s economic activity posted positive signals based on the most recent data. The largest gains occurred in the leisure and hospitality and trade, transportation and utilities sectors. The trade, transportation and utilities employment now stands about 8 percent above the pre-pandemic peak. February gaming revenue rebounded, up by 3.2 percent from the previous month and continued to top $1 billion for a record 12 consecutive months. January taxable sales declined by 21.2 percent month-over-month but remained substantially higher than pre-pandemic levels. Gaming revenue and taxable sales comments refer to seasonally unadjusted data.
Clark County also displayed favorable signs in its local economic activity with the reduced COVID-19 cases and business restrictions related to COVID-19. February residential permits experienced a loss of 19.9 percent from last year despite continued strong demand. Las Vegas home prices in March continued to post records partly due to the expectation of higher interest rates amid a shortage of home inventory.
Washoe County also exhibited generally positive signals in its local economic activity. February residential permits, nonetheless, declined slightly by 0.5 percent from last year.
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.