Index of local economic indicators declines - Business

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Aug. 12, 2008
Copyright © Las Vegas Review-Journal

Index of local economic indicators declines

As housing market struggles, gauge in May sinks to lowest level since 2003

By HUBBLE SMITH
REVIEW-JOURNAL

Graphic by Mike Johnson.

Key indicators for Southern Nevada's tourism industry declined in May, dragging a local economic index to its lowest level since 2003.

Housing numbers continued to post double-digit decreases, including a 44.7 percent drop in new-home sales and a 17.6 percent decline in new-home median price.

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With eight of 10 data series showing negative percentages from a year ago, the Southern Nevada Index of Leading Economic Indicators fell to 130.25 in July, compared with 133.24 in July 2007.

Visitor volume and convention attendance recorded modest growth of less than 1 percent in May. Gaming revenue dropped a sharp 16.4 percent and passenger count at McCarran International Airport was off 4.7 percent.

Clark County ended a five-month slide in gaming revenue with a 2.1 percent gain in June. Casinos brought in $801.6 million, compared with $789.6 million in June 2007. Still, the Clark County tourism index is down 9 percent from a year ago at 155.80.

The economic index corroborates Southern Nevada's current recession and foretells a weak second half of the year, said Keith Schwer, executive director of the Center for Business and Economic Research.

Schwer cited extensive media coverage of excess housing inventories, credit problems in various financial sectors and energy prices that cut into the budget of anyone who drives. Any of these problems could be enough to create a recession, he said.

Most people believe that national and local conditions will be "somewhat worse" during the third quarter and that difficulties are far from over, Schwer said.

"Consumer spending is down and they're cutting back on automobiles, furniture, home repairs and travel to Las Vegas," he said.

The economic index, compiled by the research center at the University of Nevada, Las Vegas, is a six-month forecast from the month of the data, based on a net-weighted average of each series after adjustments for seasonal variation.

The accompanying Review-Journal chart includes several of the index's categories, along with data such as new residents, and employment and housing numbers, updated for the most recent month for which figures are available.

Nevada lost 12,100 jobs over the last 12 months, compared with average annual gains of 40,000 jobs during the 1990s, said Jeff Thredgold, economic consultant for Nevada State Bank.

Weaker job growth has resulted in less income creation and softer retail sales, which has a negative effect on small businesses.

However, a higher unemployment rate and slower job growth contribute positively to the Nevada State Bank Small Business Index, which rose to 70.9 in July from 70.3 in June. It suggests greater access to labor for small businesses, Thredgold said.

Nevada's economy gained an estimated 12,300 jobs last year, 56,600 jobs in 2006 and 70,300 jobs in 2005, the strongest year for job gains on record.

Las Vegas is ranked No. 3 behind New York and Orlando, Fla., in Global Insight's 2007 top 20 U.S. tourism destinations. Approximately 125 visitors are needed to create a job in Las Vegas and the city is second to Orlando in the Tourism Job Dependence Index, which measures tourism jobs as a percent of total employment.

Contact reporter Hubble Smith at hsmith@reviewjournal.com or 702-383-0491.

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Please enter your name Name: Please enter your email Email: Please enter a comment COMMENTS : (word count limit is 300) You have reached the maximum number of words allowed Current Word Count: Note: Comments made by reporters and editors of the Las Vegas Review-Journal are presented with a yellow background. myalem wrote on November 15, 2008 12:41 PM: and ofcourse the same popel that had told us all was well untill the proverbial stuff hit the fan. The reality is we have a good 10 years of inventory in and coming online in the form of foreclosures - and the new hiome developers have already come down to high 100,s and low 200,s-- not good news for our local economy with the opnly places opening like Wynn that will only hire extra board workers, as they did with the original http://www.myalem.net sohbet wrote on November 15, 2008 12:40 PM: Thanks a lot admin.. http://www.myalem.net sevgisohbet wrote on November 02, 2008 12:00 PM: and ofcourse the same popel that had told us all was well untill the proverbial stuff hit the fan. The reality is we have a good 10 years of inventory in and coming online in the form of foreclosures - and the new hiome developers have already come down to high 100,s and low 200,s-- not good news for our local economy with the opnly places opening like Wynn that will only hire extra board workers, as they did with the original property F & B department, This will create many part time workers that dont qualify to buy a hamburger... http://www.sevgisohbet.com/ http://www.mircindir.name/ CAS127 wrote on August 13, 2008 08:10 AM: Accompanying graph seems wrong - index up in 2001 and 2002 (post 911?) and flat for 2005/2006/2007 (housing boom?) michael wrote on August 12, 2008 10:45 PM: D, you're comments here are wholly unsupported and, in fact, unsupportable by any information abailable. Outside of a true national depression, a price drop to $100K is literally impossible. as if las vegas would become the most affordable 300K+ metro in the country. Joe wrote on August 12, 2008 11:55 AM: energy costs are also a big concern for new business looking to relocate - we must take steps to keep costs down... homeless in Las Vegas wrote on August 12, 2008 11:24 AM: Not enough comments from the doom and gloomers in here. What's the matter? Numbers not down enough for you? I think the statement by Tom Best states the issue in a nutshell. Nothing more need be said. D- wrote on August 12, 2008 11:03 AM: " Nevada lost 12,100 jobs over the last 12 months " The scary thing about this is many of the foreclosed homes that were bought for the last year - were sold to people building things like the now delayed or canceled Eschelon. These will now be foreclosed as the job market as quoted from the article is losing jobs - not gaining. Now lets say the bank had foreclosed and sold a home for 150,000. The new price will be 30 % under that when this one now get taken back so you can expect homes in the $100,000 range next year. The wrod from financial people is the foreclosures would last about 3 years. This was a bit of positive thinking on their part, and ofcourse the same popel that had told us all was well untill the proverbial stuff hit the fan. The reality is we have a good 10 years of inventory in and coming online in the form of foreclosures - and the new hiome developers have already come down to high 100,s and low 200,s-- not good news for our local economy with the opnly places opening like Wynn that will only hire extra board workers, as they did with the original property F & B department, This will create many part time workers that dont qualify to buy a hamburger... bob wrote on August 12, 2008 09:00 AM: Not enough comments from the doom and gloomers in here. What's the matter? Numbers not down enough for you? Tom Best wrote on August 12, 2008 07:04 AM: "It suggests greater access to labor for small businesses, Thredgold said." Translation-you were making 10 bucks an hour. You are headed for $6.55. Welcome to the Las Vegas depression.