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Feb. 10, 2009
Copyright © Las Vegas Review-Journal

Forecast grim for Southern Nevada

Economic index falls for third straight month

By HUBBLE SMITH
LAS VEGAS REVIEW-JOURNAL



The Southern Nevada Index of Leading Economic Indicators declined for the third straight month, dropping to 127.96 in January as every data series showed negative percentages from a year ago.

Eight of the 10 series posted double-digit decreases in November, the month of data used for the January index.

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    • Not since the aftermath of Sept. 11, 2001, has there been as sharp of a one-month decline in the index, said Keith Schwer, executive director of the Center for Business and Economic Research at the University of Nevada, Las Vegas. It's down from 129.56 in December.

    "The fallout of the September failure of Lehman Brothers continues to show up across the United States, including Nevada, which some once thought was immune to such national economic events," the local economist said. "It is highly likely that we may see a few more months of difficulty before things get better. It may well be that we are amid the most difficult part of this recession."

    The index, compiled by the research center, is a six-month forecast from the month of the data, based on a net-weighted average of each series after adjustment 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.

    The index has fallen from its peak of 133.56 a year ago.

    Construction categories led the way. Residential building permits declined 87.7 percent to 296 and the value of those permits fell 92.1 percent to $31.9 million. Similarly, commercial building permits fell 55 percent to 49 and their value dropped nearly 60 percent to $141.1 million.

    The Clark County construction index dipped to 97.84 in November, the lowest level since 1985.

    With a surplus of empty homes and falling employment numbers, prospects for selling new homes remain dim, causing builders such as Las Vegas-based Astoria Homes to suspend any new construction. Other builders such as Engel, Woodside and Kimball Hill have filed for bankruptcy.

    "Nobody's building right now," Dennis Smith of Home Builders Research said. "One of the things the numbers don't document is financing availability. I know a couple of apartment complexes that were stopped because the lenders got nervous. Finance companies and banks are holding the key to what it takes. I know builders who have projects ready to go and can't start because they can't get financing."

    Clark County's tourism index also tumbled in November, falling to 132.15 from 142.99 in October.

    Gaming revenue has fallen to its lowest level since July 2004 and hotel occupancy rates dipped under 80 percent.

    Consumers facing economic hardship and those expecting further turmoil have cut back on big-ticket purchases and discretionary spending such as travel and vacations, Schwer said.

    He said nobody knows what the impact of the proposed stimulus package will be and right now it's like trying to put out a fire with a leaky bucket.

    "One group is arguing to let the place burn down, others are screaming to fix the leaky bucket and some just want to get the bucket in the water and get going," Schwer said.

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

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    SecretSpook wrote on February 10, 2009 07:46 PM: John Ensign Jr., Bush and company are not the responsible parties. This depression has been herded along for the last 15 years.


    Ed Garcia wrote on February 10, 2009 02:37 PM: been to vegas 2 times a mo fr '95-'03. now, 1 or 2 times/yr, why? 'cause casinos don't care about the average customers anymore. they kept on increasing the prices. my advice to them - get back to the $4.99 breakfast buffet.


    AxMan wrote on February 10, 2009 11:29 AM: Not Exactly is OFF my point. Not surprising given your name. Must be the Kool Aid. You must be Ax'd. I am not a Bush fan, nor Obama hater, but my point is that Obama makes me very nervous as the LEADER OF AMERICA. Face it, we elect non-business people trying to regulate Businesses! What a Joke. We need Experience!


    NOT EXACTLY wrote on February 10, 2009 10:55 AM: And George W. Bush was like a fifth grader. And look what he left us.


    Obama then and NOW wrote on February 10, 2009 10:12 AM: And Obama's "stimulous" speech was poor. He was like a college kid. He is fit for a professorship of one subject or small-town major. Anyone who watched it must feel the same.


    Vicky S wrote on February 10, 2009 09:18 AM: I almost fell out of my chair with laughter...

    I just saw a 1,400 sq ft home listed for $350,000 in Vegas...what the hell is wrong with the realtor? They don't make houses that small in The Ridges...


    DMCVegas wrote on February 10, 2009 08:49 AM: Gotta agree with Mike, and Axman both.

    The stimulus package isn't going to suddenly change things. It won't even stabilize things right away. It's like the inertia of a semi truck. You can't go from 120 mph, and then suddenly stop within a split second, let alone turn around. You've got to slow down significantly before you can even manage that turn to go a different direction. And even then, you need to build speed back up. Same thing with ANY stimulus package or tax cuts that we could implement. And even then that's only speaking of the top sectors of the economy. It's going to be at least 2 years from now before we get back to serious home-buying and building. That will be about the next time that credit standards not only come down, but a new generation of homebuyers with good credit come along.

    As for fire being a necessary part of growth, absolutely. I think what we seriously need to do here is re-evaluate these massive construction projects in the sense of what, if any actual needs they are fulfilling other than profiteering of contractors and developers. And that will be the stance of lenders. We went to Condos because SFU homes became too expensive, and people were worried about land availability. But now, home prices are coming down, and more existing homes will become available for market. So what need is there? Shopping centers? Reduced disposable income can't sustain them as we're already seeing.

    Fire indeed. We need to stop these projects, let them default, and put the land and buildings to better, more affordable use. We'll burn RE Developers and RE Agents for sure, but it really is for the greater good of the community. A stabile community is worth far more than their outrageous commissions.


    John Ensign Jr. wrote on February 10, 2009 08:28 AM: Historically gaming survives during a depression, and lets face it, this is a depression. A gaming company will now have to learn or re-learn to make the money on gaming while providing a great experience. It's that simple.
    And thank you George Bush and all your brain dead Republicans that got this country into this mess - the Senate should pass a law to hunt down and arrest all the wacko right wingers who stupidly put this country into this mess.


    mirage 2 wrote on February 10, 2009 08:19 AM: "Nobody's building right now," Dennis Smith of Home Builders Research said" How about the new houses being thrown up in Ladera Canyon, southwest corner of summerlin? KB homes I think. Not sure of the lot size but I could probably stretch out and touch 2 of them at the same time. I wonder if homes being so close together on lots the size of bathrooms is what got summerlin the planned community awards all those years? Thanks council members for allowing this, ot should I say thanks for selling out to the builders/developers.


    Calud wrote on February 10, 2009 08:15 AM: jimbojones wrote on February 10, 2009 07:50 AM:
    Bye Bye Vegas. Bye Bye! You're Done!

    Calm down, boy. Your daughter is very, very good. What a mouth. 69 is her favorite number.


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