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Mar. 13, 2009
Copyright © Las Vegas Review-Journal

Local economy keeps sinking, index shows

Economist says gauge resembles 'cliff-diving chart'

By HUBBLE SMITH
LAS VEGAS REVIEW-JOURNAL

Construction is seen Thursday along Charleston Boulevard near the Las Vegas Beltway. Applied Analysis reports that local office construction declined to 2.2 million square feet in fourth quarter 2008 from 3.6 million square feet a year earlier, and local industrial construction declined to 500,000 square feet from 4.7 million square feet a year earlier.
Photo by John Locher





Southern Nevada's economy is dropping sharply and has now fallen below the national level, a local economist said Thursday.

All 10 indicators contributed negatively to the Southern Nevada Index of Leading Economic Indicators, which fell to 127.23 in February, down from 127.96 the previous month and from a high of 133.93 in February 2008.

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    • The index shows no sign of change and no sign of economic recovery, said Keith Schwer, executive director of the Center for Business and Economic Research at University of Nevada, Las Vegas.

    "It's what we refer to as a cliff-diving chart," he said. "There (are) still issues out there."

    Eight series of data declined by double-digit percentages from a year ago, led by a 75 percent drop in residential building permit valuation to $36.7 million. Commercial permit valuation was off 72 percent to $16.1 million.

    With the housing slump and foreclosure crisis snuffing out new-home sales, builders have no need to pull permits. Home Builders Research reported 284 new-home sales in January and 179 new-home permits, among the lowest numbers on record.

    The commercial real estate market has seen rising vacancy and notices of default, which has curtailed local construction. Office construction fell to 2.2 million square feet in fourth quarter 2008 from 3.6 million square feet in the year-ago period, and industrial construction is down to 500,000 square feet from 4.7 million square feet a year ago, reports Applied Analysis, a Las Vegas business advisory firm.

    Southern Nevada has arguably been among the nation's hardest-hit metro areas by the current economic downturn, Applied Analysis principal Jeremy Aguero said.

    He points to the region's 10 percent unemployment rate, which is higher than the national average, along with home foreclosures and sharp drops in key tourism measures.

    Clark County gaming revenue declined 16.3 percent in January to $777.5 million and visitor volume was down 11.9 percent to 2.76 million. Billion-dollar resort projects have been halted, leaving skeleton structures on the Strip and thousands of people out of work.

    "There is little ambiguity in the numbers or the anecdotal reports," Aguero said.

    As Nevada began slipping into recession in late 2007, hotel occupancy rates started to sag.

    With historical rates above 90 percent, the Strip's hotel industry remained profitable and secure for some time, but visitor volume as measured by hotel occupancy rates declined further when the national economy tanked, Schwer said.

    "November and December, months that we often see smaller crowds in Las Vegas, were no exception this year," he said, "but occupancy rates in the 70 percent range offer ample evidence of weakness to this key sector, pinching industry profitability."

    The index, compiled by the Center for Business and Economic Research, is a six-month forecast from the month of data, based on a net-weighted average of each series after adjustment for seasonal variation. February's index is based on December data.

    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 stock market was up again today, so perhaps we're at the beginning of the end, but it's far from over," Schwer said Thursday. "Given the nature of a recession, the national economy is going to have to pick up before us. We are beginning to see some signs."

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

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    this is the answer wrote on March 13, 2009 08:29 PM: http://www.youtube.com/watch?v=WjGy9gjcoIo


    Vega Vic is an idiot wrote on March 13, 2009 07:34 PM: Vegas Vic
    Are you stupid or what, wait, don't answer that because whatever you say you'll be wrong, dummy.
    There is a net DECREASE in the number of residents living here dummy.
    There are not, I repeat, NOT more moving in than leaving...stupid.


    John O wrote on March 13, 2009 07:31 PM: Stop it! It is rebounding! I am a Realtor and an ecnonomic advisor to the Greater Las Vegas Real Estate Foundation and let me tell you; we are not declining. Home sales are rising! We are already turning around.
    Now if we can just get rid of the illegal invaders...but wait! They are already leaving!
    Went by the Plant and tree and shrub store, Star Nursery, I counted 26 guys at 11:00 AM standing around wanting work!
    YES!
    Finally, some justice. Mexicans come here and take American jobs and now they are looking for work without any papers!
    HAHAHAHHAHHAHHAHHAHAHA


    Free Nevada wrote on March 13, 2009 05:34 PM: Well, either way we are going to have a half-million homeless or hundreds of thousands living in Chapter 13 "stinking up the place" soon unless we start buying-out their negative equity to release them from their ball-and-chain.


    Vegas Vic wrote on March 13, 2009 02:56 PM: Thank you VivaVegas and Get Real. Las Vegas and its citizens will persevere through this. I have lived here almost as long as VivaVegas, and it's still a great place to live. There are others like JimboJones that will disagree, but they are a minority and actually I don't give a S--- what they say. So for all the JimboJones out there, what the hell are you doing here. GET THE F--- OUT IF YOU DON'T LIKE IT.

    We are still seeing thousands and thousands of new transplants every month that wants to make this place their home. Granted we are also losing people but again the influx of new residents outweigh the ones that leave. The majority of people in Las Vegas love this town and have contributed to its success. Being that the economy is cyclical, Las Vegas will survive this and emerge stronger than ever.


    Get Real wrote on March 13, 2009 11:45 AM: jimBOjones...Do you live here? I don't think you do. You have no idea what the residences of Las Vegas are going through. I bet you are just another redneck that has no dreams of the white picket fence. Not all of us even gamble fact most of us leave this to the tourist & the RED NECKS!


    Lou wrote on March 13, 2009 11:44 AM: March 14th 2009: Steak and bj day.
    Don't let a little doom damper your spirit. Have the missus cook a fat, big steak, eat it, sit back, relax and enjoy.


    VivaVegas wrote on March 13, 2009 11:08 AM: I've heard Vegas death knell stories time and time again during the 30 years I've lived here. However, Vegas has survived through all of that and prosepered to boot. Undoubtedly, the next 2-3 years will be tough. However, Vegas will recover along with the rest of the country. I would point out that things weren't as good as everyone thought back in '04-'06 and they aren't as bad as everyone thinks now. Regardless of the rhetoric of the tinfoil hat crowd, the sky is not falling and this is not another Great Depression.


    locke wrote on March 13, 2009 10:39 AM: Excellent comments and analysis. Why fruitful "change" won't happen: the Obama mentality is that the business community exists as a funding source for the much more important governmental priorities, such as buying the loyalty of coalition members, and managing societal outcomes. They have subjectivity; you base individuals who chase money have objectivity. They lead; you earn.


    Rob L. wrote on March 13, 2009 10:30 AM: Nunez wrote: "I hope the banks go down in flames. And if the economy goes with them, too bad."

    Utter and complete brilliance. You hope the entire economy goes down because you are somehow immune to effects of that? Im sure your neighbors are thrilled to have such a warm special human living next door to them. This clown is a prime example of why the last thing we should be doing is EXPANDING internet access!


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