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May. 15, 2009
Copyright © Las Vegas Review-Journal

Economy still looking down

Local index dips again; economist sees little hope for quick recovery

By HUBBLE SMITH
LAS VEGAS REVIEW-JOURNAL

Gamblers wait for the roulette ball to settle at The Orleans. Many categories of the Southern Nevada Index of Leading Economic Indicators, including gambling win, declined in April. A University of Nevada, Las Vegas economist expects declines to continue.
Photo by Jason Bean/Review-Journal





Consumer spending is down, unemployment claims are up, car dealerships are closing, construction has come to a near halt and major casino projects are scrambling for financing.

Worst of all, people aren't gambling as much in Las Vegas.

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    • Every local economy is taking a serious hit and a turnaround is nowhere in sight, UNLV economist Keith Schwer said Thursday.

    The Southern Nevada Index of Leading Economic Indicators dropped to 126.09 in April, down from 126.69 the previous month and from 131.89 a year ago.

    Every category in the index fell from a year ago, and eight of the 10 data series declined by double-digit percentages.

    "We see no stop in the steep decline observed over the past year," said Schwer, executive director of the Center for Business and Economic Research at University of Nevada, Las Vegas. "I'm sorry to be the bearer of unpleasant news. Somebody has to do it."

    The economic index shows no sign of a turn upward that would signal the likelihood of a recovery from the current recession, he said.

    The index, compiled by the UNLV research center, is a six-month forecast from the month of data, based on a net-weighted average of each series after adjustment for seasonal variation. April's index is based on February 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.

    Residential building permits fell 67 percent to 155 in February and the value of those permits fell 74 percent to $18.5 million. Commercial permits were down 45 percent to 30 permits, while their value was down 50 percent to $34.7 million.

    "It's pretty grim all right," said Ken Simonson, chief economist of the Associated General Contractors in Washington, D.C. "I just don't see where the relief is going to come from. Construction is hurting everywhere, and you guys are on the bleeding edge of that."

    Banks are getting hammered from both sides, Simonson said. On one hand, the government is giving them money to restore lending, but they have to be prudent. Examiners are looking at all the bad debt from real estate and construction loans, he said.

    Simonson said the Fed's stimulus package is saving some contractors from going out of business and saving construction jobs. He expects more of that money to show up in the next several months.

    The job situation won't improve this year and the unemployment rate, now at 10.4 percent in Southern Nevada, will rise both nationally and locally, Schwer said.

    "There have been signs of the rate of decline slowing down," he said. "We're using words like 'green shoots,' but at best the recovery begins in the last part of this year and more likely the first of next year for Nevada."

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

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    Steve T wrote on May 15, 2009 03:05 PM: I just love it when someone complains that there is too much gambling in Nevada...I'm shocked SHOCKED to see that there is gambling here....

    What did you think was going on here when you moved here "resident" Move awya if you don't like it.


    Ken wrote on May 15, 2009 02:24 PM: I hope you all enjoy your Memorial Day picnics because this summer is going to be brutal. Not just the temps but:

    - The commercial real estate crash
    - A state government that will be forced to release income numbers that are 20-30 below projections.
    - The resultant inability of UNLV and CCSD to cancel most if not all, planned capital expenditures.
    - Stations and MGM in bankruptcy court. MGM may delay it if they sell Mirage.
    - A complete shutdown of construction of Fontainebleu.

    If Bush were still in office the media would have already labeled this The Second Great Depression. Obama, of course, gets a free pass but it pretty much is a Depression.


    Reply to The Stopper wrote on May 15, 2009 02:17 PM: I usually use the name Doom and Gloom - but I see someone else decided to use it today....

    The Stopper - Where are you getting your information that nobody is buying the foreclosures? You are WAY off, and really don't have a clue.

    As of right now, there are 11,967 homes that are listed as either Pending or Contingent...they have contracts on them and are in escrow. There are only 15,077 properties in LV and Henderson that DO NOT have contracts on them....that really is not a lot of inventory.

    To put it into perspective and show that real estate is moving, please consider this: at this time last year, there were 6458 homes listed as pending or contingent and 21,083 homes that did not have contracts on them.

    Drive around and call the listing agents who have signs at the properties. If they are any good at all, it will have multiple offers on it.


    Doom and Gloom wrote on May 15, 2009 12:56 PM: Vegas is a good place to gather up some money and leave. It's a place not to call home. Lacks the most positive things other cities have. One day, I will escape Mr. Foley's sewage filter. Right now, I'm a stuck particulate.


    getouttahere wrote on May 15, 2009 11:41 AM: Mr. Foley is RIGHT. We need to get the heck outta here. This dust hole sucks so bad Los Angeles used to be 1000 miles away!!!


    Matt Foley wrote on May 15, 2009 11:30 AM: Las Vegas #1 autotheft, #4 violent crime, #12 air polution, #? illegals, #? smallest yards, #? congestion. Yes, I moved 2.5 years ago and have not been back. Life is alot greener outside the valley of dust. I feel sorry for the people who want out but can't. Good Luck escaping the sewage filter.


    Steve T wrote on May 15, 2009 10:23 AM: But it's a good thing with all this bad news we still have $64 million in tax payer dollars to construct the socialist shooting park.


    the stopper wrote on May 15, 2009 10:16 AM: As scary as this report is I still don't think people understand the full impact as it relates to this area. When someone wrote the local economy is built from a house of cards they weren't kidding. All the inflated home values of years past, same thing. This city was masterful in creating the illusion that LV was a great place to live, great place to buy a house, etc. etc. and now the times have turned and the truth has come out. At current values you would think all these foreclosed houses would be flying off the market, right? Strange how real estate agents spouted that houses had multiple offers when they were selling for top dollar... but now that the market value has dropped 60-70% nobody will touch these houses with a 10 ft pole? Does that make sense? %500k houses 2 year ago now cant sell for $175k? Real estate pro's any comments ?


    Resident wrote on May 15, 2009 09:37 AM: Heaven forbid, "people aren't gambling as much". Such an awful thing that people aren't forking over their hard earned money to criminal enterprises. I don't care if gambling is a major component of the states revenue, it doesn't make it right.

    There needs to be less gambling anyways. Too many parasites involved in the gambling industry and they probably need to look at other professions.


    What's a what? wrote on May 15, 2009 09:34 AM: Am I looking at the RJ Consumer Index chart correctly or did the person that made the chart and all the proof readers graduate from a Nevada school of higher learning?Shouldn't the percentage changed be the column with the percentage numbers?Someone help me,maybe I've been dumbed down so much I don't know what's right or wrong anymore.Thanks.


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