The six-state Intermountain West region has been hit hardest by the economic crisis, with Las Vegas, Phoenix and Boise, Idaho, remaining as the most troubled metropolitan areas in the entire nation in the third quarter, Brookings Mountain West reported Monday.
Across the region, deflation of the massive housing bubble, widespread job losses and the onset of significant fiscal crisis in the public sector have wreaked havoc on most communities. They're cited as the main obstacles to the region's economic recovery.
Heavily influencing the Intermountain region's below-average aggregate profile on economic performance is the severe distress afflicting Las Vegas, Phoenix and Boise -- three metro areas that have suffered most from the collapse of the housing bubble.
"It's tough. One thing to take away from this is no matter how balanced or strong your economy is, excessive speculation in real estate has led to damage of your economy," Mark Muro, director of policy for the Metropolitan Policy Program at the Brookings Institution, said from Washington, D.C.
In many Intermountain West cities, the sheer abruptness of the shift from hyper-growth early in the decade to a severe contraction in the last year has spawned a sense of almost "existential whiplash," the 21-page report stated.
Boise, for example, made the cover of national magazines as one of the nation's most balanced economies.
"I think it's a little bit of a wake-up call that they're in trouble," Muro said. "It shows the damages and fallout that occur from the unwinding of the great real estate bubble."
Even within the region, effects of the recession and recovery have not been uniformly felt.
While Las Vegas dwells in the weakest quintile of overall economic performance, metro areas such as Colorado Springs, Colo., Denver and Albuquerque, N.M., have only been moderately affected by the recession and seem poised to renew their upward trajectory as recovery quickens, according to the report.
The economic analysis released by Brookings Mountain West at the University of Nevada, Las Vegas measured employment data, gross metropolitan product (GMP), housing prices and foreclosure rates in the region's 10 largest metropolitans, 17 smaller metro areas and the nation's largest 100 metros.
In aggregate, the 10 largest Intermountain West cities have suffered disproportionately in the Great Recession compared with the rest of the country, the report found. Job losses ran 7 percent on average from the peak before the recession, compared with 4.3 percent for the nation. Gross metropolitan product has also declined more among Intermountain cities than other U.S. cities.
In terms of recovery, the region clearly lags the nation, but is largely moving in the same direction as the rest of the country in that GMP rose in the third quarter from the previous quarter for every metro area, though job growth remains elusive.
Not one of the cities posted employment gains during the quarter; in fact, overall job losses came at twice the national rate. Ogden, Utah, and Phoenix were hit especially hard with job losses of more than 1.5 percent. Salt Lake City, Las Vegas and Boise saw employment slide 1 percent.
The concentration of employment in construction and real estate tells the story for those cities, Muro said. Specifically, the share of employment in construction and real estate climbed to 13.4 percent of all nonfarm jobs in Las Vegas and 12.8 percent for both Phoenix and Boise. By comparison, it was 10 percent for the rest of the region and 8 percent for the nation.
Home prices have yet to stabilize in the Intermountain West, and the region's rate of bank-owned properties remains high, although it's highly concentrated in Las Vegas and Phoenix with 17.4 and 12.2 bank-owned homes, respectively, for every 1,000 households.
"Las Vegas has its difficulties, but it's pretty clear that a lot of it is tied to real estate," Muro said.
Quarterly job gains have yet to materialize, and large inventories of foreclosed homes and vast differences in performance levels -- not to mention a major slump in household consumption and interstate migration -- weigh heavily on the region's resilience, he said.
Contact reporter Hubble Smith at hsmith@reviewjournal.com or 702-383-0491.
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