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Las Vegas economy inching up from bottom rankings
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LAS VEGAS REVIEW-JOURNAL
The Las Vegas economy is inching out of last place.
That's according to a new study that ranks growth among 200 metropolitan economies worldwide.
The Brookings Institution's Global MetroMonitor placed Las Vegas at No. 179, an improvement over its 2010 rank, but a reminder that the city is still in recession, with recovery a long way off.
"You're certainly not back to where you were, but your relative position is improving," said co-author Alan Berube, senior fellow at Brookings, a Washington think tank with a local office. "I think that reflects the beginnings of recovery in the housing market, but more than that, it signals a pretty strong bounce-back in tourism."
Despite its below-average rank, Las Vegas' economic trajectory is typical nationally. The local and U.S. economies have struggled to return to prerecession performance as developing markets in Asia, Latin America and Eastern Europe surge, Berube said. And like the rest of the country, Las Vegas made its boom-era nut mostly on domestic consumers, selling them retail goods, housing and hospitality services. When the bust vaporized U.S. consumer demand, cities nationwide felt the pinch.
But none like Las Vegas.
The study compared data on annual income and employment growth from three time periods, beginning with 1993 to 2007, then throwing in the worst year of the recession (it varies by city). Finally, the study accounted for 2010 to 2011.
From 1993 to 2007, Las Vegas had the world's 18th fastest-growing economy.
"Las Vegas was growing jobs faster than almost any other place on the globe," Berube said.
And at the depths of the recession, Las Vegas had the 199th worst economy, second only to Athens, Greece -- the worldwide poster child for fiscal dysfunction.
From 2010 to 2011, Las Vegas had the 179th fastest-growing economy.
It's tough to compare that result to the Brookings Global MetroMonitor 2010, when Las Vegas ranked No. 145 out of 150. In the latest edition, researchers added 50 cities and included new indicators, such expanded industry-tracking. But Berube said Las Vegas is headed in the right direction, mostly thanks to improvements in tourism.
Nearly 30 percent of Southern Nevada's economy is in retail, trade and tourism, but those sectors accounted for 90 percent of regional economic growth in 2010 and 2011, Berube said.
Nor is Las Vegas still the worst-performing U.S. city. Indianapolis, New Orleans, San Francisco, Atlanta, Kansas City, Mo., and Sacramento, Calif., all fared worse than Las Vegas.
Cities ranking higher included Detroit, Cincinnati, Cleveland and Buffalo, N.Y.
To understand how Rust Belt cities posting decades-long declines could outpace Las Vegas for economic growth in the last year, consider their busts. Their downturns trace to a slump in manufacturing, while Southern Nevada's tough times related to a construction depression. Today, manufacturing is rebounding, as businesses worldwide replenish inventories and people in emerging markets begin buying cars and other consumer goods, Berube said.
Meanwhile, construction languishes, particularly here. And it will for a while, thanks to excess inventories of homes and office parks, said Stephen Miller, an economics professor and department chairman in the Lee Business School at the University of Nevada, Las Vegas.
Tourism gains and construction struggles outline the path back to local growth, Berube said. Just three U.S. cities -- Houston, Dallas and Rochester, N.Y. -- were among the 50 best-performing economies. Most of the top 50 were in Asia, Latin America and Eastern Europe. So it's essential to extend the market's reach into markets in those regions.
"If you rely only on consumers in Las Vegas, California and the rest of the United States, it will be a very long road to recovery," Berube said.
Revival will also come slowly if the city doesn't diversify away from its traditional concentration in hospitality and construction. Building a lot of houses won't be a growth recipe going forward, Berube added.
Miller agreed, noting that construction isn't likely to return to prerecession levels here. The industry employed around 12 percent of locals at its peak in 2006; it now employs roughly 5 percent, in line with the national industry average.
Brookings published a November report recommending the state lure businesses in manufacturing, aerospace and defense, information technology, health care, logistics and distribution and clean energy. Gov. Brian Sandoval's Office of Economic Development is drawing up plans to recruit new companies and help existing businesses expand.
It's "not impossible" for Las Vegas to pop back into the top 50 -- if it diversifies, Berube said.
"You're not going to grow jobs at 6 percent a year again anytime soon, but that's OK," he said. "The question now is, what is an attainable rate of growth, and what are the strategies to get there? "
Shanghai topped the Brookings list. Athens ranked last.
Contact reporter Jennifer Robison at jrobison@reviewjournal.com or 702-380-4512.
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Well spin the numbers all you want..we all know vegas is in some serious trouble.... but how about the state of nevada?, "No state has suffered during the recession more than Nevada. Between 2006 and 2010, home values plummeted a staggering 44.5 percent, the poverty rate increased 26 percent, median income dropped 3.8 percent and GDP increased only 1.2 percent. Each was the worst in the country for that category. Last year, Nevada’s budget gap was $1.8 billion, the equivalent of 54.5 percent of available funds. This was the third year in a row the state has had one of the worst shortfalls in the country, and that trend appears ready to continue through at least 2013. In order to balance its budget last year, Nevada was forced to raise taxes significantly, cut dental and vision services from Medicaid coverage for adults, reduce financial aid funding, and cut state employee salaries." per http://bottomline.msnbc.msn.com/_news/2012/01/11/10126535-nevada-illinois-among-states-that-cant-pay-their-bills
Almost 4 full yrs into office Bummer or shall Isay the O blamer and the Dems are still blaming Bush for the economy in the dumps. Dems are also racists, for every occasion that comes up , anything at all they say Repubs are racists. that tells me the Dems are the Nazi racists. they should all grow up and be adults. Obummer and the Dems are cry babies and a whiners.
The second wave is coming, the debt bubble bursting will dwarf anything we have seen so far!
When Mass,NY,and Fl get casino gambling approved this town will inch downward.
difficult to get companies here with clark county school district in a mess
Vegas would make a good location for online home businesses. I would like to return when I have enough revenue. I DO NOT want to look for a McJob in Sin City!
you can't blame obama for the bad economy. that was bush's fault who is a republican. if you vote republican you better be really rich. because if you are poor or middle class, the republicans don't care about you. so if you care about the republicans, don't complain about the economy. the republicans screwed it all up...
The obvious strategy is to market Las Vegas as a retirement destination. Our community can offer entertainment venues, leisure activities and affordable housing with the added incentive of a mild climate, which is something active seniors really appreciate. This would be a perfect opportunity to diversify and expand so many different business models to incorporate the services this demographic requires and has the resources to support.
*sigh* Obama did not cause the housing bubble in Las Vegas. Say what you want about Reid as he -was- actually present during the rise and fall of the s. nevada economy. The root cause was not a particular person, but bad business decisions made by (unregulated) banks and loan companies loaning money to people that could not afford the homes they were buying. The banks are now back to making billions in each quarter after being bailed out (see today's Goldman Sach's news). The reason have a harder time getting loans now is because people are actually being vetted properly. It's a horrible situation that Las Vegas is in, and it is unlikely to get better as quickly as people want. Job creation in any sector is needed now and that will be very difficult until the rest of the country has some disposable income to come to Vegas and play. Whether Obama or whatever Republican comes forth is President, you'll find that they have little to help an area that's sole business is entertainment.
Even during the boom, outside of construction, real estate, & hospitality, LV was mostly a low-wage, low-skill job market.