Experts foresee no major falloff in Nevada economy

Monday, Jan. 1, 2001 | 9:29 a.m.

But economists acknowledge the economy faces more challenges in 2001, and Nevada will find it hard to match its growth of the last year.

"We're not looking for any significant change, especially in the Reno area," said Mike Clarke, an economist with the state Bureau of Research and Analysis.

"We're going to hold on. We're not going to go through the roof, but there's nothing that's going to cause a major setback."

Clarke foresees some rise in the state's jobless rate, if for no other reason than it's been so low. The rate rose slightly from 4.2 percent in October to 4.4 percent in November.

But the fact that California - a major source of labor in Nevada - is economically healthy should keep the rate low.

"California is creating jobs at the rate of 40,000 per month. So we won't get many workers from there," Clarke told the Reno Gazette-Journal. "That minimizes the excess labor to play with."

John Mitchell, an economist with US Bancorp, said he thinks Nevada's job growth will slip from 6.4 percent in 2000 to 4 percent in the coming year.

But he said that still would put Nevada among the leaders nationwide in job growth.

Most economists foresee less growth in gambling in the year ahead as few new Nevada casinos are set to open.

Richard Wells, president of Wells Gaming Research, said he doesn't expect any significant impact from California Indian casinos in 2001.

Gambling analysts at Bear, Stearns & Co. Inc. of New York expect most of the California resorts to be under construction by 2002.

But they noted that tighter capital markets already have delayed the construction of some of the resorts there.

"We believe that the Reno-Sparks and Laughlin markets could be the most affected by California gaming," Bear, Stearns wrote in a December report.

"Both of these markets have a lack of must-see attractions and have an overall lower-quality casino product than the Las Vegas Strip and Lake Tahoe."

Rising gasoline prices and a severe winter also could adversely affect Nevada casinos, said Reno gambling analyst Ken Adams.

"Those are the things - and they're all travel-related - that would cause people to say, 'I'm going to find a closer place to go,"' Adams told the Gazette-Journal.

Bear, Stearns foresees mixed fallout for gambling destinations in an economic downturn.

To cut costs, the company says, consumers would take fewer extravagant vacations and instead focus on shorter, regional trips.

Such a travel shift should favor Atlantic City and riverboat casinos, which tend to already cater to this market, according to the company's report.

"Accordingly, we believe an economic downturn could have a greater impact on the Las Vegas Strip than on Atlantic City, the Las Vegas locals market or the riverboat markets," the report says.

"Operators with properties in destination locations are more susceptible to a downturn in the economy as individuals scale back on travel plans."

But Clarke said he thinks Las Vegas is on the verge of a new round of expansion.

"It's slowed down there, but a slowdown for Las Vegas is a healthy thing so they can catch their breath before trying something else," Clarke said. "If Steve Wynn makes a move, you'll see others step up, too."