Expert: Index points to lingering recession in Las Vegas

By Buck Wargo (contact), In Business reporter

Fri, Apr 10, 2009 (2 a.m.)

Southern Nevada is in for its longest recession since the Great Depression, according to a UNLV economist.

The economic slowdown will continue through the end of 2009 based on the latest trends, said Keith Schwer, UNLV’s Center for Business and Research director.

All 10 categories of the Southern Nevada Index of Leading Economic Indicators declined in March. The index, which tracks gaming revenue, tourism and conventions, retail sales and commercial and residential development through January, is a forecast through July 1, but Schwer said it’s evident the economy won’t be improving anytime soon.

The March index showed gaming revenue fell by 16 percent, taxable sales fell 13 percent, visitor volume fell 12 percent, airport passengers declined 16 percent and convention attendance was down 21 percent from the same period in 2008.

Commercial building permits fell 73 percent and residential building permits dropped 57 percent.

Even though the index forecasts the economy based on six months of data, Schwer said other forecasts over a longer period offer little hope of any improvement this year.

March’s index total of 126 is the lowest since early 2002.

“It’s not pretty,” Schwer said. “It’s going to take a while before things get better. We are in the winter of the recession. It has been quite clear for some time that this was not going to be like recessions we have experienced in the last 25 years. Unemployment is going to continue to rise. It is going to be a bitter recession.”

The state’s unemployment rate was 10.1 percent in February.

Schwer said he doesn’t expect the federal stimulus to spark any kind of recovery until 2010, but even that might be weak.

The numbers will have to show a bottom and an upturn before there’s any indication that the recession is ending. There are obstacles such as the finance sector’s instability and the reforms to fix it will take time, he said.

“There are still a lot of unknowns,” Schwer said. “And I do think coming out on the other end that there have been so many problems on the finance side that people are going to be more cautious going forward when the recovery occurs. The aspect of putting things together — we have no assurance about doing it right — we have to be realistic about all the difficulties. History will suggest we will not get it right (at first).”

Among the highlights in the center’s March report:

• The Clark County business activity index fell 7.93 percent.

• The Clark County tourism index fell 3.15 percent and 15.83 percent from the same month a year ago, Schwer said. Hotel/motel occupancy dipped from 84.9 percent in January 2008 to 71.9 percent in January.

“Not surprisingly, fewer visitors spending less pretty much says it all,” Schwer said. “And you see little on the near-term horizon to stem the decline. A return of consumer spending for discretionary items will be needed to stem the recession and return Southern Nevada tourism to prosperity.”

• The Clark County construction index fell 6.65 percent. The index has been in a downward spiral since August and at it’s lowest level since 1995, Schwer said. The concern is once current construction stops, there won’t be any new ones to stem job losses.

“We face a loss of income in the months ahead because of a declining construction sector,” he said.