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twitterNevada suffers as rest of U.S. recovers
Report: State’s economy worse off than any other
Wednesday, Nov. 11, 2009 | 2 a.m.
Sun Coverage
Sun Archives
- Morale of those with jobs a big issue amid cutbacks (11-2-2009)
- Nevada’s jobless rate second in nation after Michigan (10-21-2009)
- Report: Nevada businesses lead country in bills past due (10-20-2009)
- Recession may be over for U.S., but not Las Vegas (10-16-2009)
Beyond the Sun
For so long Nevada was like the Globetrotters of the American economy — a fun, twirling circus act always winning the race in growth of employment, wages and property values.
But now we’re the Washington Generals — hapless, winless and sad.
And, that’s our indefinite future, according to a new report.
Moody’s Economy.com recently plotted the 50 states on where they are on the path to recovery: 11 are in actual recovery and 38 are seeing the recession moderate. The one state remaining: Nevada, still considered to be in significant economic contraction, with no clear end in sight.
At this economic inflection point in which the rest of the country appears to be entering recovery — however tepid and uncertain — Nevada still lags far behind.
No doubt the 13.9 percent of Las Vegas residents officially unemployed — and the unknown number out of work so long they’ve quit looking — want to know why recovery is happening in other states but remains a distant mirage here.
Economists and local analysts say the reasons aren’t very complicated.
“Our economic growth was, frankly, unsustainable,” says Elliott Parker, an economist at the University of Nevada, Reno.
Primarily, our economy was too focused on building stuff — stuff no one wants or needs now.
As Jeremy Aguero of the economic research firm Applied Analysis notes, 12.5 percent of our workforce is in construction (or was, anyway), more than double the national average of 5.5 percent.
That was great when people were moving here and needed houses, stores and casinos, and when tourists were clamoring for more hotel rooms. But that’s all finished.
Long road to recovery
Here’s a historical parallel: When there was a run on tulips in 17th-century Holland, too much of the Dutch population was employed raising and trading tulips. Once the tulip bubble burst, there were too many tulips and too many people who could grow tulips. And really, who needed all those tulips?
Our tulips are buildings of all kinds: We now have a 23 percent office vacancy rate. Companies have vacated 2.6 million square feet of warehouse space in the past year, leading to a 13.3 percent industrial vacancy rate. And although the housing inventory has declined due to brisk sales volume, prices won’t be rising any time soon because another fresh batch of foreclosures comes on the market every month; they are like freshly slaughtered hogs showing up at market, keeping the price of pork stable.
The rest of America doesn’t have this problem of so many extra buildings of all kinds, at least not to the extent we do. So while they begin to recover, we continue to suffer.
Construction wasn’t the only culprit, however. Americans during the middle Bush years went on a spending spree — often borrowing the money against their rising property values to do it — that greatly benefited Las Vegas.
“We were particularly dependent on that overconsumption,” Parker notes.
But suddenly the idea of a $3,000 weekend in Las Vegas seemed preposterous.
When Americans cut back, indulgent trips to Vegas were at the top of the list.
Thrift and prudence are now officially in, and Americans are still nervous, which means it will take some time for people to feel confident coming here and blowing cash on the casino floor or in the clubs.
Michael Helmar, Nevada analyst for Moody’s Economy.com, says American consumers will first buy things they need: Cars and household items, then attainable products such as electronics, and then, finally, they’ll take a vacation.
California is a particular problem for us. About one-third of weekend tourists are from Southern California, so until California recovers — and it’s got a ways to go — our recovery will be stunted, says UNLV economist Bill Robinson.
In the meantime we have too many hotel rooms, a situation that will be exacerbated, Aguero notes, with the opening of CityCenter, the Hard Rock expansion and the Cosmopolitan.
“Gaming overbuilt,” Robinson says. “And they went into too much debt. And they still need to clean up their mess.”
So there’s another reason we are late to the recovery party — Americans won’t be coming here in strong numbers for a while, and even once they return, we’ll have more than enough hotels, which will drive down the price of rooms.
Aguero says the key to Nevada’s future will be using our comparative advantage — our ability to bring huge groups of people to one place at one time — to fill those hotel rooms, convention centers and restaurants.
Behind the curve
There are some other, less significant reasons we aren’t recovering like the rest of the country.
Helmar adds that one of the few sectors that has been stable during the recession is health care. Health care makes up 15 percent of the workforce nationwide, but just 8 percent here — meaning we can’t take advantage of health care stability and growth like other communities, despite some gains in that area in recent years.
Then there’s the stimulus.
Helmar notes that manufacturing in the industrial Midwest has benefited from “cash for clunkers” as well as the shovel-ready bridge and road maintenance stimulus money. Nevada wasn’t well positioned to leverage these dollars.
Winning federal dollars is often predicated on matching dollar-for-dollar with state programs. But Nevada’s flinty government — we have one of the most restrictive Medicaid programs in the country, for instance — has made winning those dollars impossible.
Aguero mentions another problem that could be slowing recovery: Nevada has become stigmatized, for so long viewed as a surefire winner, now viewed as a place of foreclosures and joblessness. This may be preventing businesses and people from relocating to the state.
And although Aguero makes no such claim, could the stigma have an unknown effect on the psyche of potential tourists? Is Las Vegas a collective version of William H. Macy in “The Cooler,” who could ice a table with a mere touch of his thumb?
Despite the emerging stigma, Aguero says he’s not suggesting papering over our problems: “Hope is not a plan,” he says.
Parker makes the same point: “It is time for Nevada to do some serious thinking about what we do next.”
Discussion: 51 comments so far…
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Nevada will take longer to recover than the rest of the United States. Due to the malpractices of government employees, settlements will bankrupt the state, county and city.
Only now are the elected officials hearing about malpractices continuing for years.
ther's a laugh! oom rates will remain low? have you looked at weekend rates - a time when - if anyone is going to come here? they are still in the high 100's and even 200's...someday the hotels will get it..cheap rooms, allow people to go out and eat, gamble and hey, even buy a hooker, all putting money back in the economy.
with elected officials like we have, we will not recover sooner than later. They have a lust to spend our money as fast as they can.
Las Vegas is America's playground. When America is broke they don't play as often. It doesn't take a genius to realize this place is going to be a down economy for a long time.
We are just seeing the end of construction at City and those job losses are going to be permanent. This city is not going to be building for a long time.
Maybe we should ramp up Yucca again. Jobs are jobs.
And where is Harry Reid during all of this???? He's with Nancy Pelosi and her deer-in-the-headlights look on her face, in Washington doing "The Peoples Business" pushing through a BS heathcare bill that more than half the country doesnt want.
just wait until all the construction jobs end at city center.
there will be a caravan of u-hauls leaving vegas.
What about State and local Govt. employees who are bleeding us all with inflated salaries and benefits? Go to www.transparentnevada.com and prepared to be shocked at how much we taxpayers are being gouged!!!
Like the city needs a News Article to tell them this! Two blocks off the LV Strip looks like Calcutta, India in the 70's (Today's Calcutta is THRIVING BEYOND BELIEF with ZILLIONS of outsourced American jobs)
While the economic model Nevada & LV follows is in need of some serious changes, trying to "win" matching dollars from a bankrupt Federal treasury by increasing State spending is like playing the lottery -- we're more likely to lose. Escalating Congressional fiscal mismanagement, combined with excessively bureacratic (and most likely ineffective) economic & social policies, with no change in our disasterous trade & energy policies, will only lead to continuing high unemployment & economic stagnation (at best).
What about State and local Govt. employees who are bleeding us all with inflated salaries and benefits?
The majority of state workers do not make a ****load of money. I worked at the AG's office for a couple of months this year and trust me - the salary was lower than I was getting in the private sector AND with the 4.6% pay reduction and all the other stuff they take out of your check , ie those "inflated benefits" - I was making a good $500-700 less a month than in the private sector. State employees put into their OWN retirement fund. That was 10.5% that was deducted once a month; the insurance sucked, too. The cheapest insurance did not require a premium but it was an HMO!! Now who in their right mind still goes to an HMO? Let's not even talk about the other little stuff no one knows about like bringing our OWN office supplies because the State couldn't afford enough supplies for everyone. So get a clue. It isn't all rosy working for the State.
A big part of our economic problem can be compared to the "chicken and the egg" analogy. Businesses are outsourcing their jobs to third world countries for a very small fraction of the price to what they pay here. These foreign workers are more educated and more skilled than our workers and are happy getting paid the lower wages. On the other hand, our workers and their unions here are demanding outrageous wages and benefits and the business owners will not have much profit left for their investments so common sense tell them to move the jobs overseas. So who is to blame? They (employers and employees) are blaming each other for the problems and guess what, both are equally guilty and they might as well look in the mirror and blame themselves.
burnemandturnem:
I looked at your link. Firefighters look overpaid for the work they do. However, the attorneys and the doctors appear to be underpaid. In some cases vastly underpaid compared to the private sector.
Maybe that is why other comments have complained about malpractice. You get what you pay for.
det_munch is right.
Don't assume these inflated salary figures are somehow "the norm." Plus, if you separated out the "benefits package" that is lumped into the dollar figure you see, it wouldn't look NEARLY so lucrative, and would probably begin another argument for health care reform.
And no, I'm not a public employee.
NevaDUH.....the state that Gried built.
Hands off taxing Big Gambling because they are his biggest donors. Hands off Big Mining also as they are his second biggest donors. Last in the "stimulus money; last in "recovery funds; last in education, healthcare, and every other category you can name.
Lake Mead is all but a little pond and will shut down in a few years with nothing on the horizon to give Las Bugsy water.
Yet Gried is going to come out and tell us once again why he is so essential to the continued "prosperity" of this state. He's going to tell us (from an $8-25 million stash) how wonderful things are here.
I'm going to continue to give him just half of the "peace" hand gesture.
This is what happens when you don't diversify. We need to expand UNLV into a academic university with more R&D, especially for solar technology. Right now Vegas only has gambling, the housing industry and tourism.
That is the same reason Iceland is in such trouble. Their only exports are cod, volcanism and Bjork.
Comment removed by staff. Contained an advertisement.
Just an FYI: g-r-e-e-d.
Yes, Nevada will take much, much longer to bounce back because we are a hospitality/entertainment/vacation destination state. People are scrambling to keep roofs over their head, clothes on their back and food in their mouths. So yes, housing, clothing and food are necessities. Putting $20 in a slot machine on the hopes that you may win $10,000 is a luxury. Common sense...can't get blood from a turnip.
Yes, I know Gried is a spoof on Senator Reid. But I think greed works too.
Anybody could see this was coming, but we have a population that is resistant to anything government - such as reasonable planning for the future. It is the nature of private business to want to make a fast profit, not care about what happens to citizens when the profit machines cease. That's one of the reasons we need intelligent people in government. But our system is just a mess - too much corruption, too expensive to run for office, etc.
However, I hope this current mess convinces some people that planning, sustainability, being more green, and improving education and diversifying the economy are important, so that when you vote, you find out what's going on and who's who and do it intelligently. You might make a mistake, but at least you didn't do it blind and suckered.
And here I thought that the conservative paradise of low taxes and smaller government would protect us from all this. Next stop anarchy!
Word of advice for all people of Nv
Sell out,and get out now.
Listen our city is in a depression.Ive been here for 22 years,and i am a small business owner.Craigs List is my new best friend,as i have sold most things i do not plan to take with me.Its finished here folks.Find a buyer for what you do not want,stay in cash and move to another state that has future prospects.
Well if you watch the uncle harry bits,he s already to the rescue.He single handedly saved city cemetary,and im sure he s here for all of us too?Come 2010 this are gonna change!And then next will be impeachment of a fool that had no buisness even running for the highest office of this land!He talked change alright,instead of millions of national debt,he will bring us right into the billions without a bat of an eye!
RUN FOR YOUR LIVES!!!!!!
I love how those 11 states in recover are mostly states where very few people live. Ha Ha.
North and South Dakota, Nebraska, Montana, Iowa and Alaska LOL
That map definitely came from the Obama administration. Hey 11 states are in full recovery and the stimulus created 3 million jobs.
Yea right. LOL
Oh didn't mean to leave out that thriving metropolis Idaho.
Thank God Idaho is in full recovery.
It also appears that Nevada may have had the largest tax increase in the nation which no doubt contributed significantly to our difficulty recovering the economy.
And doesn't our "flinty" medicaid program also pay out some of the highest benefits per person in the country?
or maybe that was medicare. I forget which one. Eitherway, more government spending on the program will not boost Nevada's economy in any meaningful way.
For anyone in construction, Indianapolis, Indiana is doing pretty well, We are expanding our expanding our convention center, work is progressing on the JW Marriott hotel at 32 stories (not as big as a Vegas property I know). Voters in Indianapolis just approved construction of a new Wishard hospital to replace our currently outdated public/charity hospital. The NCAA just announced they are doubling the size of their current headquarters here in Indiana also so there is another large construction project. There are construction jobs to be had in Indiana and we still have a billion dollars in savings. We are one of a few states who are not in the red with our budget.
The cost of living is dirt cheap here compared to other places in the country. I looked at moving to Vegas this summer and my insurance in Indiana is 1/3 of what I would have paid in Vegas. We have all 4 seasons here so the snow is something some people may not like but there are some states that do offer the promise of some jobs.
"The cost of living is dirt cheap here compared to other places in the country"
The only reason your "cost of living" is so low there is because wages are so low. My wife and I went out to TN for a couple of months to help out the daughter after she had her baby and I checked out several states wages ( yes Indy was one of them) and I would have had to take a 60% cut in pay from LV. Top dollar in construction (heavy equipment operator) is a WHOPPING $17.00p/h. WOOHOO! All I could do was laugh in their faces when they told me that.
Word of advice for all people of Nv
Sell out,and get out now.
Listen our city is in a depression.Ive been here for 22 years,and i am a small business owner.Craigs List is my new best friend,as i have sold most things i do not plan to take with me.Its finished here folks.Find a buyer for what you do not want,stay in cash and move to another state that has future prospects.
*************************************************
Good Luck and God Bless!! I'm here for the duration. Got an excellent job and my parents are here. I realize I'm blessed, so, I'll pass them along!!
The economy will bounce back. Government spending created many jobs in the Great Depression, Hoover Dam for example. Some paint that as socialism, others as a wise public investment -- saw a cool site; Balkingpoints ; incredible satellite view of earth
Sounds like Indianapolis bought into the same fads as Vegas and Phoenix. Good luck over the next decade it flopped here, probably will there too.
Reg, ever job created by the government costs a job created somewhere else. So if the government jobs are less productive than the private sector jobs you end up destroying more wealth and more jobs than you created.
Not sure about construction jobs but my current profession pays pretty well here in Indy. My dad owns a construction company in Mississippi and he pays much more than $17 hour for his heavy equipment operators and Indiana pays more than Mississippi. Most of the construction trades are unionized here and they pay high wages. THe state is also beginning construction of I69 from Indinapolis to Evansville.
One thing I hope Vegas doesn't buy into is building a stadium for a NBA team. We had a perfectly good stadium for the Pacers (Market Square) and the Pacers threatened to leave if t hey didn't get a new stadium, so the city council passed an additional 1% sales tax on restaurants to pay for a new stadium which we don't charge the Pacers to use. All they were supposed to pay for was maintenance. Now they claim that they have lost money every year they have been in INdy except for one (20+ years)and that if the city doesn't take over maintenance of the new stadium for them then they are going to leave. Again more threats and the city bows down them. Don't let these teams blackmail cities.
Word of advice for all people of Nv
Sell out,and get out now.
This is the most honest advice you will hear.
Geenab65
I bet i make alot more money then most here.Im telling people it cant get better,7-10 years maybe
"...Parker makes the same point: "It is time for Nevada to do some serious thinking about what we do next."..."
There's that god-da*n ThInKiNg word again.
(Doesn't this guy read the news? ThInKiNg here is as abundant as WaTeR, doncha ra'member, we "da secend stoopidist"...?)
Mr. Coolican:
This article is excellent. It points out the amazingly parallel historical significance of the leaders of 17th century Holland, and the leaders of 21st century Las Vegas.
The quotations in your article highlight the precise lack of overall vision that plagued the local area for these past years on end.
I would suggest that we are not just only behind the curve (an excellent analogy), but now squarely behind the eight-ball, as well.
And what your article quite gloriously points out, perhaps unknowingly, is that with all of our advanced technology, internet connectivity, and instantaneous communication, we don't think any better than they did four centuries ago in Europe (and they wore wooden shoes).
The Obama administration and our miserable Senator Harry Reid have done little for Nevada in these times. Their failures are our failures. Running political ads glorifying Wonder Boy Reid just infuriates me. Throw the bums out of office!
the economy will dog this country for a long time. i do not see any bright signs for improvement. if anything, at least government has to cut back on all the fat they have accumulated over the years. its a great time to downsize the local and state bureaucracy.
Here is how you bring Vegas back to the glory days. Either you bring back the Kansas City boys or you get rid of the bean counters that have taken over the industry, milking every penny and after you have done one or the other, let people win with looser slots like it was before. Comps used to rule and people felt they were getting something and enjoying their time here.
Sell out,Get out
Apperently,Lake Mead even knows this.
The City will never deversify,so why bother waiting around for the second comming,,,
Obama, Reid, blacks, mexicans, Democrats, Republicans, etc... All have NOTHING to do with this situation. It ALL started when we began shipping our production overseas and allowing large corporations to enslave third-world countries while enjoying the perks of tax write-offs and such. It's all about the rich versus the poor, and the rich keep sucking the rest of us dry.
A few years ago there once was a California Governor who allowed the deregulation of the utilities industry. What happened was they sold off all of their power plants to other entities and leased the power grid. What happened? A communications giant called Enron stepped in and choked the utilities out causing severe statewide shortages of power and so began the draining of California's budget surplus to keep a few lights on when rolling blackouts occured. The governor choked big time and was recalled opening up the door for the terminator to step in. sheckyvegas has hit the nail on the head for this same type of problem which now dogs us here.
Politics,Policies,Deregulations,Race,Taxes,Republican,Democrat WHATEVER!
This is all about Disposable Income,and Nobody has it anymore.
peace out
"dont be so afraid of failure that it saboutages your own success"
bidblu : Precisely ! that's why the executives need to get the idea of cheap rooms, food and loose slots back on track in Vegas lure back the tourists with their limited disposable income foe a value vacation they can afford!
Hey Listen,,
Vegas stripped itself of its real value a long time ago.Now all that is left are the skelitons in the closet...
We all here chime the same tune that the casinos need to change and lower rates food and gamming stakes to help draw the tourist back to Vegas.
I agree totally but we must remember that these big over paid execs are the ones who created this mess in Vegas and do not care about Vegas they just take their boom ideas to Macau China and are going to leave Vegas hanging instead of trying to keep it alive.
The big gold rush in Vegas is over and will never return we can only hope it grows little by little but will never explode like it did in the 90's Early 2000's.
What needs to happen is the Errogant Senator who thinks he needs to push a National Health care Plan needs to drop this eventually failure and expensive cost to the tax payers plan.He needs to come back to Navada and go to work for the citizens who voted him in.
Harry Reid and all the U.S. Reps need to drop their garbage for a moment and start helping this state.While these guys are pushing for something that can be decided later and start pushing for economic recovery Just like the corperate bone heads who put this town on its knees so has the political leaders you voted for.I moved here to Vegas at the first of the year and it is black and white looking from the outside looking in. our President promised Change and has he changed.Nevadians need to change who represents us and asap A complete make over of the poltical leadership if you/we don't Nevada is going to be in deep recession for a long long time.Long after the rest of the country is on the road to complete recovery.
Vote all the The Washington power happy lying and dont give a darn politicians out and start sending these moroons a message.Nevadians need to work hard change the long faces and stand up and be proud because this is a beautiful state and has so much to offer just needs new leadership.In the political arena and the corperate arena.Nevada Now !!!!!
Word of advice for all people of Nv
Sell out,and get out now.
This is the most honest advice you will hear.
Geenab65
I bet i make alot more money then most here.Im telling people it cant get better,7-10 years maybe
**************************************************
I was simply saying good-bye and good luck but you're in such a hurry to get the hell out, you can't even manage a simple thank you!! So...bye!!!
Wow, maybe y'all can come out to the Golden State of California. Of course, there's getting to be 2 kinds of folks left here. Those who want to work, and can't find a job, and those who won't work and the state pays them not to. We have had a sales tax increase, raised DMV fees, increased "revenue related" traffic enforcement and higher fees to those who are caught. Of course the recession is "slowing here" there are fewer people left to lose their jobs. COME AND JOIN THE PARTY! Oh, and our gas cost's about 30c more than it is in LV.
Californians getting fleeced by their state government and the oil companies is nothing new. The problem is that the folks have to go along with this gas rip off and high property taxes reluctantly of course because they have no choice! There is little or no public transportation if you live beyond the range of the subways, and thats most of the commuting population. The freeways are gridlocked, accidents abound, illegal aliens with no drivers licenses or insurance, causing death and mayhem, and runaway insurance rates. Out of control gangs the members median age of approx 16 to 18 years of age (they are usually dead by 18) causing murder and mayhem oh and by the way most of 'em are illegal aliens. Still want to come to California?
Federal stimulus money is being used to save state, county and city government jobs by covering budget shortfalls in each state.
A report by the Center for Economic and Policy Research says that state and local budget deficits to the tune of $100 billion a year will offset the stimulative effect of the president's American Recovery and Reinvestment Act.
Stimulus dollars used to cover deficits will have no stimulative effect, and the benefit of stimulus money well-spent will be offset if states increase taxes or decrease spending to close budget gaps, the report says.
SOURCE:
http://www.huffingtonpost.com/2009/05/04.........
Do a Google search on "stimulus state budget shortfalls". Here is more info:
SOURCE:
http://bobscorner.tumblr.com/post/996566...............
Georgia- State budget shortfall eliminated by cutting $1.5 billion in programs and using $1.3 billion in federal stimulus funds.
Idaho-Governor proposes to use federal stimulus funds to offset state budget shortfall.
Indiana - Senate uses $823 million in federal stimulus funds to eliminate state budget shortfall.
Louisiana- Governor uses federal stimulus funds to partially cover state budget shortfall.
Maryland --Passes budget that cuts $866 million and uses $1.5 billion in federal stimulus funds. State still expects a $1 billion state budget shortfall next year.
New York -Governor proposes to eliminate $17 billion state budget shortfall with new taxes, fees and use of federal stimulus funds.
Oklahoma-Federal stimulus funds will help solve $900 million state budget shortfall.
Tennessee -Governor uses federal stimulus funds to mitigate state budget shortfall.
Virginia--$3.7 billion State budget shortfall eliminated by use of $1.6 billion in federal stimulus funs; $1.1 billion in cuts; and other measures.
Washington --Democrat Legislators plan to eliminate $9.3 billion state budget shortfall by taxes, fees, use of pension funds; budget cuts, accounting gimmicks, and use of federal stimulus money.
Washington D.C. politicians are busy with their campaigns for 2010.
Watch this promo for Harry Reid.
http://www.lasvegassun.com/blogs/early-l...