Recession may be over for U.S., but not Las Vegas

By Buck Wargo

Friday, Oct. 16, 2009 | 3 a.m.

Although more than 80 percent of the nation’s economists say the recession is over and expansion has begun, a recovery in Southern Nevada remains dim.

The eyes of Las Vegas are on the scheduled December opening of CityCenter and its 12,000 employees, but the debut isn’t expected to reverse the climbing unemployment rate, now at 13.4 percent, and economists predict there will be little to cheer about in the region through the end of the year.

The latest data from UNLV economist Keith Schwer show no sign the recession is ending here.

His negative outlook came despite the September gain recorded by the Southern Nevada Index of Leading Indicators, the second increase in three months.

The September index, which measures data from July, rose 0.25 percent from August, but it is 3.26 percent below a year ago.

“While it’s certainly welcome news that UNLV’s indicators improved slightly between June and July, we need to see a longer pattern of improvement,” said John Restrepo, an economist and principal of Restrepo Consulting Group. “Remember, Southern Nevada lost 60,000 jobs in the 12 months ending this past August, and consumer spending remains in the doldrums. A growing number of economists are expecting a W-shaped national recovery, and this will impact our rate of recovery.”

A W-shaped recovery assumes a second drop before the economy finally improves, he said.

However, a study released Oct. 12 by the National Association for Business Economics showed that economists are optimistic about the rest of the country. They predict the gross domestic product will increase 2.9 percent in the second half of this year and 3 percent in 2010.

However, the economists said the recovery is likely to be more moderate than past ones because the jobless rate is expected to remain high.

Schwer said economists are concerned there could be a second downturn.

But even if there isn’t a double dip, signs remain that Las Vegas won’t start recovering until after a national rebound.

This recession proves that Las Vegas’ tourism and growth-based economy isn’t insulated from the national business cycle, he said.

“We have gotten ourselves whipped into a frenzy that we were decoupled from the national economy, but it couldn’t be further from the truth,” Schwer said. “Hopefully, we learned from this recession and won’t be dumb like that again.”

Five of the 10 September indexes improved, compared with August’s, including gross gaming revenue and visitor volume, which were up more than 6 percent. None of the 10 indicators was up from September 2008.

Schwer called the September index increase a “blip,” and it needs to be sustained over several months before it provides a reading of where the local economy is heading.

Also, the index may be off because of the complexity of seasonal adjustments with the data, he said.

No matter what the data say, however, Schwer said the outlook is more positive than it was a year ago.

“There was a lot of discussion about whether we were going to have a 1930s’ recession, but we have moved away from that,” Schwer said. “We have gone through a horrible period, but we have become more optimistic.”