Analyst: No signs of near-term economic relief

By Buck Wargo

Fri, Sep 11, 2009 (3 a.m.)

A UNLV economist said the Las Vegas economy shows no signs of recovering by the end of the year and will lag behind any national turnaround.

Keith Schwer, director of UNLV’s Business and Economic Research Center, said the Southern Nevada Index of Economic Indicators for August declined 0.12 percent from July and 3.63 percent from August 2008.

That drop suggests there will be no near-term relief for Southern Nevada from the most damaging recession since the Great Depression, Schwer said. The lack of any upturn in the index forecasts difficultly for the rest of 2009, he said.

However, the latest U.S. economic numbers point to a recovery in the second half of 2009, Schwer said.

“The severity and the breadth of the economic disruptions, giving rise to this recession, leave open to greater question than usual the likely U.S. recovery path,” Schwer said. “Current evidence suggests Southern Nevada’s recovery will lag the U.S. recovery.”

All 10 indicators in the August index, which measures economic activity in June, were down from August 2008: Convention attendance fell 19 percent, and visitor volume was down 6 percent. They contributed to a 15 percent decline in gross gaming revenue.

The index projects the Southern Nevada economy through Dec. 1.

The value of commercial building permits fell 80 percent, and new residential permit values dropped 58 percent. Retail sales fell 22 percent.

Compared with the July index, only five of the 10 indicators fell: Convention attendance was up 4 percent, visitor volume fell 7 percent and gross gaming revenue was down 8 percent.

Among the bright spots were retail sales are up 3.4 percent and the value of residential construction is up 104 percent. The value of commercial permits, however, fell 93 percent.

The Clark County Tourism Index is forming a bottom since it started declining in late 2007, Schwer said. Marketing efforts to keep occupancy rates up have been successful, although at markedly lower room rates, Schwer said.

But there are some weak points: With more rooms available, occupancy rates have declined, Schwer said. The properties haven’t attracted additional visitors, he said.

The Clark County Construction Index was flat in June following a sharp decline from the peak in 2006, Schwer said. Since then, the region has gone from 125,000 construction jobs to 76,000, and he expects that number to decline more.

“I see further contraction with the completion of Strip properties and few new projects,” Schwer said. “Excess commercial and residential real estate further limit the longer-term prospects.”