The nation's economy shows definite signs of recovery, but consumers aren't yet ready to spend on the entertainment, travel and other discretionary leisure activities that drive Southern Nevada's business climate, an economist said Tuesday.
The U.S. economy shows clear signs of economic improvement, and those gains seem sustainable, Federal Reserve senior economist Raymond Owens told a group of about 500 businesspeople at the Four Seasons who were on hand for the unveiling of the latest Las Vegas Perspective, an annual publication with demographic and economic profiles of local communities.
"We're emerging out of recession and we're seeing improvements," Owens said. "It's coming slowly for some areas of the country and a bit quicker for other areas. We have lots of ground to make up. We lost about 7.5 million jobs, and we're only at the verge of seeing positive job growth that's starting to chip away at that loss. We've got a long way to claw back."
Still, the signs of a turnaround appear all over some economic indicators, Owens said.
Consider business inventories, or stockpiles of unsold goods. Inventories rose as consumers quit buying in the recession's early days, in 2008 and early 2009. Businesses adjusted accordingly, trimming production and laying off workers, and inventories have since dipped below prerecession levels in some areas, such as retail. That shorter supply of goods could mean improved business for manufacturers going forward.
Other indicators herald recovery as well, Owens said. The nation's gross domestic product expanded 5.9 percent in the fourth quarter, after contracting 5.4 percent in the same quarter a year earlier. Business investment in equipment, software and commercial real estate jumped 6.5 percent in the fourth quarter, compared with a 19.5 percent decline in the same quarter of 2008.
Most importantly, household spending on discretionary goods ranging from groceries and dry cleaning to automotive parts and clothes has stopped its slide, as consumers regain confidence in their job security and financial assets. Job loss has slowed from 750,000 positions a month in early 2009 to around 36,000 jobs a month now, and positive job growth is "literally just around the corner," Owens said.
Incomes are growing again and stock markets have regained most of their recession-era losses. Both factors have helped push expansion in household spending, which suggests that "a lot of optimism is emerging out there," Owens said.
But household spending is expanding in some sectors more than others, and that's why Las Vegas continues to lag the rest of the nation in recovery.
Consumers put off replacing older cars and appliances to save money during the recession. Today, they're finally spending to replace those outmoded big-ticket items. That means budgeting for services such as leisure activities and travel won't be a priority for a while, Owens said.
"It's going to be some time down the road before (consumers) will be satisfied that they'll start to have the discretionary income to spend on things like entertainment," Owens said. "So, while people will certainly come back to Las Vegas and back to Orlando and places like that, it's usually a bit delayed. This time, the downturn was more severe, so you might expect a somewhat longer lag than typical. It's on the way, but it's not going to happen just tomorrow."
Las Vegas Mayor Oscar Goodman spoke at the Las Vegas Perspective event as well.
Goodman said Las Vegas needs three components to become a world-class city. It needs world-class medical centers such as the Nevada Cancer Institute in Summerlin and the Cleveland Clinic Lou Ruvo Center for Brain Health downtown. It also needs culture, which the Smith Center for the Performing Arts under construction downtown will help provide. And it must have a major-league sports team.
Goodman said three separate groups have proposed big sports stadiums near the Strip or downtown, and he said he's been "virtually assured" that the National Basketball Association will allow Las Vegas to have an NBA team once an arena opens here.
Goodman also discussed plans to entice Crocodile Hunter Steve Irwin's family to Las Vegas, where they've discussed building what Goodman called a "crocodarium." Goodman said the Irwin family is in talks with the city to refashion the Cashman Center and Cashman Field complex, currently home to trade shows and the Las Vegas 51s minor-league baseball team, into a zoo emphasizing Australian animals. Trade shows hosted at Cashman Center could relocate to newer convention facilities such as the 30,000-square-foot MEET, downtown at Fourth Street and Bridger Avenue. The city would also help relocate the 51s.
Goodman didn't have a specific start date in mind for the project, but he said he'd like to see it happen before his term ends.
"I've got 14 months left as mayor, and I want to put my head in a crocodile's mouth before I'm through," he said.
For information on the Las Vegas Perspective, visit www.lvperspective.com.
Contact reporter Jennifer Robison at firstname.lastname@example.org or 702-380-4512.