Southern Nevada's economy is speeding along like a Bugatti Veyron, a production car capable of reaching 248 miles an hour, a local economist said Monday.
Travel and tourism indicators have surpassed levels that existed before the terrorist attacks of Sept. 11, 2001, and job growth is projected at about 8 percent this year, well above the national average and exceeding last year's strong employment numbers, Keith Schwer, director of the Center for Business and Economic Research at UNLV, said at his Midyear Economic Outlook 2005 at Green Valley Ranch Station.
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Schwer's forecast calls for 7.2 percent growth in personal income, 6 percent growth in gross gaming revenue, 4.5 percent population growth and 3.7 percent visitor volume growth.
"I compare it to the Bugatti," Schwer said. "You could drop off a friend at the airport an hour ahead of his flight time and get to Reno and have a cup of coffee and pick him up at the airport there. Let me suggest Southern Nevada is that kind of economy. It's a Bugatti economy."
The biggest risk to the local and national economic forecast is the price of oil, the economics professor said. The price for a barrel of West Texas intermediate crude oil has climbed from about $20 in January 1990 to more than $60 today, Schwer said.
Though higher oil prices haven't affected the local economy much, they could hurt Las Vegas in the future if expensive air fares result in fewer visitors.
Other risks to the local economy include a construction slowdown, terrorism and a U.S. economic downturn.
Schwer said American businesses have learned to become more energy efficient as a result of higher oil prices, reducing by one-third the cost of energy in relation to gross domestic product since 1980. Oil consumption in North America grew 18 percent between 1980 and 2002 and 4.5 percent between 1998 and 2002, compared with 99.9 percent and 11.1 percent, respectively, in Asia, according to the Energy Information Administration.
Schwer and Bengte Evenson, associate director at the economic research center, displayed dozens of charts and graphs for national and local indicators, most of which generally showed upward trends.
However, housing units permited was on the downward side. They are forecast to be off about 11 percent this year, coming back for a 4.6 percent gain in 2006. Other categories, such as gross gaming revenue and Clark County population, are showing slower growth.
Still, gaming revenue is expected to reach a record $9.23 billion this year, growing to $9.58 billion in 2006, and population will hit 1.83 million in 2005 and 1.89 million in 2006, the economists predicted.
Construction employment in Southern Nevada grew from less than 40,000 in 1990 to more than 100,000 in 2005, Evenson said. As the number of new home permits dropped, commercial permits as a percentage of total building permits leveled off at about 4 percent and are now climbing slightly.
As for the so-called "housing bubble," Evenson said Western states such as California, Nevada and Arizona continue to lead the nation in price gains and median home prices, much of it due to investor speculation. Any bubble issues would be of a local nature, she said.
"There's concern about high increases in 2004 and 2005," Evenson said. "We're nothing compared to Hong Kong and South Africa. So the United States is not unique in price run-ups. We're getting more sophisticated in how to use the housing market as an investment tool."
Quarterly increases in median home prices that had reached double digits last year in markets such as Clark County, Los Angeles and Orange County, Calif., have now converged with markets such as Phoenix and Salt Lake City at about 5 percent, Evenson noted.
