Keith Schwer, director of the Center for Business and Economic Research at UNLV, speaks at Economic Outlook 2007 presentation Tuesday. Photo by Gary Thompson.

Southern Nevada's economy will dodge a recession in 2007, but growth in several key indicators will lag behind recent local norms, an economist said Tuesday.

Keith Schwer, director of the Center for Business and Economic Research at the University of Nevada, Las Vegas, predicted at his Economic Outlook 2007 presentation at Green Valley Ranch Resort that job formation, population growth and gaming revenue would all post lower rates of increase than they're experiencing in 2006.

But personal income, visitor volume and the number of hotel rooms should expand more briskly than they have in 2006, Schwer said.

Housing permits are the only economic indicator that Schwer expects to tumble.

Schwer said Southern Nevada's job base will grow 5.6 percent in 2006, to 920,250 positions. In 2007, though, the area's job inventory will expand 5.4 percent, to 970,256 jobs.

Southern Nevada's job formation still leads the nation, Schwer said. Plus, the top-growing sector in 2006 has been professional and business services, which added 9.8 percent to its employment base. Construction came in second, with 7.9 percent growth, while the number of leisure and hospitality jobs increased 2.1 percent. Gains in professional fields indicate strong business development for a growing metropolitan area, Schwer said.

That job growth will continue to reel in new residents for Southern Nevada, though the area's population growth will slow slightly in 2007, Schwer predicted.

Schwer said he expects the Las Vegas Valley to add 5.3 percent to its resident base by the end of 2006, for a population of 1,912,654; in 2007, the region should grow by 4.8 percent, to 2,004,000.

"The growth to come is more sustainable," Schwer said. "That's important if you want to be able to get home for dinner before breakfast is served."

Schwer said gaming revenue will also grow less rapidly in the future.

The state's casinos will post an estimated $10.52 billion in revenue in 2006, an 8.3 percent increase over 2005 numbers. But revenue growth will roughly be halved in 2007, to 4.8 percent, or $10.96 billion.

Schwer attributed the lagging revenue to a crunch in room capacity in the near term. Gaming operators will have boosted hotel-room inventory 0.2 percent in 2006, to 133,491 rooms. And with occupancy rates averaging more than 90 percent on weekends, boosting revenue will require getting visitors to spend more, he said.

Room capacity will expand substantially by the end of 2007, though. Schwer is forecasting a 5.3 percent growth rate, to 140,578 rooms. The ability to fill those rooms is favorable, with bankruptcies and overcapacity in the airline industry leading to sustained lower prices for air fare and helping with additional demand for travel into Las Vegas, according to Schwer's report.

Schwer also predicted that visitor volume will improve over 2006 rates. The number of tourists coming to Southern Nevada will have risen 1.6 percent by the end of 2006 to 39.2 million. Schwer's projections show a 2.3 percent jump in 2007, to 40.1 million.

Continuing economic expansion in Southern Nevada should leave local consumers with more cash in their pockets, as growth in personal income will more than double in 2007, Schwer said. Personal income valleywide was $60.7 billion in 2006, up 2.5 percent from 2005 statistics. The area's personal income will rise 5.8 percent to $64.2 billion in 2007, Schwer said.

But a higher cost of living will "pinch into what those dollars can buy," Schwer said, pointing to statistics that show Las Vegas' cost index of utilities, housing and other expenses is well above regional competitors. With a base point of 100, Las Vegas' cost index is 132, compared with 113.3 in Phoenix and 96.6 in Salt Lake City.

Schwer said he expects just one indicator -- housing permits -- to falter locally in 2007.

Home builders will have pulled 32,811 housing permits in 2006, 15.7 percent fewer permits than they took out in 2005. The falloff will be even more precipitous in 2007, when builders will collect 41.8 percent fewer permits than they pulled in 2006, Schwer said.

The drop in permitting reflects a return to historic levels. From 2003 to 2005, the market added 15 percent more inventory than it needed for growth, or about 5,000 extra units a year, Schwer said. With permitting activity plummeting, Schwer said he expects Southern Nevada to "burn off the overhang" in housing supply by mid- to late 2007.

A strong showing in commercial and resort construction in 2007 should offset a flagging residential-construction sector, Schwer said, with overall construction activity remaining well above building rates five years ago.

Schwer also noted that confidence in the area's economy remains healthy, with 57.8 percent of businesspeople surveyed saying they expect the local economy to expand in 2007 and just 13.3 percent planning for shrinkage in Southern Nevada's economy.