It's going to get worse before it gets better


It started with the grass. The couple living next door -- nice people, considerate neighbors -- had a run of bad luck. The man lost his job. The woman got cancer. They couldn't keep up with their mortgage payments.

The house fell into foreclosure and they moved to an apartment.

The front lawn turned brown. Then we noticed a flock of pigeons hanging around the swimming pool. The pigeons were drawn to the mosquitoes -- potentially laden with West Nile virus -- that were swarming the stagnant water. Next thing we knew, a truck pulled up and a couple of guys started draining the pool.

After the pool-draining guys -- a couple of knuckleheads who drank beer and cranked the radio while the pool water ran (illegally) into the street -- drove off, we noticed they had left the front door of the house wide open. My wife locked and closed it.

Nobody's been back to check on the house in more than a week. The grass is like hay now: tan and crunchy. The pool is uncovered.

So it goes in Las Vegas in 2008.

As far as I can tell, the house next door is one of only a couple in our neighborhood that have fallen into foreclosure. We're lucky. In other areas of town, many more houses are vacant. Some have been trashed by the departing residents. Others have been vandalized. Squatters have moved into some abandoned properties.

It's an ugly situation. We live in the foreclosure capital of the country. Once again we're No. 1, but in this case it's nothing to be proud of.

In Las Vegas the economy is a highly visceral experience. When things are good in America, they are really good here. When things are bad nationally, they are really bad here.

We all know about the woes of Wall Street, the auto industry and the newspaper industry. We feel those waves here. But in Las Vegas, the waves have the force of a hurricane.

The collapse of the Las Vegas real estate market is kid stuff compared with what appears to be unfolding in the tourism industry. Tourism is such a big deal in Las Vegas that reporters file monthly stories on the numbers: gambling revenue, visitor volume, hotel occupancy, airport activity. We follow these numbers almost as closely as the presidential polls.

The numbers have not been good lately. McCarran International Airport reported last week that its September traffic was down 13.2 percent from the same month a year ago.

From the macro to the micro: We also follow the quarterly reports of our casino companies. These haven't been good lately, either.

Boyd Gaming had a bad third quarter, but the real news was that it won't be doing anything with its Echelon project in 2009. The $4.8 billion project stopped in August when things started going sour. At that time, Boyd execs thought work could resume next year. Forget about that now. The new timeline is that construction might resume in 2010.

MGM Mirage was next, reporting that its third-quarter profit fell 67 percent compared with the previous year. That's an ominous number coming from the biggest of the Strip operators. There are repercussions. Although the company's giant CityCenter project rages forward -- because it must -- the company is cutting expenses and jobs all over the place.

For decades, Las Vegas politicians have talked about "diversifying the economy." We all know that tourism built this city and can be extremely lucrative, but it also carries the risk of a big downturn caused by events beyond the industry's control.

Gaming actually fared pretty well in the past couple of recessions, and it powered past the 9/11 tragedy with impressive alacrity. But this time it's different. This is something the industry hasn't seen in more than 20 years.

Of course, that rhetoric about diversification has never gone anywhere, leaving Las Vegas as vulnerable as ever.

I had to call a plumber the other day. While he went about his work, Brad the Plumber -- not Joe -- engaged me in the most thoughtful political discussion I have been involved in over the past year. Yes, this includes all the pundits, journalists and professors I have talked with in recent months.

Brad was well-informed and made some astute observations on the issues of the day. One thing he told me is that even the plumbing business is feeling the pinch. You'd think the demand for plumbers would be a constant no matter what the economy looks like. The demand might in fact still be there, but the money to get the work done apparently is not.

It can't be good for anybody if plumbing work is being put off until the economy improves.

Las Vegas will rise again -- I firmly believe that -- but it's in a world of hurt right now. And things seem destined to get a lot worse before the tide turns.

Geoff Schumacher (gschumacher@ reviewjournal.com) is publisher of Las Vegas CityLife, owned by the same company as the Review-Journal. He also is the author of "Sun, Sin & Suburbia: An Essential History of Modern Las Vegas" and "Howard Hughes: Power, Paranoia & Palace Intrigue." His column appears Friday.

 

Rules for posting comments

Comments posted below are from readers. In no way do they represent the view of Stephens Media LLC or this newspaper. This is a public forum. Read our guidelines for posting. If you believe that a commenter has not followed these guidelines, please click the FLAG icon next to the comment.