Las Vegas recovery remains muted, analyst says

Southern Nevada's economy continues its modest recovering from the recession as its two largest industries, tourism and gaming, remain the driving force behind the region's economic growth, according to an economist with the University of Nevada, Las Vegas.

Stephen Brown, professor of economics and director of UNLV's Center for Business & Economic Research, said Wednesday that real estate and unemployment, two sectors battered by the recession, would continue to slow down the region's recovery.

"I'm not surprised that tourism stands out. It's our big industry," Brown said.

He predicted Southern Nevada will soon see as many visitors as it did just before the Great Recession. Las Vegas needs to see the number of guests this year increase by 0.7 percent from last year to reach the record of 39.2 million, set in 2007, Brown said.

While the visitor count is up, gambling revenue is down significantly from five years ago. The national economy will need to expand further before gambling revenues rebound, Brown told attendees of the Midyear Economic Outlook, a twice-yearly forecasting event held at The Venetian.

He said it would take a little longer for Mesquite and Laughlin to "catch up" with any recovery in Las Vegas.

Brown also said the region is seeing a change in the average tourist. He said more were arriving by plane from Southern California and from further destinations, meaning more taxi trips, while the average tourist has shifted away from gaming to spending more on nongaming items including entertainment and nightclubs.

While gaming had rebounded, unemployment remains a barrier to sustained growth.

Brown said unemployment in Southern Nevada wouldn't recover to a natural rate of 5.6 percent, or full employment, until 2017.

The unemployment rate in Clark County was 11.6 percent in April. Brown said the current number didn't include "people who have dropped out of the labor force" or the "shadow unemployed," which included would add another 12 percent to the unemployment rate.

Brown said a decline in the jobless rate in recent months "indicates the economy has already started to recover."

The region's construction industry has declined to a level deeper than anyone had realized. Brown said there's "evidence construction is coming off the bottom, but it's a very deep bottom."

Brown said Nevada has the nation's highest percentage of underwater homes. He said 60 percent of homes are underwater and if the near-negative equity homes are included the number rises to 66 percent.

"Southern Nevada's economy is in a slow recovery. It is likely to continue growing," Brown told attendees as he concluded his hour-long presentation. He said the improving local economy is dependent on continued U.S. growth, particularly in the West.

Contact reporter Chris Sieroty at csieroty@review
journal.com or 702-477-3893.