Many expect slow recovery for Vegas

Economists say the national economy is showing some early signs of recovery from the recession.

So what's happening to the local economy? It's struggling, economists and other local businesspeople say.

"It's in the crapper," said Michael Gaughan, owner of the South Point.

Jim Marsh, owner of Jim Marsh Automotive, said: "Everybody I talk to seems to think it's getting worse."

Dennis Meservy, a certified public accountant and certified fraud examiner said: "This is the worst economy I've seen for over 25 plus years. It seems like people are really hurt. I think we were the first (to go into recession), and we're going to be the last out."

Matt Becker, general manager of Charlie's Down Under and three other restaurant-bars, expects no turnaround for two or three years. The properties of Becker Gaming aren't making a profit and have cut prices to the minimum to keep their 100 workers employed, he said.

"We're doing everything we can to maintain, and the consumer is getting a great bargain," Becker said.

The government reported Thursday that the U.S. national gross domestic product grew at a 3.5 percent annual pace during the third quarter, leading many observers to predict economic recovery.

Keith Schwer, director of the Center for Economic and Business Research at the University of Nevada, Las Vegas, agrees that the latest U.S. economic reports suggest a national recovery is near, noting increases in stock market prices since March and a decline in new claims for unemployment benefits nationally.

Schwer, however, doesn't expect a local recovery before next year. He said pinpointing a recovery date is "highly speculative."

Southern Nevada's leading economic indicators -- ranging from gaming revenues to visitor numbers -- are all pointing down, according to the center's latest data.

"Foreclosure and other economic difficulties (in housing and real estate) definitely are not helping us, and it is another reason why the economic recovery (in Las Vegas) will be slower," Schwer said.

Before he is willing to say a recovery has started in Las Vegas, "we would like to see a sharp increase to show that the consumer is coming back," Schwer said.

Tourism is down because people are focusing on necessities rather than discretionary expenses like trips to Las Vegas, he said.

"So it's going to be a matter of time for that to pick up," he said.

William Anderson, chief economist for the Department of Employment, Training and Rehabilitation, said that once the national economy starts to rebound, Nevada will benefit.

"At least, what we're seeing are some tentative signs of stabilization," Anderson said.

For instance, he said, existing-home sales are improving and applications for unemployment benefits are not increasing as rapidly as they had been.

Business owners are hard-pressed to find much reason for optimism.

Gaughan said South Point has seen an increase in patronage from visitors but not from locals. He attributes the higher number of out-of-towners to people who earlier snapped up low-priced hotel rooms on the Strip and now want to come back to South Point.

Gaughan said he hopes the opening of CityCenter will boost the number of casino workers locally, a market segment that the South Point attracts.

"I don't see the economy getting better until sometime in 2011," Gaughan said. "Nothing is happening until people get back to work."

Marsh, a dealer for Mitsubishi, Suzuki and Kia, noted that Nevada sales tax revenues from motor vehicles and parts slumped 16.4 percent in August, despite the federal government's "Cash for Clunkers" program. He expects the car business to show worse results for September, October and November.

The best solution: "Just let time take its course. I don't see any magic bullet."

Marsh saw one bright spot. Business increased in perennially depressed Tonopah at two small casinos he operates there, the Bank Club and the Ramada Inn Tonopah Station.

Meservy said his accounting practice is doing great, but he feels bad for clients who are suffering from the downturn.

"I probably had my best year," Meservy said. "But that's totally different than my clients' (experience)."

Typical of his clients are a man losing his home to foreclosure and another who is leaving Las Vegas to find work.

Business is good for accountants in good times and bad, Meservy said. He also is a certified fraud examiner and has six ongoing investigations, twice the usual number.

Schwer offered this bit of optimism. The last times that Las Vegas went through deep recessions were in the 1970s and 1980s, and the city bounced back.

"I suspect we will return again," Schwer said. "It may take a number of years before we get back to a stronger economy."

Contact reporter John G. Edwards at jedwards@reviewjournal.com or 702-383-0420.