Economy still looking down

Consumer spending is down, unemployment claims are up, car dealerships are closing, construction has come to a near halt and major casino projects are scrambling for financing.

Worst of all, people aren't gambling as much in Las Vegas.

Every local economy is taking a serious hit and a turnaround is nowhere in sight, UNLV economist Keith Schwer said Thursday.

The Southern Nevada Index of Leading Economic Indicators dropped to 126.09 in April, down from 126.69 the previous month and from 131.89 a year ago.

Every category in the index fell from a year ago, and eight of the 10 data series declined by double-digit percentages.

"We see no stop in the steep decline observed over the past year," said Schwer, executive director of the Center for Business and Economic Research at University of Nevada, Las Vegas. "I'm sorry to be the bearer of unpleasant news. Somebody has to do it."

The economic index shows no sign of a turn upward that would signal the likelihood of a recovery from the current recession, he said.

The index, compiled by the UNLV research center, is a six-month forecast from the month of data, based on a net-weighted average of each series after adjustment for seasonal variation. April's index is based on February data.

The accompanying Review-Journal chart includes several of the index's categories, along with data such as new residents and employment and housing numbers, updated for the most recent month for which figures are available.

Residential building permits fell 67 percent to 155 in February and the value of those permits fell 74 percent to $18.5 million. Commercial permits were down 45 percent to 30 permits, while their value was down 50 percent to $34.7 million.

"It's pretty grim all right," said Ken Simonson, chief economist of the Associated General Contractors in Washington, D.C. "I just don't see where the relief is going to come from. Construction is hurting everywhere, and you guys are on the bleeding edge of that."

Banks are getting hammered from both sides, Simonson said. On one hand, the government is giving them money to restore lending, but they have to be prudent. Examiners are looking at all the bad debt from real estate and construction loans, he said.

Simonson said the Fed's stimulus package is saving some contractors from going out of business and saving construction jobs. He expects more of that money to show up in the next several months.

The job situation won't improve this year and the unemployment rate, now at 10.4 percent in Southern Nevada, will rise both nationally and locally, Schwer said.

"There have been signs of the rate of decline slowing down," he said. "We're using words like 'green shoots,' but at best the recovery begins in the last part of this year and more likely the first of next year for Nevada."

Contact reporter Hubble Smith at hsmith@reviewjournal.com or 702-383-0491.