Economic indicators rise slightly from April to May

The Southern Nevada Index of Leading Economic Indicators showed a slight uptick in May, but it's still down 3.2 percent from a year ago, a UNLV economist reported.

Led by improvements in gross gaming revenue and taxable sales, the index climbed to 126.83, compared with 126.09 in April and 130.80 in May 2008. Seven of 10 data series rose, adjusted for seasonal variations.

Separate indexes for Clark County business activity and tourism also turned up modestly for May, while the construction index posted another monthly decline.

The evidence, though meager at this point, suggests some improvement ahead, said Keith Schwer, director of the Center for Business and Economic Research at University of Nevada, Las Vegas.

"There's all kinds of people willing to draw conclusions," he said. "Nevada's worst recession since the 1930s is far from over, but perhaps it is coming to an end. It looks like we stopped falling."

Las Vegas doesn't have much in the way of "green shoots" referenced by Fed Chairman Ben Bernanke, but perhaps there are signs of "desert flowers" here, Schwer said.

The index must reach a clearly defined bottom and start trending up before there's any assurance that the economy is on the road to recovery, he said.

The data for May's index showed month-to-month increases of 24.5 percent in taxable sales, 20 percent in airport passengers, 12 percent in visitor volume and 10.7 percent in gaming revenue, though all of those figures are down from the same month a year ago.

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. May's index is based on March 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.

One event that will have a major impact on both state and local economies is the passage of the largest tax increase in Nevada's history, John Restrepo of Restrepo Consulting Group said.

The tax package approved by the Legislature is nearly $1 billion, with historic reforms to public employee benefits, improved level of transparency in the collective bargaining process and a revamp of the state's "rainy day" fund formula.

"These are all good things for the Southern Nevada economy," Restrepo said. "Some will say, 'Taxes are never good during a recession.' However, if you look at historical data, generally speaking, they're less harmful to a struggling economy than deep cuts in services. The nature of the current recession does not make it possible to cut our way to prosperity."

A quarterly survey of local executives by the UNLV economic research center shows that they believe things will remain unsettled. Most do not see a substantial change for the current state of affairs, suggesting continued weakness ahead.

Schwer will present his Midyear Economic Outlook on June 23 at The Mirage Grand Ballroom. Register online at www.cber.unlv.edu or call 895-3191. The cost is $80.

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