A new report from a national think tank sounded both positive and negative notes for the Las Vegas economy.
The Brookings Mountain Monitor, a study that tracks quarterly economic changes in Nevada, Arizona, Colorado, Idaho, New Mexico and Utah, found that parts of the local economy are improving faster than the economies of regional peers, though sustained soft spots are reining in bigger gains.
On the upside, Las Vegas finished in the top 40 percent in the region for overall recovery. The city’s improvements outpaced those of cities such as Phoenix, Denver and Salt Lake City.
Dropping unemployment and rising economic output drove the uptick.
Joblessness in Las Vegas fell 1.5 percentage points year over year in the second quarter to 13.8 percent, the third biggest drop among the nation’s 100 largest cities, Brookings said. The city posted a 0.4 percent increase in employment from the first to the second quarter, for a second straight quarter of job gains.
And gross metropolitan product, which measures the total value of goods and services produced in a city, jumped 1.1 percent from the first quarter to the second quarter. That improvement ranked No. 3 among the 100 largest cities, considerably outpacing the 0.3 percent quarterly gain among the 100 biggest cities. Regionally, cities including Phoenix and Tucson failed to grow gross product in the quarter.
But an “anemic national recovery” is dragging down improvement potential in every regional economy, even in traditionally resilient cities in Colorado and Utah, Brookings said.
Also, unemployment in Las Vegas remains 7.5 percentage points above readings in the second quarter of 2008, the worst joblessness increase among the 100 biggest cities. The city’s unemployment rate is the sixth worst in the country. At its current job formation rate of 0.3 percent per quarter, “recovery will be agonizingly slow,” the report said.
And though local gross metropolitan product jumped significantly from quarter to quarter, its 1.4 percent gain from a low point in the fourth quarter is well below a 5.8 percent jump nationally, and ranks No. 91 out of the top 100 cities. The Las Vegas economy was 12.8 percent smaller in the second quarter than it was at its pre-recession peak. That’s the biggest drop by far in the region, with No. 2 Phoenix’s economy falling off 7.3 percent from peak to trough.
Nor does the real estate market seem poised to boost the local economy. On top of falling 64.5 percent from their apex in the fourth quarter of 2006, housing prices in Las Vegas dipped 20 percent year over year in the second quarter — the worst performance in the region. Plus, the city’s stock of foreclosures rose, an ominous sign after a year’s worth of inroads against its overhang of bank-owned properties, the report said.
Perhaps worst of all, overall economic growth across the Mountain West has “stagnated in the wake of the nation’s worst economic slump since the Great Depression,” the report added.
Brookings officials didn’t comment Wednesday but a local researcher said the report matches what he sees.
“Absolutely, uncertainty within the United States economy is impacting Southern Nevada,” said Jeremy Aguero, a principal with consulting firm Applied Analysis. “It is certainly slowing what our economy otherwise would have done. It’s encouraging businesses to sit on the sidelines.”
However, economic torpor isn’t equal across all industries, Aguero said.
The tourism sector is growing nicely, adding 15,200 jobs since it bottomed out in late 2009, he said.
Hotel employee counts dropped from 1.4 per room before the recession to 1 per room during the downturn, but have rebounded to 1.2 per room. Jobs in health care and professional services have grown as well.
However, as long as drops in construction and government jobs offset gains elsewhere, broader measures will lag, Aguero said. That slower overall growth should pick up at some point, though it’s tough to say when.
“Companies have been trying to produce more with less for a long time. Now, at least there’s some belief that they have to add more employees,” he said. “That should take us from a jobless recovery to a recovery with jobs eventually.”
Contact reporter Jennifer Robison at jrobison@review
journal.com or 702-380-4512.
year over year, third biggest drop among nation’s 100 biggest cities
above the 2008 rate, the worst drop among 100 biggest cities