Report hints at sunnier outlooks

A new report from two local research firms hints at slight improvements in how area consumers view the Las Vegas economy.

The study, which local analysis firms Urban Environmental Research and Strategic Solutions conducted for the Clark County Monitoring Program, could have broad implications for Southern Nevada's economy, because it indicates consumers might soon begin to spend more and businesses could start investing again in growth.

Of 600 locals surveyed by phone in February, 68.9 percent said it was a good time to buy a home in Clark County, up from 57.7 percent a year earlier.

Also, 28.3 percent of respondents expected business conditions to improve in Clark County in the next year, up from 27.6 percent a year earlier.

And 40.4 percent of participants expected their financial situation would brighten in the next 12 months, compared with 36.3 percent a year ago.

Not all the survey's indicators trended upward: The proportion of consumers who classified the local economy as "poor" went from 3.7 percent to 7.6 percent, for example.

But increases in the number of residents who think it's a positive time to buy a home, and who expect more-favorable personal finances in the next year, are at least small indicators that the county's economy could be due for a lift, said Sheila Conway, managing partner of Urban Environmental Research and team leader for the Clark County Monitoring Program.

"The improved results surprised us," Conway said. "I think the findings speak to two different things: One, I think we are starting to bottom out of this downturn, and two, I think there's an underlying resilience in the economy that folks who live here recognize."

The gain in respondents who said it's a good time to buy a home likely came from the decline in home prices, Conway said.

Statistics from the National Association of Realtors showed a 20.2 percent decrease in local home prices in the first quarter when compared with the first quarter of 2007. The median price of a home sold through the group's members was $247,600 at the end of March.

"People are recognizing that, because prices dropped, they are better able to get into homes," Conway said. "Prices are starting to come back into line with incomes."

Upgraded consumer sentiment portends the recent downturn's possible end because financial expectations translate into behaviors that can boost -- or hamper -- an economy, Conway said.

A perception that conditions will stabilize or improve can drive consumer spending and stimulate economic growth.

Also, gauging consumer beliefs helps businesses price goods and services for quicker sale, and consumer outlooks guide staffing and inventory decisions as well. Companies planning for a big sales year might hire more workers, make capital improvements or stockpile more inventory.

The Clark County Monitoring Program, which tracks economic and social changes over time to aid policy discussions, uses the data to evaluate how locals regard areas ranging from quality of life to local government interaction.

Keith Schwer, director of the Center for Business and Economic Research at the University of Nevada, Las Vegas, said the percentage of participants expecting their financial situations to improve "sounds high at first blush." April unemployment in Las Vegas was 5.5 percent, up from 4.4 percent a year earlier, February's taxable sales were down 3.1 percent in Clark County compared with the same month in 2007 and home foreclosures here remain well above the national average.

"Having said that, there's probably been an overreaction of some people thinking we're significantly worse off than we are because of the media's fairly heavy coverage" of the economic slowdown, Schwer said. So it's possible consumers view their personal circumstances more favorably than widespread news reports might lead analysts to expect.

Schwer, who also conducts telephone surveys assessing consumer sentiment, said phone questionnaires have one flaw: They miss consumers who don't have land lines at home and who are reachable only by cell phone, so such surveys don't always reach a cross-section of the community.

Paul Mikkelsen, owner of Vizion Furniture on South Decatur Boulevard, said he thinks the fellow Las Vegans who expect the economy to be good or excellent in the next 12 months are a little too optimistic.

Mikkelsen, who sells Scandinavian and contemporary furniture for the home, said he's still feeling the effects of a sluggish housing market. Wealthier consumers who drop $4,000 to $5,000 or more per shopping spree still come in as often as they did before the downturn in 2007, Mikkelsen said, but buyers who spend $1,000 to $2,000 per trip "have dropped off the face of the earth."

"House values have fallen, and people can't take anymore money out of their homes right now," he said. "Plus, they're concerned about keeping their jobs. People are worried: 'Should we buy or should we wait?' "

The economy in the next year will merely be "fair" because the workers who will move to the city for new resort jobs won't begin arriving until mid-2009, Mikkelsen said.

Nor does Mikkelsen always chart course based on consumer sentiment. Rather than stocking furniture, he orders merchandise upon request.

"Unless I have a body coming through the door, I can't plan anything," Mikkelsen said. "If (consumer confidence) goes down from one month to the next, there's nothing we can do about that, except run a sale."

Contact reporter Jennifer Robison at jrobison@reviewjournal.com or 702-380-4512.