Southern Nevada economy remains flat

While some signs point to mild economic recovery nationally, Southern Nevada has yet to see anything more promising than a slight rise in visitor volume and a possible bottom in residential and commercial property devaluation, local economists said Friday.

The Southern Nevada Index of Leading Economic Indicators ticked up in March to 125.89, compared with 125.78 in February. It's down from 126.69 in March 2009, the Center for Business and Economic Research reported.

Four of the index's 10 categories declined from the previous month and six declined from a year ago. Taxable sales continue to be a drag on the index, dropping 8.1 percent from last year and a "disturbing" 20 percent from the previous month, said Mary Riddel, executive director of the research center at University of Nevada, Las Vegas.

It's difficult to have much optimism about the near-term economic picture for Southern Nevada as the majority of the series comprising the index are either falling or caught in the doldrums, she said.

Other categories weighing negatively on the index are gross gaming revenue, convention attendance, McCarran International Airport passenger counts and the number of gallons of gasoline sold.

Residential building permits increased 28.8 percent from the previous period and nearly 140 percent from a year ago, while commercial building permits increased 13.8 percent for the month and 96.6 percent from the year-ago period. However, permitting levels are roughly 15 percent of what they were during the boom years of 2003 to 2006, Riddel noted.

The economic 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. March's index is based on January data.

The accompanying 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.

Any increase in economic activity is only the result of comparisons to "abysmal" levels from a year ago, said Jeremy Aguero, principal of Applied Analysis, a Las Vegas business advisory firm.

The economy has seen some improvement in the vital hospitality industry, but there has been no improvement in the construction sector and Las Vegas has multiple years of inventory in retail, office and industrial buildings, Aguero said. Office vacancy is at an "unreal" 23.4 percent, he said.

"We can take a deep breath because we survived the recession. Now we've got to survive the recovery, which could be harder for us," Aguero said. "Are those numbers going to bring back 150,000 jobs and bring unemployment under 10 percent? No. Are they going to eliminate the 70 percent of homeowners who are under water or the $26 billion in long-term debt on the Strip?"

The Southern Nevada construction industry is in deep trouble, Riddel said. A separate Clark County Construction Index from the UNLV research center continues to falter, hitting a low of 62.26 in January, down from 72.60 a year ago. Completion of CityCenter megaresort in December resulted in thousands of lost construction jobs.

Las Vegas economic consultant John Restrepo said he's finally seeing some long-awaited improvement in the most critical economic indicator -- job creation. Jobs in Clark County grew by 7,400 from January to February, compared with a loss of 18,000 from December to January, the Department of Employment, Training and Rehabilitation reported.

"This is indeed welcome news," he said. "Hopefully -- and that's the key word here -- this is the beginning of the recovery we have all been waiting for."

Clark County's unemployment rate was 13.9 percent in February, compared with 10.3 percent a year ago, and is probably four to five percentage points higher if workers discouraged from looking for jobs and those forced to work part time are included, Restrepo said.

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