Report: Las Vegas on road to recovery

Las Vegas is an economic cellar dweller no more.

That's the word from the Brookings Institution, a Washington, D.C., think tank that released a report ranking the world's 300 biggest cities by growth in jobs and gross domestic product between 2011 and 2012.

"Las Vegas should be pleasantly surprised to see the numbers this year. They are looking much more hopeful than they have for the last five years," said Emilia Istrate, an associate Brookings fellow and lead author of its Global MetroMonitor. "We see a rising standard of living and job growth. That's a glimmer of hope that shouldn't be underestimated, especially after a long-term downturn. Las Vegas still has a way to go to recover to pre-recession levels, but it is on the way, and we've seen very good signs."

Despite improvements, Las Vegas remains mired midpack in economic expansion.

For growth in employment and real GDP, Las Vegas ranked No. 194 out of 300, behind cities such as Monterrey, Mexico; Oklahoma City, Okla.; Bakersfield, Calif.; and Ottawa, Ontario. The local jobs base gained 0.6 percent, and per capita real gross domestic product grew 1.1 percent. Las Vegas now has a jobs base of 829,000, and per capita annual GDP of $47,100, the report said.

If the city's rank doesn't impress you, consider that Las Vegas was No. 245 a year ago, which means the city crept up from the bottom tier of performers into the second-lowest level. What is more, Las Vegas advanced because it posted its first GDP growth in five years.

Among U.S. cities, Las Vegas placed 46th out of 76, faring better than economic heavyweights such as Chicago, Minneapolis and Washington, D.C. It's a far cry from 2010, when Brookings anointed Las Vegas the world's fifth-worst economy. In its toughest economic year of 2009, Las Vegas ranked No. 298, with both its employment base and GDP contracting by 9.2 percent. Only Tel Aviv, Israel, and Valencia, Spain, did worse. Even Detroit rated higher, at No. 297.

Especially impressive today, said Istrate, is that local growth from 2011 to 2012 happened in a slowing global economy. The Las Vegas economy is now expanding faster than it's attracting people, which means "the economic pie per resident is getting bigger and the standard of living is going up," she said.

Istrate credited the city's recent gains to two factors: a surge in Southern Nevada's travel and tourism industry, which accounts directly or indirectly for about 45 percent of all jobs here, and a below-average GDP that, because of its smaller base number, can show above-average percentage gains when it grows.

Brookings' analysis rings true to Steve Brown, director of the Center for Business and Economic Research at the University of Nevada, Las Vegas. The center includes in its analysis other indicators, such as building permits, retail sales and visitor volume, but its numbers also show growth in Southern Nevada.

"The economy here is improving, albeit pretty slowly," Brown said.

Brookings' study noted that recovery here is incomplete, and it wouldn't be wise to downplay the fragility of economic revival locally and around the world. The eurozone is "failing," and growth in developing countries has slowed, Istrate said. Those factors are likely to stay in play, at least in the near term. Prolonged debate over the fiscal cliff can only worsen things here and abroad, Istrate added.

Those short-term issues won't necessarily hurt Las Vegas in the long run, though, and today's anemic growth should pick up in coming years, Brown said. The downturn stopped national population migration in its tracks, as consumers lost their jobs and home equity and, as a result, their ability to move.

As the economy gains steam, the population will renew its pre-recession shift from East to West, and Las Vegas, with its bargain-basement housing prices, stands to benefit, Brown said.

Even without dramatic population growth, Las Vegas - which ranked No. 26 in the world for GDP and employment growth from 1993 to 2007 - can work its way up the MetroMonitor, Istrate said.

First, it needs a more educated workforce to diversify its economy beyond travel and tourism. Second, Las Vegas officials need to connect economically, beyond gaming, with cities across the country and globe.

City officials and business executives in Los Angeles put together a strategy to boost exports and market the area as a global business brand, Istrate said. Portland, Ore., is looking to help small and midsized manufacturers export more, particularly in computers and electronics.

There are nascent efforts in Nevada to approach economic expansion in similarly targeted ways. Gov. Brian Sandoval launched the Governor's Office of Economic Development in late 2011 to focus on growth in seven sectors, including gaming, mining, aerospace, manufacturing and information technology.

"Cities' strategies are quite varied, and are based on their strengths and weaknesses," Istrate said. "But it comes back to the basics. You have to take care of what you have to offer, and you have to take care of your human capital and make sure your people are educated."

If it finds the right approach, Las Vegas could continue to improve against the world's cities. Today's top 50 growers span the globe, from developed and developing regions. That means most cities have a shot at above-average expansion.

"There is no silver bullet," Istrate said. "This kind of growth can happen anywhere."

Just three U.S. cities - Dallas, Pittsburgh and Knoxville, Tenn. - have completely recovered from the recession, the MetroMonitor found. At No. 40, Houston was the highest-ranked U.S. city in the report.

Six U.S. cities ranked among 56 worldwide "pockets of growth" that outperformed their countries in GDP and job creation. They were Boston; Detroit; Salt Lake City; Seattle; San Jose, Calif.; and Worcester, Mass.

In all, the 300 biggest cities accounted for 19 percent of the world's population but nearly half of its economic output.

Contact reporter Jennifer Robison at jrobison@review journal.com or 702-380-4512. Follow @J_Robison1 on Twitter.