Economy showing some improvement in gaming, lagging in creation of jobs

Southern Nevada's economy is gaining some traction for recovery, though the most important piece of the puzzle - job growth- is still missing, a UNLV economist said.

The Southern Nevada Index of Leading Economic Indicators showed improvement in gaming revenue and visitor volume from a year ago, but total employment dropped 7.4 percent and the unemployment rate remains much higher than the national average at 13.1 percent.

The index rose to 126.38 in January, up from 125.54 the previous month. It's still down from 127.96 in the same month a year ago.

After falling from its peak in 2007, the index has leveled off over the past several months, suggesting that massive job losses experienced in Southern Nevada are beginning to moderate, said Mary Riddel, economics professor at University of Nevada, Las Vegas, and interim director of the Center for Business and Economic Research.

"That said, it does not suggest a rosy employment picture," Riddel said in an interview Monday. "The thing I try to tell people is we need to get a better idea of what recovery means, and it doesn't mean a return to 2007. It appears we've reached our carrying capacity."

Improved performance in convention business, tourism and construction is necessary before the local economy can add more jobs, she said.

When the economy does recover, it's not going to be "all-out population and job growth," she said. It's going to be at a more moderate pace.

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. January's index is based on November 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.

The construction sector, conventions and taxable sales continue to drag the index down.

Residential building permits dropped 38.4 percent in November to 299, while commercial building permits stayed flat at 20. Compared with a year ago, residential permits are up 1 percent, commercial permits down nearly 60 percent.

Convention attendance rose 25.3 percent to 437,864 during the month, but is down 13 percent from a year ago. Taxable sales fell 10.7 percent from a year ago to $2.26 billion in November.

John Restrepo, principal of Restrepo Consulting Group and chairman of the Nevada Economic Forum, said job growth is a key indicator and the job market remains weak.

"We're not going to see a big bump in employment," he said. "Until we see sustainable job growth, and by that I mean six months or more, we cannot say the recession is over here."

Consumers are changing their spending habits, saving more than they have in the past, which is a double-edged sword for Las Vegas in terms of leisure travel spending, Restrepo said.

Taxable retail sales in Southern Nevada dropped to $25.9 billion through November last year, down from about $35 billion in 2008 and $36.4 billion in 2007.

Las Vegas had a good run from 1995 to 2007, but those days are gone, Restrepo said.

"The party's over. Now it's the hangover," he said.

SOUTHERN NEVADA INDEX OF LEADING ECONOMIC INDICATORS

Latest month Year ago % change

Total Employment 833,000 899,700 -7.4

New residents 4,311 4,656 -7.4

Unemployment rate 13.1 8.7 --

New-home sales 477 642 -25.7

Existing-home sales 4,346 2,988 +45.4

New home median price $216,854 $244,090 -11.2

New-home permits 355 168 +111.3

Commercial permits 16 23 -30.4

Gaming revenue $750.8 mil. $702.6 mil. +6.9

Visitor volume 3.16 mil. 3.13 mil. +0.8

McCarran passengers 3/23 mil. 3.23mil. +0.1

Taxable sales $2,26 bil. $2.53 bil. -10.7

SOURCE: Nevada Employment Security Division, Home Builders Research, UNLV Center for Business and Economic Research, Nevada Gaming Control Board, Nevada Department of Taxation, Nevada Department of Motor Vehicles and Public, Safety. Some percentages are rounded.

LAS VEGAS REVIEW-JOURNAL

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