Monday’s announcement that the economy has spent 2008 wallowing in recession didn’t surprise local researchers or business owners.
The data sets differ, but the conclusions match: Using Nevada-specific markers such as statistics on consumer spending and statewide unemployment, local economists say the Silver State has struggled with recession even longer than the rest of the nation.
Jeremy Aguero, a principal in Las Vegas research firm Applied Analysis, pegged the start of Nevada’s economic shrinkage to 2007’s fourth quarter, right before the nation’s slump began.
Nevada beat the nation to recession because of its reliance on retail and home-building — the two key sectors that drove the country into its tailspin.
“Our economy was uniquely positioned to take advantage of the run-up in consumer spending and construction activity between 2003 and 2007, and now, it’s uniquely positioned to get hit by the downturn in those areas,” Aguero said.
Nevada suffers along with other high housing flyers of the last half a decade, most notably California, Arizona and Florida. While Nevada’s reliance on construction and discretionary income means the Silver State has it worse than much of the rest of the country, the state “is not alone by any stretch” in bearing the contraction’s brunt.
Among the local business owners feeling the recession are Joe Hules and his daughter-in-law, Cathy Hules. The two co-own SavvyLux Furniture and Design at 2000 S. Rainbow Blvd. SavvyLux opened in September, but the store isn’t the Huleses’ first foray into furniture. The family owned two local Thomasville Furniture stores until earlier this year, when both locations closed. Cathy Hules said the family noticed a slowdown in traffic and sales as far back as September 2006. The Huleses have been using the “R” word for months, she added.
“You only have to go up and down the street to see the vacancies, not only in the homes, but in the businesses that have closed up,” Joe Hules said. “I would say people weren’t paying attention if they couldn’t see it (the local recession).”
As the city’s housing woes intensified, business for the Huleses continued to dip through 2007. They swapped the Thomasville stores for SavvyLux, where, thanks partly to independence from selling for a single manufacturer such as Thomasville, the family can charge 20 percent to 50 percent less than they asked for furniture at their former operation.
“We thought coming back with better pricing and the same family atmosphere, staff and customer service we did so well with for 10 years would be a no-brainer, but we opened at the worst possible time,” Cathy Hules said.
That opening, in mid-September, came as big banks and insurers began to fail and the federal government proposed a $700 billion financial-sector bailout. Consumers would come in to look at sofas and dining sets in those first few weeks, but they wouldn’t buy, partly because they weren’t sure they could get credit for major purchases, Joe Hules said.
The recession’s roots extend back long before September’s financial turmoil, though, and granting the downturn official status and dating its origins can affect consumer and business behavior.
Acknowledging that the nation is in a recession can give consumers the jitters and further alter their spending patterns. But most consumers and businesses have known for some time that the economy has been retracting, so though Monday’s news might pose a “continued chilling effect,” it shouldn’t stun shoppers and business owners into inaction, Aguero said.
In fact, the flip side of Monday’s announcement is hope that the retrenchment could soon end. Based on analysis from the National Bureau of Economic Research, the economy is 11 months into its contraction. It’s anyone’s guess how long the slump will endure, Aguero said, but modern-day recessions typically haven’t lasted more than one or two years. Word that the recession is already almost a year old could hearten businesses and consumers looking for a potential upturn.
David Huff said he’s braced for a slump.
Huff’s Las Vegas company, Huff Commercial Interiors, experienced an off year in 2007, but 2008 brought an increase in sales. Looking past the first quarter, business seems poised to slacken.
To prepare, Huff eliminated his annual advertising budget of $5,000 to $10,000. He won’t expand his staff of 10 unless he finds a truly exceptional job candidate. And the annual office Christmas party will move from a restaurant to Huff’s home, with employees bringing potluck dishes.
“We’re moving cautiously, but we’re confident that we will survive,” Huff said. “Next year may just be one of those years where we revert back to an off year like we had in 2007.”
The Hules family expects to make it through the recession as well.
Cathy Hules said the last two weeks have brought in more customers asking for whole-home make-overs, and Joe Hules said he’s spotted growing interest in SavvyLux’s custom home theaters. He said he sees pent-up demand for new furniture, and he also hopes the incoming presidential administration will develop ideas to spur the economy.
Until the economy turns around, they’ll keep SavvyLux’s staff at nine, down from the 14 they’d otherwise have.
“We’re hoping we have such a great concept of a store and a product that we can ride it out,” Cathy Hules said. “It’s kind of a waiting game, but I definitely have faith that it’s going to get better.”
Contact reporter Jennifer Robison at firstname.lastname@example.org or 702-380-4512.