Indicators plummet to ’07 low
The downturn in Las Vegas’ real estate market, combined with a 5.4 percent decline in gaming revenue for August, dragged the Southern Nevada Index of Leading Economic Indicators to its lowest level of the year.
The October index, based on August data, dropped to 132.67, with six of the 10 series contributing negatively. Its down from 133.46 in September, but remains slightly higher than a year ago. The index has relinquished its gain from the beginning of the year, when it stood at 132.98.
"The Las Vegas economy in August performed at less than a stellar rate," economist Keith Schwer of the Center for Business and Economic Research said.
The index, compiled by the research center at University of Nevada, Las Vegas, is a six-month economic forecast from the month of the data, based on a net-weighted average of each series after adjustment for seasonal variation.
The accompanying Review-Journal 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.
Schwer, who will give his semiannual Economic Outlook on Dec. 18 at the Las Vegas Convention Center, said he’s more worried about the national economy than the local economy.
"We’ve seen weakness, but we have not seen a sharp dropoff," he said. "There seems to be more risk, more uncertainties for the national economy. We know what’s happening here. We’ve got 35,000 to 40,000 rooms on the way and we can see construction on the Strip."
So far in 2007, the economic index declined for only two months compared with last year on a month-to-month basis, Schwer noted.
"As such, the index movements are not sufficiently strong on the expansion or contraction side to confirm a change from the modestly performing state of affairs of the past year," he said. "The story is that the weakness in housing has yet to take the Las Vegas economy down and the outlook over the next months is for more of the same lukewarm performance."
Residential building permits continue to plummet by more than half and commercial permits are off nearly 20 percent. Taxable sales fell 5.2 percent in August.
Still, Southern Nevada is adding more than 6,000 new residents a month and employment is growing by 1.4 percent. The rate of population and job growth has slowed, but most economists still see them as strong indicators for the local economy.
Schwer said 2008 won’t be a banner year, but he does see things turning around in 2009.
Housing has "taken a bite out of the robust expansion" of the past few years, he said.
Nevertheless, construction employment remains steady, losing just 1,700 jobs from last year. Also, the number of out-of-state driver’s licenses being turned in reflects continued growth in new residents.
Contact reporter Hubble Smith at hsmith@reviewjournal.com or (702) 383-0491.
