Brookings: Las Vegas remains mired in economic malaise
VEGAS INC coverage
Southern Nevada could look to Salt Lake City, Provo, Denver and Colorado Springs, Colo., as models of diverse economies. The four are among the strongest in the region despite the three-year recession, with their increased dependence on health care, high technology, manufacturing and overseas exports.
The quartet have experienced shallower declines in jobs and economic output lost from the economic heights of 2007, according to a report Tuesday from Brookings Mountain West.
Each had “enough diversification to insulate against the worst carnage of the crash,” said Mark Muro, co-director of the UNLV-based research center.
Brookings’ six-state Intermountain West includes two distinct economies: those that are diversified as opposed to the real estate-dependent economies of Las Vegas, Phoenix, Tucson and Boise.
“I find one of the most staggering take-aways is just the scale and duration of the trough,” Muro said of Southern Nevada.
Las Vegas, Phoenix, Boise, Tucson and Provo-Orem sustained the largest declines in employment from the economic peak of 2007 through the end of March. Las Vegas recorded the largest regional decline in economic output for the period, an 8.5 percent decrease. Salt Lake City produced the greatest growth, up 8.3 percent, with the Ogden region coming in second at 4.6 percent.
“The massive economic shock of the housing bust and the financial and credit crises exposed in certain metros precarious structural dependencies on certain sectors: housing in Las Vegas and Cape Coral, Fla., auto manufacturing in Dayton (Ohio) and Detroit. Recovery in these metros is proving especially slow,” reads the report.
In Nevada, 4,000 jobs were created during the first quarter, according to figures Brookings gleaned from Moody’s Analytics. The Las Vegas unemployment rate declined 1.8 percentage points to 13.3 percent during the quarter, according to state figures, but the numbers were largely driven by the departure from the market of frustrated job seekers. The Nevada employment market bottomed out during the winter.
“The two toughest economic challenges facing the nation in the wake of the Great Recession — how to translate output recovery into jobs and how to shake the burden of a depressed housing market — loom supersized over the 10 metropolitan areas of the Intermountain West,” reads the report. “Welcome progress was made toward recovery in every one of the region’s metros in the first quarter of 2011, but the pace was uncertain and the jobs picture clouded by continued troubles in housing market and the threat of further public-sector layoffs.”
Fifty-three percent of all Las Vegas employment is in real estate, gaming, food and drink, the largest percentage for any major U.S. city. Other major cities in the Intermountain West are 10 to 20 points lower. “You have placed a substantial bet on that segment,” Muro said.
Consumer spending generates about 70 percent of the nation’s gross domestic product, a significant portion of which is driven by the real estate market and its broad ripple effect.
“It is important not to minimize the scale of the trough that the nation and region are in, and the special nature of real estate-finance recessions, which are the most difficult to work through and present the specter of the lost decades if you look through American history,” Muro said. “We’re approaching half a decade of severely depressed economic life in Southern Nevada.”