Southern Nevada will continue to be hampered because Southern California’s economy is expected to remain mired in double-digit unemployment, although there are signs of improvement in the Golden State, which Las Vegas heavily depends on.
Meantime, potentially higher interest rates sparked by the nation’s debt crisis could see consumers paying more for adjustable rate mortgages, outstanding home equity loans and credit cards that carry variable interest rates, all of which could further suppress regional consumer spending.
“All of that money is going to come out of (personal) income, and it’s certainly a threat to places like Las Vegas,” said economic forecaster Jeremy Aguero of Las Vegas-based Applied Analysis.
A report released today by the Los Angeles County Economic Development Corp. points to a rebound in entertainment industry employment, with a boost in filming, advertising, original cable TV programming and increased international trade and tourism driving the numbers.
Los Angeles County’s unemployment rate is expected to be no lower than 11.5 percent next year, which would be down from 11.9 percent in May, but would likely drag on the economic fortunes of the Strip, where tourist visitation remain down from its record highs of 2007 when nearly 40 million people visited Las Vegas.
A June report by UCLA Senior Economist Jerry Nickelsburg noted that job growth will not push California’s unemployment rate below 10 percent until the second quarter of 2013, reaching 9.2 percent by the end of that year.
“If those people are facing double-digit unemployment they’re certainly not going to come here, and they’re not going to spend the money like they used to,” said Alan Schlottmann, UNLV economics professor.
Travel trends between Southern California and Las Vegas have improved. Thirty-six percent of Southern Nevada’s visitors are from California. Half of them are from Southern California, and the vast majority drive to Las Vegas.
The number of flights to McCarran International Airport is rising and vehicle traffic between the two regions has climbed during the past two years, approaching 2007 levels. Yet, visitors spend less than they did at the height of the boom years, and casino play has become increasingly dependent on high rollers who prefer table games rather than slot machines.
“When we look at the economy from 30,000 feet, it is going to look bad.” Aguero said. “When you look at it from a historical perspective, it is better but not good.”