The Center for Business and Economic Research at the University of Nevada, Las Vegas recently released data that found those three industries in Southern Nevada are expected to take at least two years to recover from the current economic recession.
CBER Director Keith Schwer said it will take longer for Southern Nevada to recover than the rest of the nation, because the Las Vegas economy is a one-industry, consumer-based system that is experiencing a decrease in the housing and construction industries, an unemployment rate higher than the national average and a decrease in visitors.
“Southern Nevada’s economy is dependent upon discretionary spending,” he said. “In an economic downturn that’s the first type of spending that will be cut back. We need to be prepared for a sharper downturn that you might ordinarily expect in other more diversified economies.
“Economic diversification is one of the recommendations from this report,” Schwer added. “Las Vegas is a destination resort so the critical factor for our economy to recover quickly would be a global economic rebound and then the U.S. economy picking up.”
In particular, the report found that the construction industry will continue to be slow and unemployment will most likely increase, causing more foreclosures. That means unless population growth occurs, a decrease in the Las Vegas housing market could continue through 2011.
On a good note, the opening of new leisure and hospitality properties will help create jobs. However, until consumers are confident enough about their job prospects, they will remain cautious about spending money on things like leisure travel and tourism. Because of this, the tourism industry will market low-cost packages, which help the industry begin to recover, but won’t be enough to improve hotel and casino revenue streams right away.
And even after the two year lag, further job losses are expected in the construction, tourism and housing industries, a trend that is noticeable in current job data.
For instance, during May, the Las Vegas-Paradise area’s construction industry employed 78,900 workers, according to the United States Department of Labor Bureau of Labor Statistics. This is down from 80,000 workers during April and a 17.3 percent decrease from last year. At the same time, the leisure and hospitality industry employed 257,300 workers during May, down from 257,400 workers during April and a 6.3 percent decrease from last year.