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Expert: South Nevada Economy to Rebound Slowly

LAS VEGAS --Southern Nevada's gaming industry-dependent economy has begun to rebound, but probably won't be as robust in the next year and a half as local business people have been accustomed to.

Keith Schwer, director of the Center for Business and Economic Research at the University of Nevada, Las Vegas, said most of the region's leading economic indicators will be flat or inch slightly ahead of current trends through the end of 2003.

Schwer and his UNLV colleagues offered the analysis in the center's Midyear Economic Outlook, presented Thursday.

"If you had to put our outlook on a bumper sticker, it would read: 'We're back,' " Schwer said in his conclusion on the state of the local economy.

While Schwer is convinced the Southern Nevada economy has turned the corner from the disastrous effects of the Sept. 11 terrorist attacks, he cautioned growth would be slow compared with the boom periods of the early to mid-'90s.

But that, he said, could be a good thing because growth in the 2-3 percent range would be more sustainable than the rate of growth that occurred nearly a decade ago that, in some categories, hit double-digit percentage increases.

"This is very encouraging," said Wayne Carsburg, senior vice president of retail banking at Colonial Bank, one of the event sponsors. "It shows that this part of the world always seems to bounce back from adversity before everyone else."

Carsburg said he was somewhat surprised that Southern Nevada's employment outlook was better than what most people expected.

Clark County's employment statistics are on the rise after three consecutive years of decline. Job growth fell from 7.6 percent in 1999 to 5.5 percent in 2000, 3.6 percent in 2001 and 2.8 percent this year. But Schwer is projecting job growth to hit 3.2 percent in 2003.

"The slowing U.S. economy has affected tourism throughout the United States," Schwer said in a report issued at Thursday's event. "Even before September, the bursting of the high-tech bubble coupled with declines in manufacturing tipped the (national) economy into recession. Rising unemployment means falling income and less money allocated to travel.

"This affects Las Vegas not only through stunted tourism growth, but also through the business travel market. Fewer visitors means slower job growth as casinos tighten budgets."

Schwer said another cause of the slowdown in growth is that no new megaresorts will open in Las Vegas in the next two years. About 3.6 jobs are created for every new room added to the city's inventory, Schwer said -- about 1.6 jobs by the resort and two more in other sectors to support those positions.

Schwer forecasts the number of hotel rooms in Southern Nevada will increase from 128,138 at the end of 2002 to 130,728 at the end of 2003. He said the only resort growth on the horizon are the opening of the Ritz Carlton at Lake Las Vegas and an expansion at the Orleans hotel-casino, both scheduled to be ready in late 2002.

New resort openings also tend to generate new tourism enthusiasm, he added, so Schwer is only projecting a 1.8 percent increase in visitor volume, from 35.3 million tourists in 2002 to 36 million in 2003. Southern Nevada's gross gaming revenue, he said, would increase during that period from $7.7 billion in 2002 to $7.9 billion the following year.

Other forecasts on leading indicators: Population is projected to increase from 1.5 million people at the end of 2002 to 1.6 million at the end of 2003; total personal income would increase from $47.2 billion in 2002 to $49.9 billion in 2003; and the number of new housing permits issued would decrease from 30,499 in 2002 to 29,431 in 2003.

The decrease in the number of housing permits forecast is more a reflection of the rampant growth in housing starts in 2001 than a drop of demand this year, he said.

The dark cloud hanging over the travel industry will continue to be the threat of terrorism, he warned. A new terrorist attack anywhere in the United States could spell disaster for the Las Vegas economy. He also cited danger for the local economy if the nation enters a war or if U.S. energy supply sources fall into unfriendly hands.

Schwer also said the effect the terrorist attacks had on Las Vegas makes it clear that Nevada must diversify its economy and not be overly dependent upon the fragile tourism industry.

Schwer also warned Nevadans will face some long-term economic and quality of life problems if they don't address health-care cost issues and state and local government fiscal problems.

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