Business Indicators - July 2002

Business Indicators

by R. Keith Schwer

Current unemployment rates remain higher than year-ago levels. Though down from earlier highs, Nevada’s latest unemployment rate is at 5.5 percent compared with 6.0 percent for the U.S. The outlook is for no quick return to rates in the 4 percent range. Prospects for a weakened U.S. dollar, sluggish corporate profits, and no near-term return to past levels of business spending have many talking about slow growth without improvement in employment, a situation reminiscent of the early phase of the last expansion in the early 1990s.

Other Nevada indicators also performed below year-ago levels. Visitor volume, gaming revenue, sales tax collections and air-transit passengers all dropped from year-ago levels for Nevada, Las Vegas and Reno. Residential and commercial permits also dropped by double-digit rates during April for both Washoe and Clark Counties. Still, these are comparisons using monthly data suggestive of a sluggish recovery, but recovery nonetheless.

Strong consumer expenditures and business spending to replenish depleted inventories have softened and shortened the 2001 - 2002 slowdown. The latest auto and truck sales are up, housing sales are down from the high levels of last year (but still strong by historical standards) and retail sales are above year-ago levels even after price-level adjustments.

Attention during the summer months should focus on the currently weak sectors. At this time there are no clear signs of a return to the robust growth of the late 1990s. Still, having enjoyed a period of sustained prosperity, slower growth is not unexpected. In addition, having faced the shock of terrorism, the economy seems on course to repair previous mistakes and current shortcomings. All in all, we expect slower but continued growth.