Business Indicators - September 2002

Business Indicators

by R. Keith Schwer

The decisions of households and businesses push and pull the economy along a path of expansion and contraction. As such, our indicators, although they have proved useful in the past, may seem to be a list of ingredients for a recipe in which something has been left out. Most recently, economic indicators foretell a short recession with a strong recovery. To be sure, the basic recipe for economic recovery from the 2001 recession seems in place; however, the confidence for a strong recovery dropped measurably following a rash of arrests for accounting scandals. Our list of indicators falls short for lack of crime data. Though one cannot predict the end of this round of misdeeds, it is highly likely that the most adverse impacts are over. All in all, recovery continues, but at slower rates of expansion than many predicted only a few months ago.

Among the economic indicators not directly influenced by the current turmoil of confidence, the GDP for the first quarter of 2002 has been revised downward. Downward revised figures for the first quarter and slower second-quarter growth (0.3 for the quarter, or an annualized compound rate in excess of 1.2 percent) still send a signal that momentum should keep the recovery underway. Retail sales, up by 3.4 percent over year-ago levels, and housing starts, up by 2.4 percent over year-ago levels, reveal consumer spending, the largest component of GDP, on a strong upward trend.

Nevada indicators generally show a weaker economy when compared with year-ago indicators. Indicators showing declines from year-ago levels include visitor volume (-1.5 percent), airline passengers (-7.4 percent), gaming revenue (-8.0 percent), and taxable sales (-19 percent). Though taxable-sales collections declined by a relatively small percentage, June gaming revenue is down substantially. Nevada, along with more than 40 other states, finds its state fiscal conditions weakening. Some major Southern Nevada casino properties have earning losses, for periods adversely affected by Sept. 11 and the national recessions. Still, the most recent data for these four indicators show improvement. Generally, improving national and regional economies have helped put Nevada back on an upward trend, albeit at slower rates than many might want. In short, Nevada is recovering from the economic recession and the reduced demand for travel following the terrorist attacks.