Business Indicators - September 2003

Business Indicators

by R. Keith Schwer

The National Bureau of Economic Research, the official arbitrator on dating the business cycle, has declared that the recession that began in March 2001 is over. The U.S. economy is now expanding. Nonetheless, the long wait to make this declaration reveals that the current expansion is weak.

Overall, the economy declined from March 2001 to November 2001. After reaching the trough, the economy has shown a lack of a noteworthy rebound. Indeed, the U.S. labor market has not recovered from the recession – unemployment rates are up in comparison with the late 1990s, employment levels remain below the peak of March 2001, and increasingly, discussion turns to the loss of jobs to foreign competitors. For those who remain employed, however, productivity growth and strong consumer spending have kept wages growing.

Not all regions of the U.S. have experienced the recovery. For example, regional economies with an exposure to the downturn in technology sectors generally continue to perform weakly. Overall economic conditions in the Silver State, however, remain better than the national average. For one, employment is growing in both Reno and Las Vegas, up 0.7 percent and 1.5 percent, respectively, measured over year-ago levels. For another, Nevada taxable sales are up 5.3 percent for the latest month, measured over year-ago levels.

Still, not all sectors of the Nevada economy have shared in the recent expansion. Gaming revenue, for one, is down 4 percent measured for April of 2003 compared with the same month a year ago. To be sure, part of this weakness is a fallout of the Iraqi War.

Without marked improvement in the U.S. business outlook, Nevada faces an outlook for modest growth. A continuation of U.S. growth, even if modest, will be required to give the Nevada economy needed traction toward better performance ahead.