A modest economic recovery under way in Southern Nevada will get stronger in the second half of this year and continue its gains in 2012, according to an assessment released today by UNLV.
The Center for Business & Economic Research at its mid-year outlook event today at the Venetian said visitor volume, gaming revenue and personal income will continue rising this year and into next year. The unemployment rate will also decline slightly but job creation will remain weak, according to the report from UNLV Economics Professor Stephen Brown and his staff.
Brown said Las Vegas will be aided by the recovery of the national economy even though there are concerns about weak consumer spending and growth. The bright spot is the improvement of the economies in western states that funnel visitors to Nevada such as California, Colorado, Arizona and New Mexico, Utah, Washington and Oregon, he said.
“The good news is that the Nevada economy is finally moving in the right direction about 18 months after the U.S. economy began its recovery,” Brown said. “And with economic conditions improving in the West, we can expect to see moderate improvements in Nevada and Southern Nevada economic conditions in 2011 and 2012.”
The report predicts Las Vegas should end the year with 38.7 million visitors, up from 37.3 million in 2010, a 3.7 percent increase. That number should grow a similar amount to 40.1 million in 2012.
As for gross gaming revenue, those gains are projected to be more modest from $8.9 billion in 2010 to $9.04 billion by the end of 2011 because visitors will show up with less money to spend, Brown said. That increases to $9.3 billion in 2012, a 2.8 percent increase to put it more in line with visitor increases, he said.
But even with the increases, Brown said the hospitality industry will continue to see the effects of excess capacity during all but the busiest times of the year.
Personal income of Southern Nevadans will be at $73.8 billion to end 2011, up from $71.9 billion a year earlier. That increases 3.3 percent to $76.3 billion in 2012, Brown said.
Job growth, meanwhile, will remain muted despite gains in visitors, gaming revenue and personal income.
The report predicts the jobless rate will average 11.9 percent for the year after surpassing 15 percent in 2010. It was 12.1 percent in April. That number will decline to 10.6 percent for an average in 2012, the report said.
“Although the early part of 2011 showed robust employment growth, Southern Nevada will likely see fairly slow employment growth over the next few years,” Brown said.
As for the real estate industry, Brown said prices in the housing and commercial real estate sector won’t be rising soon. Even though existing home sales are up, there’s too much excess supply and not enough demand to push prices up, he said.
Brown predicts Las Vegas will end 2011 with 5,304 home permits issued, down from 5,577 in 2010. That number should increase to 5,385 in 2012, he said.
Neither real estate nor construction will be able to boost the economy, he said.
“Because the Southern Nevada economy is heavily dependent on tourism, its outlook is tied to the growth of the U.S. and western states’ economies,” Brown said. “Southern Nevada can’t look to real estate or future diversification for its economic growth right now.”