Economic Recovery in Las Vegas to Take Another Two Years

In a new report, economists at the Center for Business and Economic Research (CBER) at UNLV forecast that Southern Nevada's economy won't improve for another two years. CBER director Keith Schwer says that the area is harder hit than most in the country simply by the nature of its "one-industry, consumer-based system," which is experiencing a slump in the housing and construction sectors, an unemployment rate above the national average, and a decrease in visitors to Las Vegas.

"Southern Nevada's economy is dependent upon discretionary spending," Schwer says. "In an economic downturn, that's the first type of spending that will be cut back. We need to be prepared for a sharper downturn that you might ordinarily expect in other more diversified economies. Las Vegas is a destination resort, so the critical factor for our economy to recover quickly would be a global economic rebound and then the U.S. economy picking up."

CBER's findings include:

- Construction will be slow and unemployment will likely increase, causing more foreclosures. Unless population growth occurs, a slump in the Las Vegas housing market could continue until 2011.

- The opening of new hospitality properties will create jobs; however, until consumers are confident about their job prospects, they will remain cautious about spending on discretionary items such as leisure travel.

- Leisure and hospitality properties will market low-cost packages in the form of room and entertainment deals. As such, the tourism industry is expected to begin to recover before the housing market, but it will not be enough to improve hotel and casino revenue streams in the short term.

- Further job losses are expected in the construction, housing and tourism industries even when the economy picks up.

Source: Hospitality Design Magazine