Signs of slow recovery bode ill for Reid’s reelection

By J. Patrick Coolican

Thursday, Sept. 17, 2009 | 2 a.m.

It ought to sing out like a spirited chant or a song-and-dance number: “The recession has ended! The recession has ended!”

Federal Reserve Chairman Ben Bernanke’s announcement to a Washington audience that the recession is finally coming to a close did seem to serve as a rare respite for beleaguered Senate Majority Leader Harry Reid.

Reid, the Nevada Democrat who faces the political fight of his life in his reelection quest next year and needs the economy to improve, quickly celebrated the news: “I feel that Nevada, like the rest of the states in the country, next year is going to see economic recovery,” he told reporters asking about his sagging poll numbers, which show him losing to relatively unknown Republicans.

But there is no dancing in the streets, because even if the recession has technically ended, the recovery looks fragile, weak and jobless, according to economists.

Not Vegas’ kind of recovery

In the typical bloodless language of his profession, Bernanke followed his optimism with this: “It’s still going to feel like a very weak economy for some time because many people will still find that their job security and their employment status is not what they wish it was.”

San Francisco Federal Reserve President Janet Yellen predicted a recovery that would seem to carry all the go-go excitement of a philatelist convention. “I regret to say that I expect the recovery to be tepid.”

Also, “More credit losses are in store even as the economy improves and overall financial conditions ease.”

And, “In the face of high and rising unemployment, delinquencies and foreclosures are showing no sign of turning around.”

Most ominous for Las Vegas was this statement from Yellen: “The chances are slim for a robust rebound in consumer spending.”

This is precisely what concerns Nevada economists: The view that American consumers have recalibrated their spending habits and are less likely to rush to Vegas and blow five grand once the economy does pick up.

Economists such as UNLV’s Keith Schwer say that unlike past recessions, when Nevada often emerged from downturns well before the rest of the nation, the Silver State will lag behind this time because so much of it is idle — high-end hotel rooms, workers, houses, strip malls.

Currently 12.7 percent of Nevadans are unemployed, though the number is higher in Las Vegas, with no signs of abating.

In other words, as the nation slowly moves from crawling to walking, Las Vegas will still be digging itself out.

This is filling many Democrats with trepidation.

“No question: There are danger signs,” said Dan Hart, a Democratic consultant.

Reid consultant’s dual roles

As Senate Majority Leader, Reid is the steward of the Obama administration’s policies, which means he rises and falls with the White House — he can’t run against the president because he’s closely linked to him.

And unlike Obama, who doesn’t face the voters again until 2012, Reid lacks the charisma and public good will that have buoyed Obama through continuing rough economic times.

Absent a strong recovery, Reid is in trouble, said Jennifer Duffy, an analyst for the Cook Political Report.

Rarely has Billy Vassiliadis, CEO of the advertising and public affairs firm R&R Partners and a close Reid adviser, had two clients with such interlocking interests. His firm is creating ads for the Las Vegas Convention and Visitors Authority to bolster the city’s tourism economy, even as Reid needs those tourists to start coming and spending freely, which would create jobs for Nevadans.

Vassiliadis, always the city’s most ebullient pitch man, is optimistic that a recovery is coming, and that it will surprise the city’s naysayers, as usual.

“Despite how tough times have been in tourism the past two years, tourism’s been better here than anywhere else in America. No reason we won’t enjoy the best of the recovery,” he said.

Of course, he added that Reid is the central figure in the comeback.

Reid had better hope that Vassiliadis is good at his job. Both jobs.