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August 30, 2015

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Many Nevadans feeling snakebit about economy

Economic reports indicate experts unsure when recovery will arrive

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Nasser Daneshvary

A single word drives the thoughts of many Nevadans: “When?” It can be heard in conversations at neighborhood taverns, as friends bump into each other or when business operators scan the books. When will housing prices rebound? When will the job market bounce back? When will I find work or get laid off? When we’re truly honest with ourselves, we come to a single conclusion. No one knows the answer.

UNLV economics professor Nasser Daneshvary is surprisingly honest for someone who works in a profession that prides itself on forecasting. “It’s very clear. Nobody really has a crystal ball to look at the economy and say what’s going to happen,” he said. “Everybody’s expectations are uncertain — businesses, employees, consumers. It’s an unusual time, not a normal time.”

It’s human nature to hope that six months from now the economy will be better, and next year will find us in a full-blown recovery. But the stock market is slipping, so too consumer confidence, while gasoline and food prices continue to serve as a drag on household expenses. Many of our friends and neighbors remain worried if not scared about what’s to come next. “Once you’ve been bitten by a snake, you will always be scared of it,” Daneshvary said.

Several important reports were released in recent days, each as guarded as the next when it comes to the regional economy’s prospects. The U.S. Conference of Mayors, UNLV’s Center for Business and Economic Research, and Brookings Mountain West each weighed in with signs of a stalled recovery. That 1.8 percentage point decline to 13.3 percent in Nevada’s unemployment rate during the first quarter of this year was tempered by the disappearance of thousands of workers from the regional job market. They had simply given up looking for work. Many left the community and were no longer counted on the rolls of the unemployed. It was not a sign of a suddenly re-energized economy.

“The U.S. economy is still struggling in the aftermath of the financial crisis brought on by the subprime mortgage crisis first evident in 2007,” the U.S. Conference of Mayors report said. “Improved employment growth has yet to curtail foreclosures, raise confidence in the market and increase household formation sufficiently to revive demand and work through the backlog of excess supply. And with prices falling, buyers have a strong incentive to wait despite low interest rates. As a result, we have delayed the housing upturn in our forecast to 2012.”

Visitor volume was up in April compared with a year earlier, but gaming revenue was down. Taxable sales were up by 9.6 percent. But the pace of economic growth in Clark County seems to have slowed a bit in April, according to the UNLV Center for Business and Economic Research. “With the U.S. economy downshifting, the continued growth of Nevada’s tourism, hospitality and gaming depends more heavily on a continued economic recovery in the West. Nevada’s real estate and construction sectors still show signs of weakness,” the report said.

There are serious long-term implications for our country’s job market and the development of our future workforce. Unemployment rates are exceedingly high for the young and members of ethnic minorities. That figure grows exponentially if potential workers lack college degrees, high school diplomas and a mastery of the most basic math and English skills, a particular concern for graduates of the Clark County School District. UNLV President Neal Smatresk routinely notes that 40 percent of the School District’s students who attend UNLV require remedial English classes; 70 percent need remedial math. Meantime, older workers are delaying retirement to counter the effects of lost savings and shrinking home values, further blocking workplace opportunities for young people, and it’s no different in California, the engine that drives much of the Nevada economy.

“The sputtering housing market is certainly having a significant negative impact on the California metros, as well as Las Vegas and the struggling metropolitan areas of Florida. These areas were highly dependent on inflated real estate markets, and the housing collapse has resulted in very high unemployment,” the Conference of Mayors Report said. As much as half of Southern Nevada’s tourism industry is driven by California visitors.

So what does it mean for the 600 to 1,400 Clark County School District employees who are about to be laid off, and what about the 258 North Las Vegas workers about to be let go, among others?

“Welcome progress was made toward recovery in every one of the region’s metros in the first quarter of 2011,” the Brookings report said, “but the pace was uncertain and the jobs picture clouded by continued troubles in the housing market and the threat of further public sector layoffs.”

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