9-11: Two Years Later

Nevada growth engine sputtered, but didn't fail

September 11, 2003 - The economy in Las Vegas is not what it used to be, but economists are not blaming the terrorist attacks of 2001 for the slowdown.

The state was already headed toward economic malaise when attacks occurred in New York City and Washington D.C. Those events also happened at a time when the Las Vegas Strip was experiencing its most pronounced lull in new construction since 1995 and dealing with the effects of a growing national recession.

"It was going to be slower irrespective of 9-11," said Keith Schwer, an economist with the University of Nevada, Las Vegas and director of UNLV's Center for Business and Economic Research. "There was nothing new coming online on the Strip. We were facing a national recession, then you add the third component of 9-11. All three of these things going on there will explain a softer economy."

Still, what amounts to a slowdown in Las Vegas would be a renaissance in most other U.S. cities. Despite Sept. 11, which was marked by the layoff of some 15,000 Las Vegas casino workers, Nevada reported a 2.1 percent gain in jobs in 2002, Schwer said. Only Hawaii, which reported a 2.9 percent job gain, fared better.

Clark County job growth in 2002 came in at 1.9 percent, identical to the growth rate of Alaska, the third most successful state in terms of job creation that year. Arizona reported a 0.9 percent gain and California posted a 0.4 percent increase.

Schwer predicts Clark County will see jobs increase by 2.8 percent this year and 3.4 percent in 2004. while that growth rate is among the national leaders, it's well off the 9 percent growth seen in Clark County between 1995 and 1996.

Between March 2001, when the national recession began, and July 2003, 2.7 million U.S. jobs have been lost, a report by the Washington-based Economic Policy Institute said. During that same time, however, Nevada gained 18,700 jobs, the report said.

"I would say that Las Vegas and Southern Nevada has been somewhat resilient compared to other local economies around the country," said Brian Gordon, principal with the Las Vegas research firm Applied Analysis. "The development trend is continuing and that's proving well for job growth."

In a recent study published by the Fortune magazine spin-off Business 2.0, Las Vegas is expected to pace the nation in terms of job growth over the next 10 years. The ranking, based on information provided by the economic consulting firm Global Insight and the U.S. Bureau of Labor Statistics, predicts 47.7 percent job growth in Las Vegas by 2013.

Following Las Vegas in the rankings are Orlando, Fla. (31.9 percent), West Palm Beach, Fla. (28.7 percent) and Ft. Lauderdale, Fla. (25.7 percent). Many of Las Vegas' frequently cited economic development competitors trail far behind in the report, including Phoenix (25.3 percent), San Diego (19.2 percent) and Denver (16.5 percent).

Schwer credits the relative success of Las Vegas and Nevada to the fast-paced growth the area was enjoying prior to the recession and the event of 9-11.

"You've got an upper hand anytime that happens," he said.

Still, Schwer said, gaming has been slow to shake off the effects of weaker tourism and gambling budgets.

Gaming win reported by Clark County's casinos reached $7.7 billion in 2000, reports from the Nevada Gaming Control Board said. Win in 2001, which fell sharply after Sept. 11 was off by 0.5 percent to $7.6 billion, and it was down another 0.1 percent in 2002.

Schwer blamed the sluggish performance on stagnant hotel room inventory, which is expected to grow by just 3 percent this year and a very low 1.4 percent in 2004. With that in mind, gaming revenue is expected to rise by 2.3 percent and 3.3 percent, respectively.

Pointing to 2005, however, Schwer said the addition of Steve Wynn's new Strip property, Wynn Las Vegas, could bolster figures.

The economic slowdown in Las Vegas surrounding the Sept. 11 attacks took a toll on home construction, Schwer said. It was, however, brief. In 200, 26,811 housing permits were issued, he said. In 2001, that total jumped to 29,668. In 2002, however, the permits slipped 0.8 percent to 29,427.

By the end of the year, however, Schwer expects those figures to jump to 31,193 and they are predicted to reach 32,440 in 2004.

As long as employment continues to increase, the demand for housing will remain strong, Schwer said, cautioning that higher interest rates could dampen the market.

Jobs have also kept Clark County residents spending with increasing fervor since Sept. 11. In October 2001, the first full month following Sept. 11, Clark County taxable sales jumped 2.3 percent from the same month in 2000, said a report from the Nevada Department of Taxation. It marked a significant improvement from the month of the attacks, which saw sales fall by 10.3 percent in Clark County from the same 2000 month.

Taxable sales hit a high point for 2003 in June, registering an 8 percent increase over June 2002. It was the 12th consecutive month in increased business activity.

"We've started to see the trends pick back up," Gordon said. "I wouldn't say we are at pre-Sept. 11 levels, but we're getting closer."

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Article Copyright ©: K. Rademacher, Las Vegas Sun