Stephen Brown, director of the center, told business leaders Monday at an economic conference in Las Vegas that southern Nevada’s economy has begun to recover, but a weak U.S. market and a sinking real estate industry means the economy is not picking up as fast as it could.
Brown linked housing troubles in Las Vegas to the nation’s stalled economy. Population growth tends to drive housing prices, while job growth attracts new residents, he said. In other words, Nevada needs to create more jobs to attract homebuyers.
“It’s going to take years for the real estate market to recover,” Brown said.
Nevada’s slight tourism gains have been offset by severe losses in the construction industry, Brown said. The southern Nevada construction industry has shed more than 72,000 jobs since its peak in June 2006.
Brown also warned that the national unemployment rate could return to 10 percent or higher if consumer spending doesn’t increase.
Brown’s research is based on data from the federal Bureau of Labor Statistics, the Federal Reserve Board and projections from the university’s business center.
The immediate future looks anything but bullish, Brown said.
While corporate profits are at the highest point in more than two decades, business leaders are hesitant to invest in new workers because people are spending less, he said.
Job creation is expected to rise slightly, but the unemployment rate will likely remain above 8 percent through 2012, an unusually high rate for the United States, Brown said. High food and energy prices, along with flat wages, dropping home values and shrinking government budgets, have created a reluctant population of consumers unlikely to invest in new goods or homes. Consumer sentiment is at its lowest point since at least 1998, according to research from the University of Michigan.
“Consumers have a reason to be not very confident,” Brown said.
The nation’s economic future is clouded with uncertainty, which could create weaker job creation in the future, he said. Some fear a second recession is imminent, Brown said.
There are a few bright spots on the horizon, he said.
If consumer spending accelerates, corporations will likely tap into their sizable profits and begin hiring at a speed that could bring the unemployment rate toward 6 percent, Brown said. But that could be years away, he cautioned.
For Nevada, it’s already been a long wait. The previous decade of furious housing, population and job growth ended in a bust. Nevada has led the nation in unemployment and foreclosures for months. The state’s unemployment dropped to 12.1 percent in May, but in Las Vegas, unemployment rose to 12.4 percent from 12 percent in April.
In Clark County, which includes Las Vegas, construction has come to a crawl and home prices have dropped to 2001 levels.
Meanwhile, visitors will continue coming to Las Vegas with less money to spend, and hotels will still have too many empty rooms for the remainder of the year, excluding holidays and special events, Brown said.
John Restrepo, a consultant for RCG Economics LLC of Las Vegas, said Nevada once thought it was invincible to economic disasters. In recent years, however, Nevada has learned that its tourism-rich economy is dependent on the economic successes of other states and nations.
“That’s why I call it the long and winding road,” he said during the conference. “It’s going to be slow.”