Is Nevada recovering? Depends on who you ask
LAS VEGAS – Donna West could once name the homeowners on her affluent Las Vegas street. Then came the recession, the vacant homes, and the parade of anonymous renters.
“To me, the recession hasn’t ended,” said West, a 55-year-old retired state worker. “We have more foreclosures happening in my neighborhood than a year ago.”
Across this hardest-hit Western state, a battle of perceptions is being waged over whether Nevada is on the edge of recovery, or still falling four years after the collapse of its mighty housing, tourism and construction industries.
It’s a story unfolding across the nation, only in Nevada, it is worse because the state depends heavily on money spent by people from elsewhere. Nevada continues to top the nation in unemployment, foreclosures and bankruptcies rates.
“We are like somebody who is wearing a lead weight. We have jumped off the dock and finally stopped sinking, but that just means we are at the bottom of the sea,” said Elliot Parker, an economist with the University of Nevada, Reno.
The tepid return of the gamblers and revelers who drive Nevada’s economy has drawn cheers from government and business leaders, including Gov. Brian Sandoval. They point to rebounding convention attendance numbers and hotels rates as cash-bearing tourists from healthier states return to the Las Vegas Strip. The jobless rate has dipped slightly and unemployment benefit claims are down.
But the housing market remains in a free fall and workers are either fleeing the state or dropping out of the work force altogether. Half of all homes are now purchased with cash. The average home price in Las Vegas fell to $118,213 last month, down from $329,720 just four years ago.
Nationwide, the recession ended in 2009. But the recovery has been weak. Consumers are more reluctant to spend, banks are not lending as readily as before and developers have shied away from risky construction projects. All have combined to depress Nevada’s tourism-dependent economy.
“Nevada is about a year behind the rest of the country or even more because we had much deeper, much bigger problems,” Parker said. “We had a steep decline and we have a long way to go to get out of this.”
Even so, some signs suggest the turnaround has begun.
Passenger counts at McCarran International Airport, one barometer of the city’s success in attracting visitors, reached 3.7 million people in October, a 4.5 percent jump from the year before.
New unemployment claims more than doubled to 30,190 from January 2007 to January 2010. In all, more than 300,000 Nevadans received jobless benefits last year. The claims have since fallen to nearly 17,000 new applicants in September and 143,500 overall. “Nevada is on the move again,” Sandoval told business leaders earlier this month. “We are seeing signs, some large, some small, of economic improvement.”
Nevada’s unemployment rate has improved from above 14 percent to just above 13 percent in the past year and new jobs have sprouted in the hospitality sector.
But the declining jobless rate can also partly be explained by the state’s shrinking work force. Nevada had nearly 200,000 fewer workers in 2010 than it did in 2007, and that’s despite a soaring population during those years.
“The dramatic losses that we saw throughout 2007 to roughly 2010 are behind us,” said Bill Anderson, chief of the state employment office’s research bureau. “Now we are at a point where we have essentially stabilized.”
At CityCenter, an upscale retail, hotel and casino resort on the Las Vegas Strip, sales are up 27 percent at Crystal’s, the city’s latest upscale retail center, with its Louis Vuitton, Miu Miu and Versace outposts. Roughly 14 percent of the property remains vacant, with two Dolce & Gabbana stores slated to open there next year. The mall flanks Aria and Vdara, both upscale resorts.
“Aria continues to emerge as a premier destination for convention business groups,” Robert H. Baldwin, president of CityCenter, told investors earlier this month.
Hotel rooms and bar tabs are also up compared with a year ago, but they are nowhere near the rollicking levels of 2007, before tourism dropped and hotels across the Las Vegas Strip closed or filed for bankruptcy.
The Nevada Gaming Control Board recently estimated that casinos statewide made $53.8 million less from gamblers in September than they did a year ago, a 6 percent drop. In Northern Nevada, which has struggled to fight off the rise of Indian casinos in California, some casinos saw revenues drop 14.3 percent.
The people who are hitting the casino floor are shunning the upscale table games that keep casinos flush and are instead sticking to less profitable slot machines. That hurts people across Nevada, even those who aren’t directly tied to the industry, because casinos that make less money pay less in taxes. Casino-generated taxes were down 9 percent in October from a year ago.
State demographer Jeff Hardcastle said the latest Census figures won’t be made public until later this year, but driver license data suggests some people are still moving to Nevada, “but it’s not to a magnitude that it would offset the people moving out.”
For unemployed Nevadans, the state hitting bottom offers little encouragement.
Jim Rogers, 49, has had trouble sleeping since he lost his construction job three years ago. He has been living off of his 401 K.
“There are no jobs,” he said. “The casinos are operating on a meager staff. Where they used to have 10 people, they now have six people doing the work.”
For those who do have jobs, a sense of security remains distant.
Evangelina Rodeiles works the night shift at the cafeteria at the Venetian casino-hotel on the Las Vegas Strip. Her house value has dropped from $155,000 to $80,000 in the past six years. Her husband is an underemployed construction worker.
“I want to believe things are getting better, but I don’t see it,” she said.
West, whose idyllic neighborhood has been overrun by foreclosures in recent years, said there is no bright side.
“We are losing our community,” she said.