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213 Economic Outlook December 1, 212 Dr. Stephen P. A. Brown, Director Prepared by The Lee Lee Business School University of Nevada, Las Vegas University of Nevada, Las Vegas May 3, 212 December 1, 212 http://cber.unlv.edu 1 Overview Southern Nevada Economy Slowly Strengthening Tourism and Gaming Housing and Real Estate Gaining traction Southern Nevada in Slow Recovery Southern Nevada Economic Outlook Slow growth 2 University of Nevada, Las Vegas 1

213 Economic Outlook December 1, 212 Southern Nevada Economy Slowly Strengthening 3 Southern Nevada Leading and Coincident Indexes 775 42 725 39 675 36 Leading Index Index: January 1981 = 1 625 575 525 475 Coincident Index 33 3 27 24 Index: January 1981 = 1 425 21 375 18 Southern Nevada Recessions 325 199 1992 1994 1996 1998 2 22 24 26 28 21 212 15 4 University of Nevada, Las Vegas 2

213 Economic Outlook December 1, 212 5 Clark County Business Activity Index 45 4 Index: January 1981 = 1 35 3 25 2 Southern Nevada Recessions 15 199 1992 1994 1996 1998 2 22 24 26 28 21 212 5 3 Clark County Tourism Index 28 26 Index: January 1981 = 1 24 22 2 18 16 Southern Nevada Recessions 14 199 1992 1994 1996 1998 2 22 24 26 28 21 212 6 University of Nevada, Las Vegas 3

213 Economic Outlook December 1, 212 1 Clark County Construction Index 9 8 Index: January 1981 = 1 7 6 5 4 3 2 Southern Nevada Recessions 1 199 1992 1994 1996 1998 2 22 24 26 28 21 212 7 People, Employment and Income 8 University of Nevada, Las Vegas 4

213 Economic Outlook December 1, 212 3, Nevada and Clark County Populations 2,5 Nevada Clark County 2, Thousands of People 1,5 1, 5 198 1982 1984 1986 1988 199 1992 1994 1996 1998 2 22 24 26 28 21 212 9 1, Clark County Redeemed Driver's Licenses 8, th umber of Licenses Turned in Each Mont Nu 6, 4, Clark County Redeemed Driver's Licenses 12 Month Moving Average 2, 199 1992 1994 1996 1998 2 22 24 26 28 21 212 1 University of Nevada, Las Vegas 5

213 Economic Outlook December 1, 212 3,5, Clark County Population Forecast 3,, Number of Persons 2,5, 2,, 1,5, 1,,, 5, 198 1985 199 1995 2 25 21 215 22 225 23 235 24 245 25 11 Nevada and Las Vegas Employment 1,4 1,2 1, Nevada Las Vegas Thousands of Jobs 8 6 4 2 Note: Data are seasonally adjusted 199 1992 1994 1996 1998 2 22 24 26 28 21 212 12 University of Nevada, Las Vegas 6

213 Economic Outlook December 1, 212 16 Las Vegas Unemployment Rate Not Seasonally Adjusted 14 Percent Unemployed 12 1 8 6 11.4 Seasonally Adjusted 4 2 199 1992 1994 1996 1998 2 22 24 26 28 21 212 13 5, Nevada and Clark County Taxable Sales 4,5 4, 3,5 Millions of Dollars 3, 2,5 2, 1,5 1, Nevada Taxable Sales 12 Month Moving Average Clark County Taxable Sales 12 Month Moving Average 5 199 1992 1994 1996 1998 2 22 24 26 28 21 212 14 University of Nevada, Las Vegas 7

213 Economic Outlook December 1, 212 9, Automobile and Part Sales 9 8, 8 United States 7, 7 6, 6 Millions of Dollars 5, 4, Nevada 5 4 Millions of Dollars 3, 3 2, Clark County 2 1, Washoe County 1 2 21 22 23 24 25 26 27 28 29 21 211 212 15 45, Per Capita Personal Income 4, 35, 3, Dollars 25, 2, 15, 1, 5, 2 21 22 23 24 25 26 27 28 29 21 211 United States Nevada Las Vegas 16 University of Nevada, Las Vegas 8

213 Economic Outlook December 1, 212 What Drives the Southern Nevada Economy? 17 Nevada and Las Vegas Location Quotients Industry Nevada Las Vegas Natural Resources and Mining.89.3 Mining, Except Oil and Gas 5.83.17 Construction 1.2 1.23 Manufacturing.37.26 Trade, Transportation and Utilities.95.91 Air Transportation 1.48 1.85 Transit and Ground Transportation 3.51 4.48 Scenic and Sightseeing Transportation 4.37 5.72 Support Activities for Transportation 1.8 1.6 Information.51.51 Financial Activities.78.81 Real Estate, Rental and Leasing 1.46 1.47 Professional and Business Services.9.9 Education and Health Services.59.56 Management of Companies and Enterprises 1.5 1.12 Leisure and Hospitality 2.63 2.94 Other Services.69.67 18 University of Nevada, Las Vegas 9

213 Economic Outlook December 1, 212 16 Mgmt. of Companies and Enterprises in Las Vegas 14 12 Thousands of Employees 1 8 6 4 2 199 1992 1994 1996 1998 2 22 24 26 28 21 212 19 Nevada and Las Vegas Location Quotients Industry Nevada Las Vegas Natural Resources and Mining.89.3 Mining Except Oil & Gas 5.83.17 Construction 12 1.2 123 1.23 Manufacturing.37.26 Trade, Transportation and Utilities.95.91 Air Transportation 1.48 1.85 Transit and Ground Transportation 3.51 4.48 Information.51.51 Financial Activities.78.81 Real Estate, Rental and Leasing 1.46 1.47 Professional and Business Services.9.9 Tourism and Gaming Education and Health Services.59.56 Leisure and Hospitality 2.63 3.23 Other Services.69.67 2 University of Nevada, Las Vegas 1

213 Economic Outlook December 1, 212 1, U.S. GDP and Clark County Gaming Revenue 18, U.S. GDP 8 15, Clark County Gaming Revenue (12 Month Moving Average) 12, Millions of Dollars 6 4 9, Billions of Dollars 6, 2 U.S. Recessions 3, 199 1992 1994 1996 1998 2 22 24 26 28 21 212 21 16, U.S. Employment and Las Vegas Leisure and Hospitality Employment 3 14, Total U.S. Employment 25 12, Las Vegas Leisure and Hospitality Employment 1, 2 Thousands of Jobs 8, 6, 15 Thousands of Jobs 1 4, 2, 5 Note: Data are seasonally adjusted U.S. Recessions 199 1992 1994 1996 1998 2 22 24 26 28 21 212 22 University of Nevada, Las Vegas 11

213 Economic Outlook December 1, 212 4,8, Nevada Visitor Volume 4,6, 4,4, Number of Visitors 4,2, 4,, 3,8, 3,6, 3,4, Nevada Visitor Volume 12 Month Moving Average 3,2, 2 21 22 23 24 25 26 27 28 29 21 211 212 23 4,1, Clark County Visitor Volume 3,9, 3,7, Number of Visitors 3,5, 3,3, 3,1, Clark County Visitor Volume 12 Month Moving Average 2,9, 2,7, 2,5, 2 21 22 23 24 25 26 27 28 29 21 211 212 24 University of Nevada, Las Vegas 12

213 Economic Outlook December 1, 212 4,, Las Vegas Visitor Volume 3,5, 3,, Number of Visitors 2,5, 2,, 1,5, Las Vegas Visitor Volume 12 Month Moving Average 1,, 5, 199 1992 1994 1996 1998 2 22 24 26 28 21 212 25 3,6, Las Vegas Visitor Volume and Taxi Trips 2,4, 3,4, Taxi Trips 2,3, 2,2, Number of Visitors 3,2, 3,, 2,8, Visitor Volume 2,1, 2,, 1,9, Number of Taxi Trips 1,8, 2,6, Note: Data shown are 12 month moving averages 1,7, 2,4, 2 21 22 23 24 25 26 27 28 29 21 211 212 1,6, 26 University of Nevada, Las Vegas 13

213 Economic Outlook December 1, 212 3,6, 3,4, Las Vegas Visitor Volume and Room Nights Occupied 4,, Room Nights Occupied 3,8, Number of Visitors 3,2, 3,, 2,8, 2,6, 2,4, Visitor Volume 3,6, 3,4, 3,2, 3,, 2,8, 2,6, Number of Room Nights Occupied 2,2, 2,4, 2,, Note: Data shown are 12 month moving averages 2,2, 1,8, 2 21 22 23 24 25 26 27 28 29 21 211 212 2,, 27 4,2 Clark County Visitor Volume and Gaming Revenue 1, 3,6 Visitor Volume 8 3, GrossGaming Revenue Thousands of Visitors 2,4 1,8 6 4 Millions of Dollars 1,2 6 2 Note: Data shown are 12 month moving averages 1997 1998 1999 2 21 22 23 24 25 26 27 28 29 21 211 212 28 University of Nevada, Las Vegas 14

213 Economic Outlook December 1, 212 3,6, Las Vegas Visitor Volume and Employment in Leisure and Hospitality 3 3,, Visitor Volume Leisure and Hospitality Employment 25 2,4, 2 Number of Visitors 1,8, 1,2, 15 1 Thousands of Employees 6, 5 Note: Visitor data are 12 month moving averages; employment data are seasonally adjusted 199 1992 1994 1996 1998 2 22 24 26 28 21 212 29 Southern Nevada Housing and Real Estate 3 University of Nevada, Las Vegas 15

213 Economic Outlook December 1, 212 25 Case Shiller Home Price Indexes 2 Index: 2 = 1 15 1 5 Las Vegas United States (1 City Composite) United States (2 CityComposite) Composite) Note: Data are seasonally adjusted 1987 1992 1997 22 27 212 31 4 Median Home Prices 35 3 Thousands of Dollars 25 2 15 1 5 1993 1994 1995 1996 1997 1998 1999 2 21 22 23 24 25 26 27 28 29 21 211 212 212 212 Q1 Q2 Q3 United States Western Region Las Vegas Metro Area 32 University of Nevada, Las Vegas 16

213 Economic Outlook December 1, 212 4, Clark County Median Home Prices 35, 3, 25, Dollars 2, 15, New Existing 1, 5, 1997 1998 1999 2 21 22 23 24 25 26 27 28 29 21 211 212 33 3 Las Vegas Months of Supply and House Prices 25 Months of Supply 25 2 15 1 5 7.3 Potential Months of Total Supply? Months of Vacant Supply? Months of Listed Supply 6.2 House Prices 2 15 1 5 ) ouse Prices (Index: January 2 = 1 Ho Months of Listed Vacant Supply 2 21 22 23 24 25 26 27 28 29 21 211 212 34 University of Nevada, Las Vegas 17

213 Economic Outlook December 1, 212 8 Nevada Homeowners with Negative Equity 7 6 5 Percent 4 3 2 1 29 Q4 21 Q1 21 Q2 21 Q3 21 Q4 211 Q1 211 Q2 211 Q3 211 Q4 212 Q1 212 Q2 Negative Equity Near Negative Equity 35 7 Negative Equity Mortgages: Top Six States (Second Quarter 212) 6 5 Percent 4 3 2 1 Nevada Florida Arizona Georgia Michigan California U.S. Average Negative Equity Near Negative Equity 36 University of Nevada, Las Vegas 18

213 Economic Outlook December 1, 212 1 Housing Opportunity Index ncome t of Housing Sold That Is Affordable at Median I Percent 8 6 4 2 Las Vegas Paradise, NV Los Angeles Long Beach Glendale, CA Phoenix Mesa Scottsdale, AZ United States 23 24 25 26 27 28 29 21 211 212 37 Southern Nevada Economy in a Slow Recovery 38 University of Nevada, Las Vegas 19

213 Economic Outlook December 1, 212 12 Leading Indexes of Economic Activity 11 1 Index 24 = 1 9 8 Southern Nevada Nevada United States 7 6 2 21 22 23 24 25 26 27 28 29 21 211 212 39 14 CBER Southern Nevada Business Confidence Index 12 Percent Up Percent Down + 1 1 8 6 4 2 28 29 21 211 212 4 University of Nevada, Las Vegas 2

213 Economic Outlook December 1, 212 8% U.S. and Southern Nevada Credit Conditions 76% 7% 65% 64% 67% 6% 5% 4% 3% 25% 28% 26% 2% 16% 1% 1% 8% 8% 7% % U.S. 21 U.S. 212Q4 Southern Nevada 21 Southern Nevada 212Q4 Not seeking additional credit Credit needs were satisfied Credit needs were not satisfied 41 4 Western States Employment Growth 3 2 Percent Change 1 1 2 3 U.S. Arizona California Colorado New Mexico Oregon Utah Washington Nevada 21 211 212 213 42 University of Nevada, Las Vegas 21

213 Economic Outlook December 1, 212 Southern Nevada Forecast Visitor Volume 3.6% 1.3% 2.% 2.5% Gross Gaming Revenue 3.5% 2.4% 2.8% 3.5% Hotel/Motel Rooms 8%.8%.1%.2%.3% Housing Units Permitted 8.2% 22.5% 2.% 45.% Employment.6%.9% 1.3% 1.7% Unemployment 1.9% 2.1% 1.4%.9% Total Personal Income 4.3% 2.2% 3.2% 3.5% Population.1% 1.% 1.1% 1.5% 2.% 1.%.% 1.% 2.% 3.% 4.% 5.% 211 212 213 214 43 Clark County Visitor Volume and Gaming Revenue 4,2 $1, Visitor Volume Forecast 3,6 $8 Forecast 3, GrossGaming Revenue Thousands of Visitors 2,4 1,8 $6 $4 Millions of Dollars 1,2 6 $2 Note: Data shown are 12 month moving averages 2 21 22 23 24 25 26 27 28 29 21 211 212 213 214 $ 44 University of Nevada, Las Vegas 22

213 Economic Outlook December 1, 212 4, Clark County Housing Permits 3,5 3, Number of Units Permitted 2,5 2, 1,5 1, Forecast 5 Note: Data shown are 12 month moving averages 2 21 22 23 24 25 26 27 28 29 21 211 212 213 214 45 1,4 Nevada and Las Vegas Employment Nevada 1,2 Forecast 1, Thousands of Jobs 8 6 Las Vegas Forecast 4 2 Note: Data are seasonally adjusted 199 1992 1994 1996 1998 2 22 24 26 28 21 212 214 46 University of Nevada, Las Vegas 23

213 Economic Outlook December 1, 212 Economic Outlook: Conclusions Improving Southern Nevada economy Dependent on U.S. growth, particularly in the West Headwinds: Weak U.S. economy financial sector; European recession; Slowing Asian economies; Real estate overhang; Lack of economic diversity Fair Winds: Housing market improving; Increased consumer confidence and spending; U.S. economy to improve 47 Thank You 48 University of Nevada, Las Vegas 24