Economic forecast: bad weather

June 29, 2009 by Victoria Gonzalez 

Midyear conference finds economy will get worse

The UNLV Center for Business and Economic Research held its 18th annual Midyear Economic Outlook Conference on June 23. At the center of the conference was the ongoing recession and its effects on the ecomomy of Nevada and the nation.

“I must say, I never thought that we would end up with the current bad recession, the worst since the 1930s,” said Keith Schwer, director of the CBER.

While many characteristics of the economy were evaluated, the housing market, credit imbalance and rising unemployment need to be the major focuses in attempting to improve the U.S. economic outlook according to Schwer.

He said Southern Nevada should focus primarily on gaming, travel and construction, as well as the housing market and increased unemployment.

After 17 months of recession, Schwer said that a full economic improvement is not expected.

He said the United States should be addressing the short-term issues before focusing on the long-term ones.

Schwer explained that the main economic problem in the U.S. is the condition of the housing market, followed by the crippled financial sector.

As in a typical recession, spending, jobs, interest and prices have fallen while the unemployment rate have risen.

A monetary policy plan presented during the lecture calls for lowering interest rates, taking emergency measures, easing credit and buying long-term securities.

The challenge of preventing deflation without seeding inflation was also a move discussed in the plan, Schwer said when a forecast for 2010 predicts a 10.6 percent unemployment rate compared to the 9.3 percent rate in 2009, it is clear that time is what is needed most.

He claimed that this is also true for the Southern Nevada economic situation.

“Las Vegas is not recession proof or immune,” Schwer said.

He believes that there are no “quick fixes” to the state’s economic woes, but the overbuilding of houses and buildings has not helped.

He explained that excess supply leads to further price declines.
Clark County construction has declined, along with tourism, employment and population.

“There isn’t anyone that I have talked to that hasn’t been affected [by the economy],” said Nick Mallas, chairman and president of the Nevada Regional Economic Development Center.

Since Las Vegas thrives on travel and tourism, news that travel spending is down to negative 6.7 percent from 5.7 percent in 2008 is not comforting to Schwer.

However, with airlines reducing prices and hotels offering special deals, the travel market for 2010 is expected to rise at a 2.3 percent average.

This year will end at the bottom trough of the recession, he predicted.

“Even though we have done this [conference] for 17 years, it is always a learning experience in addressing the ever-changing world of economic events,” Schwer said.

Charity Cage, accounting and payroll supervisor for the RTC of Southern Nevada, believes UNLV resources can help the community make sense of the recession.

“I think it is important to face the facts and keep informed,” she said.

She also believes this information may help Southern Nevadans predict what is likely to occur in the economic market.

“I’m here to find out the forecast,” Mallas said. “I have my own ideas, but it is interesting to see what the economy might look like. I’m just praying.”