Las Vegas Business Press :: Economy : Unemployment to pass 21,000 in coming months

Unemployment to pass 21,000 in coming months

TAXABLE RETAIL SALES

The latest statistics released by the Nevada Department of Taxation indicated a 1.3-percent year-over-year decline in taxable retail sales activity in Clark County. Taxable activity totaled $2.9 billion in July. The largest retail sales category, food service and drinking places, posted another decline, with a substantial drop of 7.4 percent. Motor vehicle sales, the second-largest contributor to aggregate sales volumes, also reported a decline of 13.5-percent when compared to the same month last year.

Relatively high retail gasoline prices, utility costs and increasing interest costs are likely to influence consumers' willingness and ability to spend. In addition, slower rates of residential price appreciation, increases in home foreclosures and for-sale signs on houses across the valley are indicators of the excess level of inventory facing the Las Vegas community. Along with a weaker residential housing market, we anticipate declining inflation-adjusted per-capita spending pattern to persist throughout 2007.

MCCARRAN PASSENGER COUNT

In August, McCarran International Airport welcomed approximately 4.3 million passengers, representing a significant 6-percent increase over the same month of the prior year. Southwest Airlines maintained the largest market share, transporting over one-third of all arriving and departing passengers. US Airways (inclusive of America West Airlines activity) remained second on the list, followed by United, Delta, and Continental Airlines. US Airways and United Airlines were the only two major airlines to post year-over-year declines in the number of passengers served during the month of August.

International travel here grew at a steady rate of 14.2 percent in August. Overall the Las Vegas airport has reported healthy increases since 2003. In spite of this, we remain somewhat concerned about capacity constraints prior to the Ivanpah airport alternative. While Terminal 3 is expected to accommodate increased air travel after its completion in 2012, we anticipate McCarran to face infrastructural challenges when major hotel-casino resorts come online later this year.

WELFARE CASELOADS

The State of Nevada Welfare Division reported that welfare caseloads in July reached 20,040, an increase of 7.5 percent when compared to the previous month. The latest figure represents the second month-over-month caseload level increase since December 2002. In the upcoming months we expect continued shifts in the sources of employment growth, unemployment rates, and discretionary income levels to put additional upward pressure on the future number of welfare caseloads.

In addition, the market continues to absorb the negative impacts associated with the residential construction slowdown and sector-related unemployment. Even though the commercial and resort construction sectors have provided some stability, we remain concentrated on softer employment growth and lagging home prices, particularly in the short term. Based on overall market expectations, we anticipate caseloads to press the total number of individuals requiring assistance towards 21,000 in the coming months.

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