Will look not like V, but Nike swoosh, jobs expert says
While acknowledging Southern Nevada’s economy was slowly improving, economist John Restrepo said there was more work to do before the region’s economy was truly healthy.
“This isn’t you father’s recession,” Restrepo said during a presentation Thursday at City National Bank’s Economic Forecast and Market Update for 2013. “It’s a whole different world out there.”
He said reset, rebuild and recover “are the words that best describe where we are in Southern Nevada.” Restrepo, principal with RCG Economics in Las Vegas, said the job market has begun to recover from the recession.
The region’s prerecession employment market was creating 33,000 jobs annually, with a high of 63,000 from December 2004 to December 2005. During the recession, the annual average was a loss of 22,000 jobs.
Restrepo said some 15,700 jobs have been created in the last 12 months.
Initial claims for unemployment benefits in Nevada fell 13.5 percent to 20,533 in January, the Department of Employment, Business and Industry reports.
“The job market is slowly coming back but it’s not where it was prerecession,” he said. “We are slowly coming back to historical averages.”
Restrepo said the region’s economy was far from being diversified.
“No we are not diversified,” Restrepo told about 175 City National executives, clients and prospects at Wynn Las Vegas. “About 33.3 percent of all our jobs are in tourism, hospitality and gaming. We are still pretty concentrated in (those) industries.”
Restrepo said Southern Nevada won’t see a V-type recovery that we are used to, but instead it will look like a Nike swoosh, with a long recovery,
“(But) we are coming back,” he said.
Factors contributing to the longer recovery include somewhat constrained visitor spending, average weekly wages lower than the national average, and a real estate market that is still struggling with high vacancy and foreclosure rates.
The average weekly wage in 2012 in Southern Nevada is $829.30, compared with $939.50 nationally. In 2002, it was $812.20 in Southern Nevada and $829.90 in the United States.
Restrepo said income growth, not job growth, will have the biggest effect on the housing market. Industrial space has a 16 percent vacancy rate, a price of 50 cents per square foot, and a three-year supply, data compiled by RCG Economics show.
The region’s office market had a 22 percent vacancy rate, which jumped to 30 percent with subleases included. He said with a six-year supply, office space leases for $1.86 per square foot.
“We are slowly recovering,” Restrepo said. “We talk about our weather, cheap housing, low taxes, but it’s the people (here) that are the most important asset in Southern Nevada, This is what is going to get us out of the recession.”
The U.S. economy is expected to continue its recovery this year and in 2014, said Bruce Simon, who participated in the panel discussion on the economy Thursday.
Simon, City National Bank’s chief investment officer, said the economy has moved beyond the European Union debt crisis and a possible slowdown in China, but is still being hurt by the “political dysfunction” in Washington.
Contact reporter Chris Sieroty at firstname.lastname@example.org or 702-477-3893. Follow @sierotyfeatures on Twitter.
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