One-legged stool. Its principal historical supports—heated job growth in the Leisure and Hospitality sector, heated job growth in Construction (both residential and commercial) and high rates of population growth and in-migration were knocked out from under the Las Vegas economy by the devastating recession. Severe job losses, a shocking decline in in-migration to rates below the nation’s, and the catastrophic collapse of the local housing market were the results. While signs of improvement recently emerged, they belong mainly to a single leg of the once-formidable economic tripod—the Leisure and Hospitality sector. These gains, however, have been substantial and appear to be shoring up other economic elements as well. According to data provided by the U.S. Bureau of Labor Statistics (BLS), employment in Leisure and Hospitality as of August was up 5,100 jobs (1.9%) from 12 months prior and was up 14,800 jobs (5.8%) over 24 months.
While all the recent losses suffered in this sector have yet to be redeemed, the 5,700-jobs (2.1%) gap between the pre-recession August 2006 high and the total for the latest August is quite a bit narrower than the gap that persists for non-farm employment as a whole. Indeed, according to BLS, non-farm employment per August 2012, despite an 11,700-job (1.5%) increase over the past two years, remained down fully 109,900 jobs (11.9%) from August 2006. Other major sectors, meanwhile, continue to struggle. Construction, robust in the recent past with heated activity in the residential and hotel-casino sectors, has contracted dramatically and even now continues to shrink. Employment therein as of August amounted to only 32.4% of the total recorded six years earlier, a shocking statistic; the latest August number, moreover, was down 2,200 jobs (5.7%) from 12 months prior. And the growth that emerged in the Professional and Business Services sector in 2010 and 2011 is not apparent in the more recent data.
Las Vegas owes the gains in tourist-related employment chiefly to improvement on the national economic front. Las Vegas, after all, is a national tourist destination and thus is tied closely to national trends. The local gains in Leisure and Hospitality employment could be a link in a more widespread network of recovery, however. Accordingly, the annual population growth rate, after shrinking to 0.7% in 2010, rose to 1.2% last year and is projected to run at 2.2% (a net gain of 48,300 persons) in 2012, according to Moody’s Economy.com.
The beginnings of recovery now increasingly apparent in the national housing market have become apparent locally as well. Las Vegas’ housing decline was among the nation’s worst—and until recently it led the U.S. in rate of foreclosure. “The metro has already relinquished the top spot in the nation for home foreclosures as home sales are stronger and new home construction has begun,” reports Marcus & Millichap. After leading the nation in that category for an extended period, the local Metropolitan Statistical Area (MSA), after months of steady decline, had slipped to the 15th spot (among more than 200 metro areas) as of May, only to rise to 13th place in June, according to a July report in the Las Vegas Sun citing RealtyTrac. “The overall slowdown in bank takeovers is believed to be responsible for a smaller inventory of homes for sale and a resulting rise in price.” As reported by the Las Vegas Business Press in August, “The continued squeeze on inventory and sales of larger homes, in general, have resulted in five consecutive months of price increases, with the median single-family home price rising to $166,575 in June, a 5.7% jump from a year ago. “Cash buyers continue to account for an incredible 47% of all transactions.” “Short sales or lender-approved sales for less than the principal mortgage account for 35% of all transactions.”