Gambling revenues have hit the skids, accompanied by the collapse of the construction industry. Confidence that the return of tourists will revive the city and the state is absent.
A view of a downtown casino in Las Vegas, Sept. 16, 2010. The nation�s gambling capital is staggering under a confluence of economic forces that has sent Las Vegas into what officials describe as its deepest economic rut since casinos first began rising in the desert here in the 1940s.
There are many cities across the country that are beginning to see the first glimpses of the end of the recession.
This is not one of them.
The nation's gambling capital is staggering under a confluence of economic forces that has sent Las Vegas into what officials describe as its deepest economic rut since casinos first began rising in the desert there in the 1940s.
Even as city leaders remain hopeful that gambling revenues will rebound with the nation's economy, experts pro- ject that it will not be enough to make up for an even deeper realignment that has taken place in the course of this recession: the collapse of the construction industry, which was the other economic pillar of the city and the state.
Unemployment in Nevada is 14.4 percent, the highest in the nation and a stark contrast to the 3.8 percent unemployment rate there just 10 years ago; in Las Vegas, it is 14.7 percent.
August was the 44th consecutive month in which Nevada led the nation in housing foreclosures.
The Plaza Hotel and Casino, which is downtown, recently announced that it was laying off 400 workers and closing its hotel and parts of its casino for eventual renovation, the latest high-profile hit to a city that has seen a steady parade of them.
"It's been in bad shape before, but not this bad," said David Schwartz, director of the Center for Gaming Research at the University of Nevada, Las Vegas. "If you look at the gaming revenues, they have declined and continue to decline over the past three years.
"September 11 set off a two-year slowdown," Schwartz said. "But nothing of this magnitude."
'Not what it was'
Mayor Oscar Goodman said in a recent interview that he was "very bullish on our future," offering as evidence the packed airplanes he encountered both ways on a recent trip east to appear on "The Colbert Report."
But, he added: "Our daily room rate average is not what it was. Our hotel room rates are bargains now. People aren't spending on gambling as they have in the past. Ordinarily Las Vegas was the last to go into a recession and the first to come out. This one is different. As soon as they feel secure in their financial position, then Las Vegas will come back stronger than ever."
The drop in the city's gambling revenues, at first glance, tracks historical trends: Americans cut back on recreational travel and gambling during a recession. There are some signs that gambling revenues, which are down to 2004 levels, have at least stabilized. After months of precipitous decline, revenues increased 3 percent in the first quarter of 2010, but then dropped 5 percent in the second quarter, according to the Center for Gaming Research.
"I think we are bumping along the bottom," said Stephen Brown, the director of the Center for Business and Economic Research at the University of Nevada, Las Vegas, which has been tracking the downturn. "Expectations are that once the U.S. economy turns around, the gaming industry will begin to improve."
What is worrisome now is the nature of this economic downturn, when many people saw the value of their retirement funds or homes collapse. Economists say people are less likely to gamble as freely as they have in the past, particularly baby boomers, who may now be rattled about their retirement years. In one sign of this, while there were more people coming to Las Vegas in recent months, gambling receipts have remained stagnant.
Paying a steep price
The downturn in gambling is just one big part of the economic malaise. Nevada is paying a price for an exuberant and often speculative run of commercial and residential construction that has left the market glutted. As a result, the confidence that the return of tourists alone would spur the city to rebound automatically after this recession -- the way it did after, say, the recessions of 1982 and 1992 -- is absent.
"There was a time 25 years ago that if tourism rebounded, the state rebounded," said Billy Vassiliadis, the chief executive of the advertising agency that represents the Las Vegas Convention and Visitors Authority. "That isn't the case anymore ... There needs to be some real, thoughtful, deliberate effort to rebuild an economy here. It isn't going to happen by itself."