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Las Vegas sees no immediate economic recovery

(Xinhua)

17:04, August 25, 2011

LOS ANGELES, Aug. 24 (Xinhua) -- Las Vegas, known as the Entertainment Capital of the World, has suffered seriously from the recession and it sees no immediate recovery.

Unemployment in Las Vegas rose from 13.8 percent in June to 14 percent in July, while joblessness statewide jumped from 12.4 percent to 12.9 percent, according to Nevada's Department of Employment, Training and Rehabilitation. It was the second straight month of unemployment increases after several months of declines.

In Nevada as a whole, the jobs market posted another disappointing month in July, with experts predicting high unemployment could last until the end of 2011.

Las Vegas is the most populous city in Nevada and internationally renowned for gambling, shopping, and fine dining.

Once immune to national economic trends, continuing to grow, build and thrive despite what happened elsewhere, Las Vegas now faces tough times.

Las Vegas remains the foreclosure capital in the U.S., with one in every 99 homes receiving a foreclosure notice in July, according to California-based residential data tracking firm RealtyTrac.

Nearly two-thirds of existing homes in Las Vegas sold for a loss to the owner between April and June, Seattle-based real estate listing company Zillow said. And more losses are likely to follow.

Local homeowners will have to wait an estimated nine years to recoup just half their pre-recession value, said New York-based Moody's Analytics, and it will take two decades or more before prices fully return.

Most people in Las Vegas simply cannot afford to wait that long. More than 85 percent of valley homeowners there owe more money than their home is worth, resulting in a sea of for-sale signs across the city.

John Restrepo, principal of RCG Economics, a Las Vegas-based research firm, said, for most families, a home is their biggest asset. "As a result, losing their home can financially wipe them out and ruin their credit," he said.

According to the Greater Las Vegas Association of Realtors, there were 22,242 residences available for purchase in July, equal to about a four-year supply of homes based on sales in 2010. The oversupply has pushed prices down to 1999 levels.

Many cash-strapped families have already sapped financial nest eggs as a recession stop-gap to keep milk in their refrigerators and food on their tables.

A lot of the unemployed are construction workers, who had benefited from a 20-year boom in construction that is now no more.

According to the Las Vegas-based business advisory firm Applied Analysis, construction was once an economic superhero responsible for 150,000 jobs statewide in Nevada.

In 2006, the industry generated 14.7 billion U.S. dollars of economic activity, which included almost 22 percent of state and local taxable retail sales, according to Applied Analysis.

Construction was the state's fastest-growing and second-largest employer behind hospitality. Today, however, construction accounts for less than 5 percent of Southern Nevada's workforce. According to the Nevada Contractors Association, Nevada needs 5 billion dollars in infrastructure improvements.

The Federal Highway Administration estimates that every 1 billion dollars invested in highways will support 27,823 jobs. But, with both federal and local governments suffering budget shortfalls, there is little hope that any money will be spent in infrastructure improvements.

Millions of tourists travel from Los Angeles to Las Vegas, but there is no train between the two cities, and people have to drive about five hours to get there.

The 6-billion-dollar DesertXpress high-speed railway project has been planned for many years and it could potentially create 35,000 jobs, while diverting 3 million automobile trips annually along a 186-mile stretch of I-15 highway. DesertXpress would follow the I-15 highway alignment from Victorville, California, to Las Vegas, using existing right-of-way land either along the median or roadside.

Electric-powered trains would travel up to 150 miles per hour using off-the-shelf steel wheel technology, with a one-way trip taking only 1 hour and 24 minutes. The project could transform Las Vegas into a future bedroom community for Los Angeles, and improve traffic flow from Southern California, a vital market for Las Vegas business.

But hopes the high-speed railway would get permission and funding in the foreseeable future are slim. However, there are some positive signs. Visitation and room rates have steadily increased during the past year and a half, according to the Las Vegas Convention and Visitors Authority.

Local visitation increased 7 percent in June, while the number of people coming to town is up by 5.1 percent for the first half of 2011. That is a welcome relief for the city. Citywide occupancy reached nearly 89 percent in June, a 6.4 percent improvement over last year, as room rates climbed to 101 dollars a night, or 13 percent more than 2010.

Email|Print|Comments(Editor:燕勐)

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Tim at 2011-08-2667.239.205.*
"John Restrepo, principal of RCG Economics, a Las Vegas-based research firm, said, for most families, a home is their biggest asset."Restrepo needs a lesson in financial education: A home is NOT (nor ever was) an asset! It is a liability. The fact that we got lucky with equity in the last century was because of a economic cycle that is now done with and foreve obsolete. Depending on equity/capital gains is a fool"s game.
  

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