The document discusses the economic recovery of Southern Nevada from the recession. It provides data on housing prices, job growth, unemployment rates, consumer confidence and other economic indicators from 2001 to 2011. While some indicators like housing prices and unemployment have improved from their lowest points, the recovery has been slow and the region still faces challenges in achieving stronger and sustained job and income growth.

1. The Southern Nevada Recovery:
The Long & Winding Road
Presented to
Risk Management Association
June 15th, 2011
Presented by

2. The U.S. Economy

3. The early warning system - essential in electronic
technology - computers, mobile phones, DVDs.
1,400 Dot Com Bubble
1,200
1,000
800
Semiconductor Sector Index:
6/1996 – 6/2011
600
400
200
0
Jun-96
Jun-97
Jun-98
Jun-99
Jun-00
Jun-01
Jun-02
Jun-03
Jun-04
Jun-05
Jun-06
Jun-07
Jun-08
Jun-09
Jun-10
Jun-11
3
Source: Philadelphia Stock Exchange.

4. Manufacturing purchases continues to
improve at national level.
70 U.S. Purchasing Managers Index (MFG):
5/2001 – 5/2011
60
50
40 Above 50 since 8/2009
30
May-01
May-02
May-03
May-04
May-05
May-06
May-07
May-08
May-09
May-10
May-11
MFG Purchasing Managers Index
May 2011 = 54.5
- Above 50: Manuf. & economy expanding
- 43 to 50: Manuf. contracting; economy may be growing
-Below 43: Manuf. & economy in recession
4
Source: Institute for Supply Management.

5. Unemployment rate stabilizing; but still elevated
relative to the trend rate.
U.S. Unemployment Rate: 4/2001- 4/2011
12%
10% US =9.0%
8%
6%
4%
2%
0%
1
2
3
4
5
6
7
8
9
0
1
-0
-0
-0
-0
-0
-0
-0
-0
-0
-1
-1
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A
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A
A
A
A
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5
Source: U.S. Bureau of Labor Statistics.

6. The Long & Winding Road:
The Potholes

7. Enough said.
7

8. This is what a bubble looks like. Prices at
pre-2000 levels.
240 1
S&P / Case-Shiller
1
Housing Price Index
1
1
190
1
1
0
140
Trend 0
Rate 0
NV-Las Vegas
0
20-City Composite
90 0
0
1
2
3
4
5
6
7
8
9
0
1
-0
-0
-0
-0
-0
-0
-0
-0
-0
-0
-1
-1
ar
ar
ar
ar
ar
ar
ar
ar
ar
ar
ar
ar
M
M
M
M
M
M
M
M
M
M
M
M
8 1/2000 = 100 index
Source: Standard & Poors.

9. Another look @ avg. apartment rents & vacancy.
$900 Asking Rents Vacancy 12%
$880
$860 10%
Average Monthly Rent
$840
8%
$820
$800
Q1-11 6%
$780 10.6%
$760 $754 4%
$740
$720 2%
$700
$680 0%
Q1-05
Q3-05
Q1-06
Q3-06
Q1-07
Q3-07
Q1-08
Q3-08
Q1-09
Q3-09
Q1-10
Q3-10
Q1-11
9
Source: Center for Business and Economic Research, University of Nevada Las Vegas.

10. Little job creation.
At least 6 mos. of steady job growth needed
along with deleveraging needed
10
Probably mid-2012 at the earliest

11. Clark County job market stabilizing
but back to 2004 levels.
1,000,000 1
Establishment-Based Jobs
1
950,000 Clark County: 4/2001 – 4/2011
1
900,000
1
4/11
850,000 804,600 1
800,000 1
0
750,000
0
700,000
0
650,000 0
600,000 0
01
02
03
04
05
06
07
08
09
10
11
-
-
-
-
-
-
-
-
-
-
-
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A
A
A
A
A
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A
11
Source: Bureau of Labor Statistics.

12. Establishment-Based Job Growth (% Y-o-Y)
Clark County & US
10% 1
4/2001 – 4/2011 1
4/11
5% Clark = -0.3%1
US = 1.0% 1
0% 1
1
-5% Clark County 0
US 0
Number of jobs needed to
-10% 0
0
-15% 0
01
02
03
04
05
06
07
08
09
10
11
-
-
-
-
-
-
-
-
-
-
-
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A
A
A
A
A
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A
12
Source: Bureau of Labor Statistics.

13. Good news: Initial unemployment claims
continue to decline, but still at 10-year high.
140,000 1
Clark County Initial Unemployment
Insurance Claims (12-MMT) 1
120,000
1
12-Month Moving Totals
100,000 1
1
80,000
77,910
1
60,000 0
0
40,000
0
20,000
0
0 0
01
02
03
04
05
06
07
08
09
10
11
-
-
-
-
-
-
-
-
-
-
-
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13
Source: Bureau of Labor Statistics.

14. Minimum improvement in weekly hrs worked
means jobs creation will be slow.
Clark County & US Average Weekly Hours
Worked: 1/2007- 4/2011
38
37 Clark County = 34 hrs.
US = 34.3 hrs.
36
Hours
35
34
33
Ja 07
Ja 08
Ja 9
Ja 10
O 7
O 8
O 9
O 10
A 07
Ju 7
A 08
Ju 8
A 09
Ju 9
A 10
Ju 0
A 11
1
l-0
l-0
l-0
-0
-0
-0
-1
-1
-0
l-
n-
n-
n-
n-
n-
-
-
-
pr
ct
pr
ct
pr
ct
pr
ct
pr
Ja
14
Source: U.S. Bureau of Labor Statistics.

15. NV unemployment rate getting better; but still
above national average since mid-2007
US, NV & CA Unemployment Rates:
16% 4/2001- 4/2011
14%
12%
10% US =9.0%
Nevada = 12.5%
8%
California = 11.9%
6%
4%
2%
0%
1
2
3
4
5
6
7
8
9
0
1
-0
-0
-0
-0
-0
-0
-0
-0
-0
-1
-1
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A
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A
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15
Source: U.S. Bureau of Labor Statistics.

16. Job Growth Scenarios
1, 2, 3, 4, 5 years...and longer
950,000 1
1
~57,000:
900,000 1
Total jobs needed to target 6%
unemployment rate*
1
850,000 1
1
800,000 0
0
Jobs needed per month
750,000 2012 = +4,700/mo 2013 = +2,400/mo 0
2014 = +1,600/mo
2015 = +1,200/mo 2016 = +1,000/mo 0
700,000 0
A 01
A 02
A 03
A 04
A 05
A 06
A 07
A 08
A 09
A 10
A 11
A 12
A 13
A 14
A 15
6
-1
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
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16
*Assuming labor force remains constant, and 1 job (CES) equates to 1
person (LAUS) becoming employed. Source: Bureau of Labor Statistics.

17. And flat incomes don’t help
17

18. “The Challenge”: LV & U.S. median family income also
remains flat. Impacts purchasing power.
1 $70
$65.5
Median Household Income $65
LV & US $64.0
$60
$ in thousands
$55
$50
$41.8 $45
$40
$40.8
$35
0 $30
2
3
4
5
6
7
8
9
0
1
2
3
4
5
6
7
8
9
0
1
9
9
9
9
9
9
9
9
0
0
0
0
0
0
0
0
0
0
1
1
1/
1/
1/
1/
1/
1/
1/
1/
1/
1/
1/
1/
1/
1/
1/
1/
1/
1/
1/
1/
Q
Q
Q
Q
Q
Q
Q
Q
Q
Q
Q
Q
Q
Q
Q
Q
Q
Q
Q
Q
US '92$ US current $
LV-Paradise MSA '92$ LV-Paradise MSA current $
18
Sources: Department of Housing & Urban Development; US Bureau
of Labor Statistics; RCG Economics.

19. Consumer confidence has risen from low-point
at beginning of 2009.
1 140
U.S. Consumer Confidence Index
120
100
5/11=60.8, similar to 80
3/03 levels
60
Still far from the reading
of 90 that indicates a 40
healthy economy.
20
0 0
1
2
3
4
5
6
7
8
9
0
1
-0
-0
-0
-0
-0
-0
-0
-0
-0
-1
-1
ay
ay
ay
ay
ay
ay
ay
ay
ay
ay
ay
M
M
M
M
M
M
M
M
M
M
M
19
Source: The Conference Board.

20. The sign of the New Frugality. Personal savings
rate likely to remain elevated for some time.
U.S. Personal Savings Rate
1 9%
8%
4/11=4.9%
7%
6%
5%
4%
3%
2%
1%
0 0%
01
02
03
04
05
06
07
08
09
10
11
-
-
-
-
-
-
-
-
-
-
-
pr
pr
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pr
pr
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pr
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A
A
A
A
A
A
A
A
A
A
A
20
Sources: U.S. Bureau of Labor Statistics.

21. Finally, consumer debt loads will restrain
spending.
21

22. National Household Debt Service &
Financial Obligations Ratios
20 1
Debt 0.9
18 Service 0.8
(DSR) 16.64
0.7
16 0.6
0.5
Financial
14 Obligation
0.4
(FOR) 0.3
11.74
12 0.2
0.1
10 0
0
3
6
9
2
5
8
1
4
7
0
8
8
8
8
9
9
9
0
0
0
1
4/
4/
4/
4/
4/
4/
4/
4/
4/
4/
4/
Q
Q
Q
Q
Q
Q
Q
Q
Q
Q
Q
DSR = % of debt payments (estimated required payments on outstanding
mortgage and consumer debt) to disposable personal income.
FOR = adds automobile lease payments, rental payments on tenant-occupied
property, homeowners' insurance & property tax payments to the DSR.
22
Source: Federal Reserve Board.

23. Now we have elevated gas prices
23

24. A mild respite. . . but
$4.5 1
Forecast
0.9
$4.0
0.8
$3.5 Real Price
(Jun 2011 $) 0.7
$3.0
0.6
$2.5 Nominal Price
0.5
$2.0
0.4
$1.5 0.3
$1.0 0.2
$0.5 0.1
$0.0 0
6
9
2
5
8
1
4
7
0
3
6
9
2
7
7
8
8
8
9
9
9
0
0
0
0
1
1/
1/
1/
1/
1/
1/
1/
1/
1/
1/
1/
1/
1/
Q
Q
Q
Q
Q
Q
Q
Q
Q
Q
Q
Q
Q
24
Source: Energy Information Administration.

25. And food price spike isn’t helping.
25

26. World Commodity Food Price Index
200 1
1
180 187.01 1
1
160 1
1
140 0
0
120 0
0
100 0
6
7
8
9
0
1
-0
-0
-0
-0
-1
-1
ay
ay
ay
ay
ay
ay
M
M
M
M
M
M
26
Source: Index Mundi.

27. Reduced government spending is not all good.
Remember government IS an economic sector
• Budget Cuts • With Rising Demands
“The upcoming fiscal year (FY2012) is shaping up as one of states’
27 most difficult budget years on record. Thus far, some 44 states
and the District of Columbia are projecting budget shortfalls
totaling $112 billion for fiscal year 2012.” - CBPP

28. 28
0%
5%
10%
15%
20%
25%
30%
35%
45%
50%
Alabama
Arizona
California*
Colorado
Connecticut
Delaware
District of Columbia
Florida
Georgia
Hawaii
Idaho
Illinois
Indiana
Iowa
Kansas
Kentucky*
Louisiana
Maine
Maryland
Massachusetts
Michigan
Minnesota
Mississippi
40% Shortfall as % of State GF Budget
Missouri
Nebraska
Nevada
New Hampshire
45.20%
New Jersey
New Mexico
New York
North Carolina
Ohio*
Oklahoma
Oregon*
States with Projected FY 2012 Shortfalls.
Pennsylvania
Rhode Island
South Carolina
South Dakota
Tennessee
Texas
Utah
Vermont
Virginia*
Washington
Wisconsin
States Total
Source: Center on Budget & Policy Priorities, 3/9/2011.

29. Las Vegas Real
Estate Markets

30. The industrial market will be first to improve
as inventories are rebuilt.
18% Valley Industrial Vacancy & Asking Rents $0.90
Q1, 2005 – Q1, 2011
16% $0.80
14% $0.70
12% $0.60
10% Vacancy (%) $0.50
Asking Rents ($ PSF per Month)
8% $0.40
6% $0.30
4% $0.20
2% $0.10
0% $0.00
Q1 '05
Q3 '05
Q1 '06
Q3 '06
Q1 '07
Q3 '07
Q1 '08
Q3 '08
Q1 '09
Q3 '09
Q1 '10
Q3 '10
Q1 '11
30
Source: RCG Economics.

31. The Valley’s office market will be last to recover.
Overbuilding & anemic hiring.
25% Valley Spec Office Vacancy & Asking $3.00
Rents: Q1, 2005 – Q1, 2011
20%
$2.50
15%
10%
$2.00
5% Vacancy (%)
Asking Rents ($ PSF per Month)
0% $1.50
Q1 '05
Q3 '05
Q1 '06
Q3 '06
Q1 '07
Q3 '07
Q1 '08
Q3 '08
Q1 '09
Q3 '09
Q1 '10
Q3 '10
Q1 '11
31
Source: RCG Economics.

32. Valley’s retail market remains in doldrums.
Consumer confidence & spending is key.
14% Valley Anchored Retail Vacancy & Asking Rents $2.50
Q1, 2005 – Q1, 2011
12%
$2.00
10%
$1.50
8%
Vacancy (%)
6% Asking Rents ($ PSF per Month)
$1.00
4%
$0.50
2%
0% $0.00
Q1 '05
Q3 '05
Q1 '06
Q3 '06
Q1 '07
Q3 '07
Q1 '08
Q3 '08
Q1 '09
Q3 '09
Q1 '10
Q3 '10
Q1 '11
32
Source: RCG Economics.

33. Years of supply to reach 10% vacancy.
Las Vegas Valley Commercial Market: Q1, 2011
Years of Supply
17.8
18.0 Vacant Inventory
16.0 Under Construction
Square Feet (Millions)
40-qtr (10-yr) Avg. Absorption
14.0
12.0
10.0
10.0
8.0
6.0 5.4
4.0
2.0 0.6
0.2 0.2 0.3 0.0 0.4
0.0
Indus (3.2 Yrs of Spec Ofc (5.0 Yrs of Anchored Ret. (0.7
33 Supply) Supply) Yrs of Supply)
Source: RCG Economics.

34. And that’s why the recovery will be long
& winding.
34

35. Contact:
John Restrepo
702-967-3188
jrestrepo@rcg1.com