The Backyard Economy: Nevada
A look at this state's economic issues.
— -- A state known for its ritzy casinos has lately become famous for a dubious distinction: Nevada had the highest rate of home foreclosures in the United States in the first three months of this year.
According to the research firm RealtyTrac, one in every 54 Nevada households received a foreclosure filing during that period, for a total of 19,595.
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Once celebrated for its rapid growth, Nevada's housing construction began slowing in 2006, said Keith Schwer, the director of the Center for Business and Economic Research at the University of Las Vegas, Nevada. In Las Vegas alone, he said, there are now 27,000 vacant homes.
"We have for many years been the fastest-growing state, so when you slow down to a stall speed, it feels like a recession," Schwer said.
On the Las Vegas strip, the lodging industry has invested $30 billion for 40,000 hotel rooms, which are now under construction. Still, that won't compensate for the job losses related to the downturn in residential construction, Schwer said.
The tourism industry, according to Moody's Economy.com, has also shed jobs. Overall, the state's unemployment rate rose to 5.8 percent in March.
But there is a bright side for Nevada. As the country's leading gold producer, the state has benefited from the recent spikes in gold prices, Schwer said. In 2007, Nevada mines produced a record $5.4 billion in gold, silver and other minerals, according to The Associated Press.
In addition, the education and health sectors in Nevada are expanding, driven by the state's continuous population growth, according to Moody's.
Schwer said that, despite a slight drop in visitors to the state, tourism should also continue to serve Nevada well.
"In Nevada, even today, its room rates are among the best in the nation," he said. "We've become a value for those people, in a recession, who are looking to travel and perhaps wishing to spend less. Instead of going to Paris, France, they go to the Paris casino in Las Vegas."