Economist: Businesses will wait out ‘screwy election cycle’
October 2, 2012
Hang on. Just hang on.
That’s essentially what a popular economist returning to Carson Valley for the third time had to say last week at a gathering of business owners, economic development officials and politicos.
“The light at the end of the tunnel is visible,” Jim Rounds, vice president and senior economist with Elliott D. Pollack and Company, said Thursday at the 18th annual Critical Issues Conference, which is organized by the Business Council of Douglas County. “Keep your chins up.”
Rounds predicted that Nevada will not reach a full recovery in terms of employment until 2017, which means that Nevada will have suffered an entire decade of economic decline since the recession began in 2007.
The good news, he said, is that we are closer to the end of the cycle than the beginning. He expects the economy to start picking up steam at the end of 2013 or beginning of 2014.
“This is still going to be a growth state,” he said. “You still have the assets that you had before the recession.”
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Those assets include geography, he said. Nevada is part of the “sunbelt,” where cold-averse retirees are looking to settle down.
“The good news is households are getting their finances back in order,” he said.
Rounds noted that retail sales are up across the country, and consumer confidence, if still bruised, is returning to the marketplace.
“We could be stuck in first gear for a while,” he said.
He argued that a faster, stronger recovery would be possible if not for the political uncertainty emanating from Washington D.C.
“The psychology is as real as the economic data,” he said. “People tell me, ‘I’m going to know a lot more in six months.’ Unfortunately, that’s going to stall the economy a bit.”
Rounds addressed the proverbial fiscal cliff – automatic spending cuts set to begin next year if lawmakers can’t reach a budget deal. He said large-scale cuts, coupled with tax increases if the Bush rates expire, could knock 3 percentage points off national gross domestic product. Some states might be able to absorb such reductions, but he feared Nevada would be thrown back into recession.
Rounds called the current climate in Washington “a really screwy election cycle.” He argued that spending cuts alone will not balance the federal budget, invoking the specter of tax hikes.
“There are not enough government agencies to cut to balance the budget. The math isn’t working out,” he said. “I wish we weren’t in this position.”
While Rounds provided an overview of the economy, other speakers at the conference focused on specific investments in the region.
Bill Rock, chief operating officer at Northstar, said Vail Resorts has invested $100 million in Heavenly Mountain Resort since 2002. The company also purchased Kirkwood earlier this year.
“With our pass sales, we’re expecting to see volumes at Kirkwood not seen in years,” he said. “We’ll operate there for a year and see what happens, and then we’ll make investments in the right place.”
Rock said new changes in federal law will expand recreational summer uses on public lands.
“Obviously, it will mean jobs year-round, more people visiting, and more sales tax dollars,” he said.
He believes the Lake Tahoe Basin could become the premier ski destination in the country, if not the world.
“We are going after the destination skier,” he said. “That means great things for all of you and surrounding communities.”
Patrick Rhamey, vice president of real estate for Edgewood Companies, said a restructured Tahoe Regional Planning Agency will enable new development in the basin to strengthen the area’s “bed base” and mitigate sediment flows into the lake.
“Environmental gain through redevelopment,” he said. “We need to attract investment capital, and an updated regulatory process will help us do that.”
For example, Rhamey said, the TRPA recently approved a 194-room lodge on Edgewood beachfront property. The project entails major improvements to habitat and watershed.
“Gaming will not drive our economy, but it will be part of it,” he said. “Recreation and entertainment are the pathways forward for our economy.”
A portion of Thursday’s conference was dedicated to the host itself. Celebrating 20 years of operation, the Business Council of Douglas County received a proclamation from the governor’s office.
As Assemblyman Kelly Kite, R-Minden, put it, the organization is where, “business people can talk to other business people about business.”