Not Leaving Las Vegas

Unemployment in Nevada is now 14.4 percent, the highest in the nation and a stark contrast to the 3.8 percent unemployment rate here 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 article is here and it details other grim aspects of the city's economy.  This is a simple yet effective example of the current non-separability of aggregate demand and structural problems.  Demand in Las Vegas is ailing and businesses are complaining of low sales.  Yet this is a sectoral shift as well, resulting from especially bad local housing problems, lower travel demand from outsiders, and a growing desire for investment safety rather than gambling risk.  Las Vegas needs for the United States to have higher real asset values, not just higher nominal aggregate demand.

It is a mistake to require that the sectoral aspect of the explanation postulate an offsetting boom in some other city or some other non-travel, non-gambling sector; that is one sectoral theory but not the one which applies today.

Comments

"It is a mistake to require that the sectoral aspect of the explanation postulate an offsetting boom in some other city or some other non-travel, non-gambling sector; that is one sectoral theory but not the one which applies today."

Why? Not being argumentative, just seems like this is a thought worth finishing and I'm not sure what ending you had in mind...

A couple of years ago I took on Paul Krugman's dismissal of Arnold Kling's recalculation hypothesis using Las Vegas as my example, specifically the long-term mothballing of the half-finished $4.7 billion Echelon hotel complex on the Strip.:

http://isteve.blogspot.com/2008/10/i-had-not-realized-nobel-laureate-paul.html

We need to move the gambling from New York to Las Vegas.

Nevada's economy gets a bad reputation because of Las Vegas. I'm up in Reno, and things are improving at a steady clip up here. Still bad, mind you, but nothing compared to Vegas.

Is it just me or do others feel Tyler's posts getting denser. Do you have to be difficult to understand in the quest to be profound? The last sentence of the post really had my brain tied up in a knot.....

Lost Wages.

Waddaya expect? The Vegas economy is even more of a shell-game than the rest of the nation.

And they're opening more casinos on the east coast.

Casinos, not factories.

Yep, that's the way to go...

Don't forget Nevada voted to create a higher minimum wage ($1 above the national minimum adjusted with inflation) and the legislature has increased taxes twice in the last 10 years - including maxing the room tax at around 13 percent, increasing franchise and business license fees and creating a payroll tax, entertainment tax, and more.

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