Las Vegas suffering like never beforeThere are many cities across the country that are beginning to see the first glimpses of the end of the recession

There are many cities across the country that
are beginning to see the first glimpses of the
end of the recession.

This is not one of them.

The nation's gambling capital is staggering
under a confluence of economic forces that
has sent Las Vegas into what officials
describe as its deepest economic rut since
casinos first began rising in the desert there
in the 1940s.

Even as city leaders remain hopeful that
gambling revenues will rebound with the
nation's economy, experts pro- ject that it
will not be enough to make up for an even
deeper realignment that has taken place in
the course of this recession: the collapse of
the construction industry, which was the
other economic pillar of the city and the
state.

Unemployment in Nevada is 14.4 percent, the
highest in the nation and a stark contrast to
the 3.8 percent unemployment rate there 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 Plaza Hotel and Casino, which is
downtown, recently announced that it was
laying off 400 workers and closing its hotel
and parts of its casino for eventual
renovation, the latest high-profile hit to a city
that has seen a steady parade of them.

"It's been in bad shape before, but not this
bad," said David Schwartz, director of the
Center for Gaming Research at the University
of Nevada, Las Vegas. "If you look at the
gaming revenues, they have declined and
continue to decline over the past three years.

"September 11 set off a two-year slowdown,"
Schwartz said. "But nothing of this
magnitude."

'Not what it was'

Mayor Oscar Goodman said in a recent
interview that he was "very bullish on our
future," offering as evidence the packed
airplanes he encountered both ways on a
recent trip east to appear on "The Colbert
Report."

But, he added: "Our daily room rate average
is not what it was. Our hotel room rates are
bargains now. People aren't spending on gambling as they have in the past. Ordinarily
Las Vegas was the last to go into a recession
and the first to come out. This one is
different. As soon as they feel secure in their
financial position, then Las Vegas will come
back stronger than ever."

The drop in the city's gambling revenues, at
first glance, tracks historical trends:
Americans cut back on recreational travel
and gambling during a recession. There are s
ome signs that gambling revenues, which
are down to 2004 levels, have at least
stabilized. After months of precipitous
decline, revenues increased 3 percent in the
first quarter of 2010, but then dropped 5
percent in the second quarter, according to
the Center for Gaming Research.

"I think we are bumping along the bottom,"
said Stephen Brown, the director of the
Center for Business and Economic Research
at the University of Nevada, Las Vegas, which
has been tracking the downturn.
"Expectations are that once the U.S. economy
turns around, the gaming industry will begin
to improve."

What is worrisome now is the nature of this
economic downturn, when many people saw
the value of their retirement funds or homes
collapse. Economists say people are less likely to gamble as freely as they have in the
past, particularly baby boomers, who may
now be rattled about their retirement years.
In one sign of this, while there were more
people coming to Las Vegas in recent
months, gambling receipts have remained
stagnant.

Paying a steep price

The downturn in gambling is just one big part
of the economic malaise. Nevada is paying a
price for an exuberant and often speculative
run of commercial and residential
construction that has left the market glutted.
As a result, the confidence that the return of
tourists alone would spur the city to rebound
automatically after this recession -- the way
it did after, say, the recessions of 1982 and
1992 -- is absent.

"There was a time 25 years ago that if
tourism rebounded, the state rebounded,"
said Billy Vassiliadis, the chief executive of
the advertising agency that represents the
Las Vegas Convention and Visitors Authority.
"That isn't the case anymore ... There needs
to be some real, thoughtful, deliberate effort
to rebuild an economy here. It isn't going to
happen by itself."