April 19, 2

013

SOUTHERN NEVADA ECONOMY:

RESET. . . REBUILD . . .

RECOVER

Prepared by:

RESET

3

The ugliest chart, ever.This is NOT your father’s recession.

Source: U.S. Bureau of Labor Statistics. Indexed by RCG.

Nevada Recovery Comparison of Last 11 Recessions (1948 – 2007)% Job Losses Compared to Peak Job Month

Current Jobs Recession-NV

4

6

8

10

12

14

16

18

20

22

24

Q4/08

Q1/09

Q2/09

Q3/09

Q4/09

Q1/10

Q2/10

Q3/10

Q4/10

Q1/11

Q2/11

Q3/11

Q4/11

Q1/12

Q2/12

Q3/12

Q4/12

% R

ate

The “real” unemployment rate - beyond the official rate.

Note: Rates are at a 4-quarter moving-average basis. Source: U.S. Bureau of Labor Statistics.

U3 = Official unemployment rate - 11.0%

U6 = U3 + All Marginally Attached + Part-time Workers - 20.3%U5 = U3 + Discouraged + All Other Marginally Attached Workers-13.3U4 = U3 + Discouraged Workers- 11.9%

Alternative Measures of the Nevada Unemployment Rate: 2008 - 2012

5

REBUILD

Resort Industr

y

6

Clark County Non-Farm Employment & Visitation Growth (%): 2003 - 2013

-15%

-10%

-5%

0%

5%

10%

Employment (Feb/12 - Feb/13) = +16,000 jobs)Visitor Volume (Feb/13 = 3.3 M visitors)

The moderate return of visitor & job growth.

Sources: U.S. Bureau of Labor Statistics; Las Vegas Conventions & Visitors Authority.

7

Las Vegas remains a strong player in global gaming resort market. But is it still “Mecca”?

Source: Nevada Gaming Control Board.

Clark County Gaming Revenue: 2003 – 2013

Net Baccarat

GGR

8

Leisure & Hosp.’s improving operating environment.

Healthy increases in avg. daily room rates.

Clark County Hotel Revenue Per Available Room (RevPAR*): 2005 - 2013

* RevPAR = average daily room rate x occupancy rate. Source: Las Vegas Convention and Visitors Authority. Calculated by RCG.

$50

$75

$100

$125

$150

Feb-

05

Feb-

06

Feb-

07

Feb-

08

Feb-

09

Feb-

10

Feb-

11

Feb-

12

Feb-

13

RevPAR

12-Month Moving Average

9

Consumer spending slowly returning. How sustainable?

Source: Nevada Department of Taxation.

Clark County Taxable Sales (12-Mo. Moving Average): 2003 – 2013

$1.5

$2.0

$2.5

$3.0

$3.5

Feb-

03

Feb-

04

Feb-

05

Feb-

06

Feb-

07

Feb-

08

Feb-

09

Feb-

10

Feb-

11

Feb-

12

Feb-

13

12MMA

10

REBUILDJob

Market

11

Private jobs growing at a moderate pace, but government jobs continue to lag.

Source: U.S. Bureau of Labor Statistics.

Clark County Public & Private Employment Growth (#): 2003 - 2013

-100,000

-75,000

-50,000

-25,000

0

25,000

50,000

75,000

YoY E

mplo

yment C

hange

Public Emp. Ch. (Feb/12-Feb/13 = +1,600)

Private Emp. Ch. (Feb/12-Feb/13 = +14,400)

12 *Based on Clark County's employment-to-workforce ratio (Nevada Department of Employment, Training and Rehabilitation). Indexed to a baseline of 100 in December 1998.

The Stair Climb Return

RCG Clark County & US Job Index*: 2000 - 2013

88

90

92

94

96

98

100

102

Feb-

00

Feb-

01

Feb-

02

Feb-

03

Feb-

04

Feb-

05

Feb-

06

Feb-

07

Feb-

08

Feb-

09

Feb-

10

Feb-

11

Feb-

12

Feb-

13

Clark County

US

Clark County

February 2013 = 93.7

2012 Annual avg. = 92.2

2000 - 2012 avg. = 96.1 2000 - 2007 avg. = 98.7

2008 - 2012 avg. = 91.8

13

Diversified or Not? Southern NV’s Economy

12.3% 11.8% 12.1% 12.8%17.4% 16.8% 16.4% 16.4%

3.1% 2.9% 3.0% 3.2%

3.9% 4.2% 4.0% 4.1%

34.8% 34.1% 32.1% 34.9%

8.4% 9.0% 9.5% 10.0%

6.9% 7.2% 7.7%9.8%

11.1% 12.7% 13.6% 15.4%

4.1% 4.3% 4.6%4.3%

10.2%12.1% 13.0%

13.4%

6.3% 6.2% 5.7%5.5%

6.1%6.2% 6.1%

5.9%

18.9% 18.8% 19.1%

20.5%

20.4%19.6% 19.5% 19.3%

3.2% 3.1% 3.1%

2.7%

15.4% 11.5% 10.0% 8.9%8.5% 10.1% 11.3%

5.0% 3.9% 4.9% 5.2% 4.0%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

1993 2003 2008 2013 1993 2003 2008 2013

Natural Res.

Construction

Manufacturing

Trade/Trans./Util.

Information

Financial Act.

Prof. & Business

Educ. & Health

Leisure & Hosp.

Other Services

Government

Clark County U.S.

Source: U.S. Bureau of Labor Statistics. Analyzed by RCG.

Employment Distribution by Industry

14

Nat. Res./Mining, 0.1, 300

Constr., 1.2, 37,400

Manuf., 0.3, 20,000

Trade/Trans./Util., 1.1, 154,200

Inform., 0.6, 9,600

Financial, 0.9, 41,600

Prof./Bus., 0.3, 32,300

Educ./Health, 0.6, 73,700

Leis./Hosp., 3.5, 262,000

Other, 0.8, 23,700

Gov., 0.8, 96,1000.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

-50% -30% -10% 10% 30%

LQ (2

013)

% Change in LQ (2003 - 2013)

14 Note: The first value by each industry is the LQ for that industry; the second value is the number of employees in that industry in 2013. Source: U.S. Bureau of Labor Statistics. Analyzed by RCG.

Diversified or Not?, cont’d: Location QuotientsSouthern NV’s Economy, Last 10 Years

Mature sectors that are losing ground

Mature, healthy sectors

Sectors that need attention

Potential up-and-coming sectors

15

$819

$841

$822

$900

$947$937

$775

$825

$875

$925

$975 Clark County

US

S. Nevada has competitive but relatively low wages. Avg. weekly wage below the U.S. average.

Source: U.S. Bureau of Labor Statistics. Calculated by RCG.

10% above Clark

14%

Clark County & US Average Weekly Wages – Adjusted in 2012 $

16

REBUILD

Real Estate

17

$100,000

$150,000

$200,000

$250,000

$300,000

$350,000

0

0

0

0

0

1

1

1

1

1

1

New Home

Resale Home

Both types

Median Home Prices*: 2003 - 2013

* All product types, including hi-rises. Sources: Home Builders Research; MLS.

Southern Nevada’s new housing market has stabilized & improved over the past 12 months.

18Sources: Various local entities; Center For Business & Economic Research at UNLV.

Commercial permitting values have finally hit a bottom & continues to stabilize.

Clark County Annualized Commercial Permit Valuation: 2003 - 2013

12-Month Moving Totals

$0

$250,000,000

$500,000,000

$750,000,000

$1,000,000,000

$1,250,000,000

$1,500,000,000

$1,750,000,000

$2,000,000,000

$2,250,000,000

$2,500,000,000

$2,750,000,000

12-Month Total ending Feb/2013:

$196.5 M

19

0%

2%

4%

6%

8%

10%

12%

14%

16%

18%

Q4 '07 Q4 '08 Q4 '09 Q4 '10 Q4'11 Q4 '12$0.00

$0.10

$0.20

$0.30

$0.40

$0.50

$0.60

$0.70

$0.80

$0.90

Vacancy (%)

Asking Rents ($ PSF/Mo.)

Industrial Vacancy & Asking Rents: 2007 - 2012

Sources: RCG Economics.

The Industrial market continues to bump along the bottom with stable but high vacancies.

20

0%

5%

10%

15%

20%

25%

Q4 '07 Q4 '08 Q4 '09 Q4 '10 Q4 '11 Q4'12$1.50

$2.00

$2.50

$3.00

Vacancy (%)

Asking Rents ($ PSF/Mo.)

Spec Office Vacancy & Asking Rents: 2007 - 2012

Source: RCG Economics.

The office market made some headway in 2012 & continues to stabilize with high vacancy.

21

0%

2%

4%

6%

8%

10%

12%

14%

Q4 '07 Q4 '08 Q4 '09 Q4 '10 Q4 '11 Q4 '12

$0.00

$0.50

$1.00

$1.50

$2.00

$2.50

Vacancy (%)

Asking Rents ($ PSF/Mo.)

Sources: RCG Economics.

Anchored Retail Vacancy & Asking Rents: 2007 - 2012

The anchored retail market is the most improved,because of improving taxable retail sales.

RECOVER

23

Realism vs. Fantasy

• Relentless Pragmatism & Creativity Are Key

• Real Economic Development

• Learning From Others

• Making Necessary Investments

• True Public-Private Partnerships

• Focus On Our True Assets

Southern Nevada’s MOST

IMPORTANT Asset

25

Everyone In This Room

Questions

27

Contact:John Restrepo702-967-3188

jrestrepo@rcg1.comwww.rcg1.com

Twitter: @rcgeconomics