NBER says recession ended only 5 months after Obama was elected

According to the U.S. National Bureau of Economic Research the depression began at the beginning of December of 2007. Most Nevadans were surprised to find that according to NBER calculations the recession ended at the end of June 2009. Very few people in Las Vegas were aware of any significant change in business conditions at the end of June.

The following table summarizes the changes in gaming revenue from the beginning of the recession until the end of the recession designated by the NBER. It also shows the change in revenue from the end of the recession until the latest date for which gaming revenue has been released. A comprehensive percentage is also shown. The metric used for the percentages was the trailing 12 month average up until that date to remove any seasonal variation. Percentages are shown per month. Because baccarat and blackjack had such a large affect over the last years, they are highlighted separately. Also Strip numbers are shown less baccarat revenue.

Region (Percentages per month)	Recession	Post Recession	Total Percentage
Start Date	1-Dec-2007	1-Jul-2009	1-Dec-2007
Finish Date	30-Jun-2009	31-Jul-2010	31-Jul-2010
State of Nevada	-1.0%	-0.4%	-20.0%
Blackjack in Nevada	-1.3%	-1.3%	-32.0%
Clark County	-1.0%	-0.3%	-19.0%
Downtown	-0.8%	-0.9%	-21.0%
Las Vegas Strip	-1.0%	-0.1%	-18.0%
Baccarat on Strip	-1.1%	+3.6%	+22.0%
Strip less Baccarat	-1.0%	-0.8%	-24.0%
Laughlin	-1.0%	-0.9%	-24.0%
North Las Vegas (1 new casino)	-0.2%	-0.5%	-10.0%
Boulder Strip (2 new casinos)	-0.6%	-0.6%	-17.0%

In contrast, the Vegas Strip went up an average of 0.76% / month for the 46 months before the recession.

While the State and Clark County figures improved in the post recession period, Downtown, Laughlin, North Las Vegas, and Boulder Strip were the about the same or worse.

Blackjack dropped significantly both during and after the recession. Baccarat was the only game that showed dramatic improvement in the post recession period.

The strip only showed improvement because of baccarat. Without baccarat revenue the strip did more poorly than Clark County. New casinos had no effect on the strip on overall gaming revenue, but they did slow the loss in the regional markets of North Las Vegas and Boulder Strip.

North Las Vegas had only (1) Cannery Casino and (2) Texas Station until Alliante Station was added.
Boulder Strip had (1) Boulder Station, (2) Sunset Station, (3) Green Valley Station, and (4) Sam's Town before M Resort and Casino and Eastside Cannery were added.

very nice study.

My 2 cents.
The U.S. National Bureau of Economic Research started years ago and had very respectable goals back then.

Unfortunately, now days, they receive many government grants, (free money) to do their studies. I know someone that works for this group. Maybe he will post some interesting news.


Billionaire Warren Buffett says the economy remains in a recession according to a recent news item.

I would trust Mr Buffett, who puts his money where his mouth is,

way before I trust a group of yahoos, sitting around watching tv and getting government grants.

Well, of course we all know that the Second Great Depression isn't even close to over; in fact, it hasn't even stopped getting worse. We also know that government unemployment figures are moonshine, and that 1 in 4 persons are actually out of work or underemployed.

That said, I wonder just how significant "gaming revenue" figures are as an indicator of overall Vegas economic health. I seem to recall a recent survey that showing that visitation was actually UP, but the amount of money a given person blew during a visit was sharply DOWN. Now, not everything Vegas offers is directly related to gambling--there's nice hotels, great food, entertainment, balmy 120 degree temperatures, etc. So I think the place could still be a going concern even if they sheared less wool from the sheep--just so long as the sheep kept coming back.

The numbers always seem to be in advance of reality in both a depression and a boom.

Quote: mkl654321

That said, I wonder just how significant "gaming revenue" figures are as an indicator of overall Vegas economic health. I seem to recall a recent survey that showing that visitation was actually UP, but the amount of money a given person blew during a visit was sharply DOWN.

Gaming revenue is now an indirect indicator of Vegas economic health. It does affect government highly because of the taxes. They can keep visitation numbers fairly high by simply giving the rooms away for very little money. Neverthless the strip makes more money from non-gaming revenue than from gaming. Downtown still takes in most of its money from gaming.

In this survey of downtown Las Vegas, you see that until recently the gaming numbers have only been on a slow slide. But in Fiscal year 2006 downtown set new records for non-gaming revenue and overall profitability. Downtown was cashing in because the strip was able to charge such exorbitant rates for a hotel room. People (especially city officials) got very excited and forecast a new era for downtown. Now of course, the whole area is slipping into the toilet as two major hotels closed their rooms, and the new 275 condo tower sits nearly vacant.

Fiscal	Gaming	Non Gaming	Total	Cost of Sales + Expenses	Income
2010	$504,797,262	$000,000,000	$000,000,000	$0,000,000,000	-$00,000,000
2009	$548,229,363	$423,478,789	$971,708,152	$1,025,762,675	-$54,054,523
2008	$614,300,055	$486,011,289	$1,100,311,344	$1,069,517,335	$30,794,009
2007	$624,342,258	$476,021,955	$1,100,364,213	$1,035,724,394	$64,639,819
2006	$641,867,763	$549,908,852	$1,191,776,615	$1,051,137,744	$140,638,871
2005	$658,620,516	$453,983,449	$1,112,603,965	$1,063,477,540	$49,126,425
2004	$653,438,887	$432,280,254	$1,085,719,141	$1,043,617,621	$42,101,520
2003	$655,186,940	$430,046,275	$1,085,233,215	$1,061,310,849	$23,922,366
2002	$661,435,043	$424,290,301	$1,085,725,344	$1,085,143,588	$581,756
2001	$671,942,657	$430,689,916	$1,102,632,573	$1,081,845,340	$20,787,233
2000	$670,245,345	$426,704,853	$1,096,950,198	$1,067,715,580	$29,234,618
1999	$667,172,173	$428,829,098	$1,096,001,271	$1,087,802,160	$8,199,111
1998	$683,125,890	$440,043,947	$1,123,169,837	$1,124,023,556	-$853,719
1997	$687,734,387	$458,187,682	$1,145,922,069	$1,195,709,593	-$49,787,524
1996	$654,362,075	$350,799,805	$1,005,161,880	$984,724,435	$20,437,445

Although fiscal year 2010 ended on June 2010, the non-gaming numbers are not reported until February 2011. I suspect that non-gaming revenue will be between $350-$400 million as they are caught in a downward spiral of closing rooms, catering to lower and lower class people and fighting costs on every front. I think that income will be even worse than losing $54 million in FY2009.

Historically revenue went way down after 9/11 (but still stayed positive). The negative numbers in the late 1990's were probably almost all due to the Stratosphere which had massive financial problems when it first opened.

One thing that seems important is that the Strip has actually tumbled almost as bad as the regional markets. If you take out baccarat it has done as badly as Laughlin.

There is a myth going around that the tourist spending is back up while NV with it's massive unemployment is still way down. Other than these high rollers I don't see it in the numbers.

The concern is that baccarat players will keep on drifting to the newest place on the planet, and Vegas is not likely to open something for years.

Quote: pacomartin

One thing that seems important is that the Strip has actually tumbled almost as bad as the regional markets. If you take out baccarat it has done as badly as Laughlin.

There is a myth going around that the tourist spending is back up while NV with it's massive unemployment is still way down. Other than these high rollers I don't see it in the numbers.

The concern is that baccarat players will keep on drifting to the newest place on the planet, and Vegas is not likely to open something for years.

In the long run, the collapse of the Vegas casino industry will be healthy for the city. It will be forced to produce actual, tangible goods and services, rather than the illusory goods of gambling and entertainment.

The reason why Vegas is hurting is simple--the demand for the goods it produces is EXTREMELY elastic. When the price of gambling goes up--as it did, in effect, when people's disposable incomes went WAY down--the demand for it plummets. Vegas casinos have done too little, too late in reducing the price of their gambling--most, in fact, have done the REVERSE--raising prices, making odds worse, cutting down on service, slashing promotions, and making players' clubs MUCH worse. Not to mention, slashing comps, mailers, and cash back. The only thing they've liberalized is room offers, which brings in a lot of people who hang out in the jacuzzi tub, play nickel slots, and scarf down the buffet.

Quote: mkl654321

In the long run, the collapse of the Vegas casino industry will be healthy for the city. It will be forced to produce actual, tangible goods and services, rather than the illusory goods of gambling and entertainment.

In the first entry on this run, I said the strip went down 18% in the last 20 months. Before that revenue was rising.

Atlantic city gaming revenue went down 20% in the 24 months of calendar year 2008 and 2009. It has dropping at the rate of 11% a year for the 7 months of 2010.

So by all accounts Atlantic City is doing much worse than Las Vegas on gambling revenue. The non-gaming business is by and large a money losing operation in AC (with the exception of the Borgata).

Would your "good in the long run" theory apply to AC as well? Or do you think it will continue to slide as competition increases or a major infusion of capital happens?


The A.C. Hilton and the Tropicana would seem to be on the short list of casinos to close. I am basing this assessment on their miserable performance and their geographical detachment from the rest of the casinos in the city. Yet Carl Icahn bought the Tropicana, and Tilman Fertitta is considering buying the Hilton (the old Golden Nugget). That is reasonably smart money chasing some down and out properties. They must have some ideas on how to reverse the tide.

I haven't been to AC in decades, but from a tourist maps the hotels around the Hilton and the Tropicana are pretty much very small and pretty divy.
Ascot Motel
Eldorado Motor Inn
Days Inn
El Greco Motel
Econo Lodge
Flamingo Motel
Rodeway Inn
The Chelsea (seems to be the only decent one of the bunch).

Quote: pacomartin

Would your "good in the long run" theory apply to AC as well? Or do you think it will continue to slide as competition increases or a major infusion of capital happens?

AC isn't a major city on the scale of Las Vegas, so it couldn't substitute another industry for tourism that would bring in as much cash flow. That said, the place had a tourist industry long before the casinos came along, and there's no reason that it couldn't return to being a beach boardwalk resort and thrive, without the casinos.

The place was an abject disaster in 1979--a complete and utter dump, a blighted, high-crime ghetto. However, the promise of the casinos to help revitalize AC never materialized. For two decades after the casinos opened, to venture inland two blocks--even in daylight--was to risk your life. The casino profits went to the controlling corporations--almost none of that money went to the city, in part thanks to massive sweetheart deals that essentially waived property taxes for the casinos, in perpetuity. So there wasn't any real benefit to the city--even to local employment, as the casinos hired people from Philadelphia, NYC, etc who commuted--the local pool of talent was unskilled and uneducated, and no one in his right mind wanted to LIVE there.

Even today, AC is like a thin wrapping of casino bandages over a festering sore. The place isn't quite as appalling as it was, but it's still a dump. A dump with casinos.

Another thing that hurts rather then helps re the casinos is that the vast majority of visitors are day-trippers. Hardly anyone stays there overnight. This further insulates the flow of dollars from going out to the surrounding community. The casinos sold the AC city fathers a bill of goods, but back in 1979, I suppose they would have accepted a cattle yard or a toxic chemical plant if it offered the hope of economic revival.

I actually don't know why it turned into such a crud zone in the first place. It was apparently a very nice destination in the first part of the 20th century, and within a couple hours' drive of twenty million people, to boot.

The problem with AC is they don't have a real airport, and they are infested with democrats.

Quote: mkl654321

I actually don't know why it turned into such a crud zone in the first place. It was apparently a very nice destination in the first part of the 20th century, and within a couple hours' drive of twenty million people, to boot.

People got richer, more availibility of vacation destinations via plane, overseas, etc. Theme parks. Water parks. Those are just some theories. That said, it could still be a viable destination by going the "nostalgia" route. There are people who just want to come down the shore and not spend too much money. Wildwood, N.J. is pretty nice. Cheesy stores, food, and casinos aren't going to do it, though.

Quote: mkl654321

Even today, AC is like a thin wrapping of casino bandages over a festering sore. The place isn't quite as appalling as it was, but it's still a dump. A dump with casinos.

Not to mention governmental stupidity and corruption on a colossal scale. Just as with Camden, Newark, Asbury Park and similar problems, numerous mayors and other so-called public officials have landed in prison for a staggering array of crimes that flaunt an utter lack of conscience.