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  • detroit1051 detroit1051 Jun 18, 2009 7:07 AM Flag

    Nevada Closing In On Michigan-2

    The news wasn't all bad, though.

    The combined category of education and health services grew 3.2 percent year-over-year in May, adding 1,300 positions statewide for a job base of 97,200. And in the spring alone, food services and drinking places created 2,500 new jobs, bringing on positions in two consecutive months, from March to April and once again from April to May.

    Observers said they're loath to call a two-month string of gains in one corner of the economy an important trend, but Keith Schwer, director of the Center for Business and Economic Research at the University of Nevada, Las Vegas, said the uptick in food-and-beverage hiring could hint at improved public sentiment.

    Discretionary spending plummeted in the first quarter as nervous consumers fretted over how deep the recession would go, Schwer said. They loosened the grip on their wallets a little in the second quarter, as the downturn showed signs of easing and a federal stimulus measure reduced paycheck withholding and goosed take-home pay slightly.

    Advertising campaigns offering discounts and price cuts could also have tempted consumers to spend a little more in March, April and May, Schwer said.

    The employment department also released data Wednesday showing that the downturn has disproportionately hit Nevada's big businesses.

    Employers with 500 or more workers cut 11.4 percent of their work force from the fourth quarter of 2007 to the fourth quarter of 2008, while medium-sized businesses -- those with 50 to 499 workers -- lost 9.8 percent of their staffs in the same period. Companies with fewer than 50 workers saw employee counts fall just 4.4 percent.

    Analysts say the discrepancy comes from the recession's big effect on discretionary spending. The downturn in consumer spending has savaged the bottom lines of gaming operators, which tend to be the state's biggest employers. It might also be easier to lay off workers at a bigger business; employees at smaller companies typically perform multiple tasks, and many such businesses might have already operated as efficiently as possible, both Schwer and Gordon said.

    The recession has shown recent signs that a bottom is nigh. Tuesday reports pointed to bigger-than-expected jumps in home construction and smaller-than-anticipated inflation in wholesale prices. The International Monetary Fund even reversed earlier projections of continued contraction, and issued new forecasts predicting a slight expansion in the U.S. economy in 2010.

    But unemployment lags recoveries substantially. Since the end of World War II, job losses have tended to mount for a full year after a recessionary economy stabilizes and growth returns. That means joblessness in Nevada could rise beyond levels economists and experts predicted a few months ago.

    Anderson wasn't prepared to say unemployment would surpass his agency's previously predicted peak of 11.5 percent, but he did say state economists would look anew at just how high unemployment might go.

    Senate Majority Leader Harry Reid, D-Nev., issued a statement expressing concern for unemployed Nevadans and urging the formation of new jobs in the green economy and infrastructure.

    "My thoughts go out to the thousands of Nevadans struggling to stay in their homes and find new jobs," Reid stated. "While the news of Nevada's record high unemployment rate is very unsettling, it underscores the importance of the work we're doing to help the economy recover and stabilize. We must remain vigilant in our effort to create jobs by investing in Nevada's renewable energy and transportation projects while continuing to help Nevadans who are struggling to get by."

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