Like a stunned gambler who has enjoyed a long run of success only to lose all his winnings on a cruel turn of the roulette wheel, Nevada’s economy is in shock. After years of growth its housing market has collapsed, decimated by the mortgage foreclosure crisis. Tourism is in a slump, casinos are shelving construction projects worth billions of dollars and unemployment is soaring.
After Nevada voted Republican in 2000 and 2004, Democrat party strategists believe grim economic conditions will swing the state their way next month. If it does, Barack Obama may find himself in the White House: Nevada has backed the eventual president in every election since 1980.
Before the onset of the credit crunch Nevada had enjoyed a long run of good economic luck. It was, for a while, the fastest-growing state in the US, with the absence of state income tax attracting thousands of new residents. With non-gaming companies exempt from corporate taxes, it also lured new businesses from nearby California.
“Because we’re a state that doesn’t have an income tax, we rely on tourism and property taxes,” says Kenneth Fernandez, an assistant professor of political science at the University of Nevada, Las Vegas. “So the housing crisis and the rise in gas prices have been a double whammy for our economy.”
A report by the Rockefeller Institute of Government this week said that Nevada’s economy had declined more than any other US state.
Visits to Las Vegas from southern California and the key Los Angeles market have fallen by more than a third, with high petrol prices seen as the main factor. Las Vegas continues to attract international visitors thanks to the weak dollar, but airlines are cutting flights, gaming revenues are down and casinos are shedding staff.
Unemployment in Nevada has risen from about 4 per cent last year to more than 7 per cent.
At the Green Valley casino in Henderson on the outskirts of Las Vegas, this week slot machines whirred without players to play them and waitresses stood idle. Normally thronging with local residents, the huge complex was almost deserted. The busiest part of the casino was an Irish pub offering cheap prices throughout the evening.
“We’re all fighting to keep our jobs,” says Mechelle Nasiri. “The casinos are laying people off . . . we’re in the hospitality industry and if our economy keeps sinking we won’t have any work.”
Others share her view. “People are hurting right now,” says Emery Collier, an engineer with the casino who is backing Mr Obama. “There are 93,000 people out of work in Las Vegas. All the casinos have cut jobs.”
If John McCain is to keep Nevada Republican, he will have to convince voters that he can solve its economic woes and manage the financial crisis. At the Boulevard shopping mall a few miles from the Las Vegas Strip, Zalman Braverman, a resident of the city for the past 18 years, says he is backing the Arizona senator.
Like many investors, Mr Braverman has suffered losses in the past few weeks. “I was wiped out in Washington Mutual and wiped out in Lehman Brothers,” he says. He has faith in the Republican candidate to sort out the mess. Mr McCain, he says, “will be tougher on spending, whereas I think Obama will try and spend his way out of it”.
It was harder to find a supporter for Mr McCain in North Las Vegas, one of Nevada’s poorest areas.
Monica McCoy, a woman in her early 20s, has just lost her job at a car dealership. She is backing Mr Obama.
“We used to sell 43 cars on a weekend but it dropped to nine,” she says. Ms McCoy and several colleagues were let go when sales dried up: buyers with good credit scores were not being approved for financing to buy the cars.
Nevada can now add a freeze in consumer credit to its growing list of economic troubles. Regardless of who wins the election, it is likely to be quite a while before the Silver State gleams again.
The Financial Times