This week has seen the US stock market decline suddenly amid recession worries that would see Las Vegas impacted heavily. Speaking on the event, principal analyst for Las Vegas-based Applied Analysis, Jeremy Aguero, said ‘There used to be a concept that Las Vegas was recession proof.’ He continued, ‘I don’t think that was ever the case, and I don’t think that’s the case now.’
Wednesday, August 14th, 2019, saw the Dow Jones Industrial Average record its worst day in trading over the year when they dropped 800 points.
This was realized after the benchmark 10-year Treasury note yields slipped by 1.5% below the benchmark 2-year Treasury note yields which greatly showed signs of the looming recession. This comes as an indication to the investors that the coming months will see a slower expansion in the US economy.
Through the movement, it is expected the recession could hit the economy after two years having preceded a minimum of the last 5 recessions in the States.
Amid the drop, a lot of the major gaming companies lost billions in stock valuation. Companies like Wynn Resorts recorded $105.55 per share when closing on Friday. The prior Friday had the company closing at $107.87. Still, on the period, Boyd Gaming Corp. recorded a drop from $24.41 to $23.01.
Companies to keep going
The recent droppings are not likely to bring immediate impacts on the companies. John DeCree, Union Gaming analyst, does not see the companies remodeling their investment plans as a result of the movement. John doesn’t expect those companies that have some ongoing projects to modify plans any time soon. However, he expects those that haven’t started yet to have some second-thought about the plans.
Speaking on this, John DeCree expects the recession threat in the next 12 months’ will have the companies working cautiously. ‘We wouldn’t be surprised to see companies allocate additional capital to share repurchase or potentially debt pay down.’ He said.
On John Restrepo’s, the principal of Las Vegas-based RCG Economics, part, he says it’s too early to say what will happen but he believes the companies will study the movement tides before committing to any expansion or investment plan.
Boyd’s spokesman, David Strow, said that the market shift had no impact or changes to their ongoing plans. However, there were no comments from Las Vegas Sands Corp., MGM Resorts International, and Red Rock Resorts management on the issue. On Caesar’s part, they referred an Eldorado Resorts representative to comment who later declined and at the time of writing this, Michael Weaver, Wynn spokesman, did not return request to comment.
What is being expected?
Restrepo says that when the recession finally hits, resorts casinos and Las Vegas’ economy will be impacted. ‘Our economy remains largely dependent on discretionary spending tourists.’ He said.
Aguero views the slowing economic tides in the States as major legitimate concerns especially due to Las Vegas being one of the least diversified economies in the country.
John DeCree, however, does not expect the looming recession to be severe as the one experienced in 2008. In the year, Las Vegas resorts faced reduced demand from the consumers, a sudden increase in supply on the Las Vegas strip and tightened credit markets.
He cites the present supply growth being less than that that led to the 2008 recession. He expects that the magnitude of the impact Las Vegas is expected to have is much less.