One of America’s most astute businessmen, known for having expanded the Las Vegas strip of resort hotels and casinos in the 1990s, says the U.S. remains mired in an economic funk and any talk of a broad recovery is “pure fiction. A lie.”
Steve Wynn, the 73-year-old founder and CEO of Wynn Resorts, made the comments in a televised interview with Jon Ralston of PBS’ “Ralston Live.” He opened the Wynn Hotel and casino in Macao, China, in 2006, and is known as an international gaming and casino magnate.
Wynn’s Macao operation recently reported a 28 percent quarterly loss in revenue, and a 70 percent downturn in earnings. He is now building the Wynn Palace in China, which he calls “the nicest, most extravagant hotel in the world,” with 1,700 rooms and a $4 billion price tag.
He cited corruption as his primary concern in China, but in the U.S. he said the economy has never really bounced back from the 2008 financial meltdown.
“You’re not sanguine about Las Vegas, though. You’ve said the notion of a great recovery is a complete dream here in Las Vegas,” said Ralston of KNPB, a Public Broadcasting affiliate in Las Vegas.
“Well, the idea that America is in the midst of a great recovery is pure fiction. It’s a lie. It’s a jobless recovery,” Wynn said. “Because recoveries are marked by the level of real employment. And if you count the people who have left the work force, real unemployment is 15 to 20 percent.”
Not only is unemployment much higher than the “official” rate of 5.5 percent, but Wynn said the Consumer Price Index, used to measure inflation, is also rigged in such a way that it doesn’t accurately reflect what real Americans experience on a daily basis. According to the U.S. Bureau of Labor Statistics, the U.S. had -0.1 percent inflation for the 12 months ended in March 2015. Inflation doesn’t exist.
Wynn says that’s a sham.
“If you take real inflation, and you’ve got to count energy and food and all that stuff, real inflation is much higher than they say it is,” Wynn said. “My employees’ take home pay, in spite of the increases we give them, their paychecks are 90-cent paychecks, 90 cents on the dollar. It’s very difficult for the middle class in America to keep up because of the inflationary pressure and the devaluation of the dollar.”
Wynn gave Ralston a quickie lesson in economics 101 so he could understand the dilemma faced by the average American. It starts with the overwhelming national debt.
“It’s very difficult to explain to a normal working citizen the implications of what $18 trillion in debt means, and what it means when the Federal Reserve buys the U.S. Treasury bonds to finance our loss every month,” Wynn said. “People think that is some abstract conversation in Washington, uh, for pundits.
“In fact it impacts every one of my employees, critically, every day,” he said. “They notice when they sit down at the kitchen table, that after they pay the necessities, there just isn’t any money left.”
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As for the future of Las Vegas, it sounds cloudy, at best, from Wynn’s vantage point.
“Are you optimistic about the future? You’ve always been optimistic. Where is Vegas going?” Ralston asked.
“The gaming industry is facing uncertainty in Nevada, in America, and in China,” Wynn said. “For the past 50 years, two-thirds of the gaming establishments in the state of Nevada have lost money.
“The industry as a whole loses money in Nevada. Loses money,” he repeated. “Nevada Energy doesn’t lose money. The gaming industry loses money. It employs all the people. It pays all the taxes. And if you take the P&L, the profit and loss, of the hotels in Las Vegas and Reno, it is a number that is minus, not plus, minus. So, the challenge has really never changed. Most of the money has been made by the best, the newest and the most competitive properties, and I suspect it will stay that way.”
While he’s made money on both continents, North America and Asia, Wynn indicated it’s getting harder to make smart investments. His company recently posted poor quarterly numbers in China.
“Those are terrible numbers for everyone in Macao. What is going on?” asked Ralston.
He said corruption in China is pervasive.
“All business[es] in China have to do business with government and government officials. It’s impacted all aspects of the economy in China, including Macao,” he said.
Uncertainty reigns, he said.
“All you can do is what we do in America. Keep a strong balance sheet, don’t get over leveraged and try to protect the security of your employees.”
He said the new “Palace” in China took two years to plan and will take four years to build.
“You can’t stop now. The skin is on the building,” he told investors on a recent conference call.
While Wynn is building, most major U.S. retailers are closing.
WND reported this week that U.S. retail chains plan to close more than 6,000 stores this year and next year, another sign that the economy is not nearly as strong as some in the Obama administration has said it is.
But Wynn said his people have the capital and experience to “do it right,” and likely won’t get caught by any new downturn to the extent that others will.
“It’s not so much how much is built, but how good is it? The excitement and the quality of the buildings here,” he said.