September 2020

Governor Sisolak announced a 45-day extension of the residential eviction moratorium at the end of August amid the COVID-19 public health crisis. This directive extends the moratorium on residential evictions based on nonpayment of rent to provide for greater housing stability. Policymakers hope this will allow Nevadans to remain in their homes as the community continues to fight and recover from both the health and economic ramifications brought on by COVID-19. The directive seeks to maintain public safety during the pandemic as Nevada transitions to programs that protect landlords and tenants. The directive, however, does not change any tenant’s obligation to pay rent.

According to the Census Pulse Household Survey’s most recent results, approximately 11.7 percent of people across the U.S. have not paid their mortgage or rent for the month of July. In Nevada, approximately 15.3 percent of people indicated they had not paid their mortgage or rent for the past month. Although this may improve as unemployment declines, 9.2 percent of Nevadans have little to no confidence that their household can pay next month’s mortgage or rent on time, differing from the national average of 7.2 percent. Even with Governor Sisolak’s eviction moratorium extension, 27 percent of adults in the state are living in households where eviction or foreclosure in the next two months is somewhat or very likely. This is better than the national percentage of adults at 33.4 percent, but it is still a growing concern within our communities.

Despite the economic uncertainty, the state’s housing market showed improvement over the latest period. Sales activity increased noticeably in July as existing home closings grew in Southern Nevada by 34.8 percent, exceeding 4,000 for the first time this year. This was also reflected in the MLS inventory, which fell by 29.2 percent in the same period. Statewide, single family residential units permitted were 47.0 percent higher than the previous month while multi-family units permitted grew 13.3 percent over the same period.

The labor market expanded modestly as business operations continued to normalize moving into September. The statewide seasonally adjusted unemployment rate fell from 14.0 percent in July to 13.2 percent in August. This decline brings the overall rate below its highest point experienced during the last recession when it peaked at 13.7 percent. This improvement is the result of 6,500 newly added jobs, 4,500 of which were sourced to the trade, transportation and utilities sector. August marks the fourth straight month that jobs have been added to the Nevada economy. Despite this, the unemployment rate remains nearly 5 percentage points higher than the current national average and 9.4 percentage points higher than it stood in August 2019.

Nevada’s historical reliance on tourism will ensure that recent market shocks have lasting effects. Gaming revenue is coming off the floor following mandatory closures through June 3. Even with these recent gains, gaming revenue remains 26.2 percent below its 2019 level. Statewide visitor volume similarly grew by 24.7 percent in July from June, exceeding 1.7 million visitors. Though a notable improvement, this is 58.9 percent lower than July 2019 as visitation was regularly above 4 million in the months preceding the public health crisis. With hotel occupancy down to just 42.5 percent in Southern Nevada during July, less than half the 91.1 percent rate measured in July 2019, it will be critical to remember that recovery will largely be a function of science. The health crisis and related response have resulted in an economic crisis, particularly in the travel and tourism industries. The recovery timeline for resort operations is likely to be measured in years and not months.

August 2020

Now five months into the COVID-19 pandemic, Nevada remains on a slow path to recovery after being one of the states hit the hardest by this public health crisis. While many economic indicators are beginning to exhibit positive growth trends again, they are still significantly lower relative to their benchmarks from the prior year. On August 3, Governor Sisolak introduced Nevada’s long-term recovery plan. The plan shifts away from a phased reopening approach to a long-term strategy, increasing enforcement by targeting specific zip codes and individual businesses that are not compliant with COVID-19 mitigation measures. The intent of this new plan is to keep more businesses open and avoid broad closures of whole industries. With the number of positive cases still high despite a recent downward trend, state and business leaders are prioritizing containment measures in order to keep the public safe.

Employment trends have continued to improve slightly as Nevada’s labor market benefits from the re-opening of the economy, experiencing positive growth moving into August. The statewide seasonally adjusted unemployment rate fell from 15.2 percent in June to 14.0 percent in July. This is a sustained decline from the highest rate ever recorded in the state during April, more than double its current level at 30.1 percent. The most recent period’s gains can be attributed to the addition of 14,800 jobs this month, 3,900 of which came from the professional and business services sector. This marks the third straight month that jobs have been added to the Nevada economy. Despite this, the unemployment rate remains 4 percentage points higher than the current national average and 10.1 percentage points higher than where it stood in July 2019.

The slower employment growth this month was also reflected in unemployment insurance claim trends through July 2020. Initial claims totaled 66,698 in July, up 39 percent from June claims. Though an uptick, this still represents a step toward recovery as the months of March and April this year both saw initial claim totals exceed 200,000. Continued claims hovered above 300,000 for most of the month, a modest rise relative to the prior period. In addition to unemployment insurance, Governor Sisolak signed an extension of the Pandemic Unemployment Assistance (PUA) program allowing Nevadans to claim eligibility through December. The PUA program saw 12,606 initial claims filed in the week ending August 8, a decrease of 31.8 percent from the previous week’s total of 18,495. This is the fewest number of PUA initial claims filed in a week since the program began.

Nevada’s housing market continued to improve moderately this summer. In June, single family residential units permitted were 65.3 percent higher than the previous month while multi-family units permitted experienced a decline of 14.8 percent over the same period. Permits for both single and multi-family units are down relative to the same period last year. In the first quarter of 2020, housing prices rose 2.5 percent from the prior quarter, and 4.1 percent from the same quarter last year while the state’s foreclosure inventory also fell 8.0 percent.

Nevada continues to be highly vulnerable in the current economic climate. Being a state that is largely dependent on tourism comes with additional implications. The general uncertainty surrounding public health will serve as a deterrent to travel for the foreseeable future. Consequently, it will be a long time until tourism returns to pre-COVID levels. Gaming revenue has started to recover, jumping nearly 10,000 percent from May to June 2020 as casinos in Nevada were allowed to reopen. Despite the increase, gaming revenue is still 45.6 percent below the same period last year. Similarly, visitor volume grew by more than a million visitors in June but remains 66.2 percent below the June 2019 level. With hotel occupancy down 14.5% in the first quarter of 2020, navigating a feasible and safe approach to welcoming guests back to Nevada will prove imperative. Ultimately, the economy will continue to reflect the changing public health landscape and will likely recover as the health risk associated with travel and large events begins to subside.

July 2020

Nevada’s transition into Phase 2 of the Nevada United: Roadmap to Recovery reopening plan in late May was announced as COVID-19 cases and hospitalizations trended downward. In the weeks that followed, businesses large and small reopened across the state and once again welcomed customers through their doors. The effects of the reopened economy were evident in key economic indicators for June 2020 as laid off workers returned to their jobs and boosted employment significantly.

Increasing business activity in June 2020 was reflected in positive employment trends across Nevada during the month. The statewide seasonally adjusted unemployment rate improved significantly, declining from 25.3 percent in May 2020 to 15.0 percent in June 2020. The improvement moved Nevada from having the highest unemployment rate in the nation to the fourth-highest. Nevada’s improvement in unemployment rate equated to the addition of 100,000 jobs in June 2020, an unprecedented gain for a single month. However, those new jobs only partially offset the 280,000 jobs lost through April, and total employment remained 148,000 jobs below February 2020 levels.

The leisure and hospitality sector accounted for a majority of the job gains in June 2020, adding 74,100 positions over the month as many of the state’s major resort-casino properties reopened to guests. Leisure and hospitality employment still registered 52,000 fewer jobs than in February 2020. Other notable employment gains were reported by the retail trade sector (+14,400) and professional and business services sector (+10,400).

Unemployment insurance claims mirrored the positive trend in employment through June 2020. Initial weekly claims for state unemployment benefits hovered near 11,000 during the month, a fraction of the 92,300 weekly claims filed in mid-March. Initial claims only reflect new layoffs. The measure of ongoing joblessness, continued claims, remained near 300,000 throughout June 2020, with a low of 287,000 at the end of the month representing a notable improvement from the May 2020 weekly peak of 369,000. Through the first two weeks of July 2020, however, both initial and continued claims ticked up slightly, suggesting Nevada employment trends may be moderating amid rising public health concerns and related business restrictions.

The increased employment and other positive signs for the economy were accompanied by rising caseloads and hospitalizations due to COVID-19 infections. As confirmed cases continued to grow, additional public health measures were implemented that could affect the prospects for additional job growth in coming months. Following a four-week rise in cases, Governor Steve Sisolak on June 24 ordered mandatory face coverings in most public indoor spaces. Two weeks later, he ordered the closure of bars and limits on restaurant dining parties in counties with rising COVID-19 caseloads, which included Clark, Washoe and five other counties. The effects of these measures and the continued prevalence of COVID-19 cases could become evident in employment data through the summer as businesses and consumers adjust to the shifting public health landscape.

Another major potential economic shift hinges on the $600 per week in additional payments for unemployed Nevadans under the federal CARES Act. Through mid-July, payments under the Federal Pandemic Unemployment Compensation Program have totaled $2.8 billion, averaging $273 million a week over the past month. Those payments are set to expire after July 25, ending a significant source of income for tens of thousands of Nevadans. Congress has discussed extending the program in some capacity as part of a new federal aid package in Washington, D.C., though many potential aspects of new legislation, including additional household stimulus payments, remained under consideration.

The reopening of K-12 schools throughout the state could also have implications for Nevada families and their ability to work, adding another potential impact on the statewide economy in the months ahead. That impact is currently among the many unknowns surrounding the coronavirus’ spread and the economy’s recovery. Early progress in getting ahead of the virus was cause for optimism just two months ago, but what has transpired since then serves as a reminder that the road to economic stability in Nevada will rely on the state’s ability to address public health concerns.

June 2020

The doors of shuttered resort-casinos reopened in June with enthusiasm and optimism following an 11-week shutdown because of the COVID-19 crisis. The closure of Las Vegas’ iconic properties was the most visible sign of the gravity of the pandemic and the public health measures enacted to slow the viral spread. Those measures proved effective in slowing infection rates, enabling Governor Steve Sisolak to relax restrictions and move Nevada into Phase 2 of the economic reopening plan.

Phase 2 began May 29 and allowed gyms, movie theaters and other businesses to reopen. Gaming establishments were allowed to reopen starting June 4 under new public health guidelines enacted by the Gaming Control Board. In transitioning the state into Phase 2, the governor cited the state’s progress in reducing the COVID-19 test positivity rate over the prior month, which has continued to decline to below 5.5 percent. The World Health Organization goal is 5 percent.

The reopening of Las Vegas Strip resorts was met with a wave of initial customer demand under Gaming Control Board guidelines including testing for all employees, thermal scanners at entrances, masks for employees and increased cleaning and disinfecting procedures throughout the properties. Many properties distributed personal protective equipment, including masks, to guests as well, though mask wearing remained sporadic, prompting the Gaming Control Board to revise rules and require masks for anyone at a table game that was not equipped with partitions.

Although the first week of resort reopenings was met with enthusiastic crowds, expectations should remain tempered. In one early indication of activity, Caesars Entertainment reported that revenue at its five reopened Nevada resorts was between 56 percent and 58 percent lower compared to the same period a year ago. Overall, gaming operators appear optimistic as additional resort reopenings have already been announced, though the Caesars report serves as a reminder that a recovery to pre-COVID-19 levels may take an extended period of time.

Nevada’s gradual economic reopening that began in early May 2020 had a positive effect on the state’s employment picture. Initially, unemployment claims filed by newly jobless workers declined throughout the month, reaching 11,300 claims for the last week of the month, the lowest one-week total since mid-March. Continued unemployment claims, a measure of ongoing joblessness, peaked in mid-May at 369,000 and has since declined to 305,900 a month later, indicating people transitioning from unemployment to work.

The national and statewide employment situations each benefited from business reopenings in May 2020. The United States unemployment rate dipped from 14.7 percent to 13.3 percent as the nation added 2.5 million jobs, with the leisure and hospitality sector accounting for about half of those gains by adding 1.2 million jobs. In April 2020, Nevada recorded the highest unemployment rate in the nation of 30.1 percent. In May 2020, the state regained 35,800 jobs, pushing the unemployment rate down to 25.2 percent. However, statewide employment remained 243,800 jobs below February 2020 levels.

Federal stimulus funding through a variety of programs to support businesses and individuals has helped boost short-term incomes for households throughout the nation and blunt some of the financial hardships created by the economic crisis. However, state and local government budgets face significant shortfalls from the loss of tax revenues during the extended shutdown period. Public agencies throughout Nevada have announced layoffs, furloughs, pay cuts, delayed capital investments and other strategies to help close the funding gap through the next fiscal year. At the state level, Governor Sisolak is expected to call a special session to address significant funding shortfalls of more than $800 million for the fiscal year ending June 30 and $1.3 billion for the next fiscal year.

The future of Nevada’s economy and the budgets of public and private entities alike will depend on how quickly economic activity can recover. While the COVID-19 virus remains active and will likely impact the economy for the foreseeable future, the first month of broader business reopenings and the return of resorts and casinos provided a major step toward returning people to work and regaining the state’s economic footing.

May 2020

After more than two months of social distancing, nonessential business closures and other public health measures enacted under Nevada’s COVID-19 pandemic response, there are signs for optimism in the battle to contain the virus. Daily coronavirus case counts and deaths have been on the decline, while the gradual reopening of the economy has been evident with increased foot traffic and more crowded parking lots at commerce centers around the state. The economy could soon get a bigger boost in June if the state’s gaming resorts are given clearance to reopen, as Governor Steve Sisolak has tentatively announced.

These are welcome signs for a statewide economy that has been battered in the fight against COVID-19. In the latest unemployment data for April 2020, Nevada registered a seasonally adjusted unemployment rate of 28.2 percent, an unprecedented rate that was the highest in the United States. For recent historical perspective, the state’s unemployment rate during the Great Recession and subsequent downturn peaked at 13.7 percent in September 2010. Nevada’s experience is not unique, as 42 states registered double-digit unemployment rates and the national rate reached 14.7 percent, the highest since the Great Depression.

The depth of Nevada’s unemployment crisis can also be measured in raw job numbers. Between March and April 2020, the state lost nearly 245,000 jobs, and over the year employment declined by 255,000 jobs. Overall employment declined to 2013 levels, while leisure and hospitality employment has fallen to the lowest levels since 1993. The industries most affected by the employment declines were accommodation and food services (-40.9 percent), administrative support (-28.2 percent) and other services
(-24.8 percent).

As staggering as April’s unemployment numbers are, they are backward looking and reflect survey data collected in mid-April. Weekly unemployment claims provide a more up-to-date picture of the state’s jobless situation. The positive news is that initial unemployment claims have continued their weekly downward trajectory, falling from a high of 92,300 for the week ending March 21 to 17,800 in the latest data for the week ending May 16. Conversely, the number of continued claims for unemployment insurance has climbed to 369,000 as most initial claimants have begun receiving regular weekly benefits. The actual number of unemployed is higher than that figure, as well, as some unemployed workers are not eligible for unemployment benefits and many self-employed workers have only recently been able to file for benefits under a new federal program.

While official unemployment rate data lag by about a month, unemployment insurance claims can provide insight into more current trends. Since mid-March, total initial unemployment claims by new jobless workers have totaled 459,000, which implies a state unemployment rate of about 33 percent in May 2020. Although this rate may not reflect recent rehires as some businesses have reopened and other dynamics of the labor market, it suggests job losses may be nearing a peak and could improve as more parts of the economy reopen in the coming weeks.

For Nevada’s unemployed workers, unemployment insurance has been a financial lifeline. Through mid-May, the regular state unemployment program has paid out $616.3 million in weekly benefits to Nevada’s unemployed. The Federal Pandemic Unemployment Compensation program, one of several programs enacted under the federal CARES Act legislation, adds $600 per week for unemployment recipients along with the state benefits, which average about $380. The federal program has paid unemployed Nevadans $786.3 million to date. Additional federal funding has begun to reach the state with implementation of the Pandemic Unemployment Assistance program for self-employed workers, who are not typically eligible for regular state unemployment benefits funded by employer contributions.

The final economic impacts of COVID-19 are yet to be determined; however, the benefits provided by the federal government will help bridge the financial hardships for many. The deciding factors in the efficacy of these programs are numerous and include factors such as how quickly and safely the local economy reopens. With the state’s progress to date in controlling the spread of the COVID-19 virus, signs are pointing to a careful reopening of businesses and a step toward rebuilding the economy once again.

April 2020

The COVID-19 pandemic has created profound worldwide social and economic uncertainty as it has spread around the globe. Without a vaccine or herd immunity among humans, the novel coronavirus has infected 2.5 million people around the world, including nearly 4,000 in Nevada. In response to growing caseloads and lost lives, nations, states and local governments have enacted extraordinary measures to limit person-to-person contact and stem the virus’s spread. These measures have been effective in protecting public health yet devastating for the economy.

Nevada’s stay-at-home commitment has been among the best. State residents have been particularly successful in limiting their movements throughout the community, cutting travel to workplaces by 53 percent, retail and recreation by 45 percent, and parks by 43 percent, according to an analysis of location tracking data by Google. A similar analysis by Unacast ranked Nevada first in the nation for its reduction in nonessential visits.
The measures appear to be working. The number of COVID-19 deaths has slowed, and new modeling by scientists at the University of Texas projects Nevada to reach peak COVID-19 caseloads in April. The extraordinary efforts to stem the looming public health crisis might have been effective, but they have also triggered an unprecedented economic crash that has already left hundreds of thousands of Nevadans jobless.

Millions are losing jobs in the United States, yet Nevada is positioned to be among the hardest hit due to its reliance on an industry built on bringing people together at a time when social distancing is a must. The state’s leisure and hospitality industry directly employs more than 350,000 Nevadans, or about a quarter of the workforce, and half of the state’s 20 largest employers are resort-casinos that are shuttered under Governor Sisolak’s order to close nonessential business, making the state’s economic heartbeat particularly vulnerable to social distancing measures.

The true extent of the expanding economic crisis is only beginning to show in official data, which typically lags the real world by a month or more. The statewide unemployment rate in March 2020 was 6.4 percent, a 2.6 percentage point jump from a month earlier and the highest mark in more than four years. Because of data collection timing, that number misses the majority of job losses that came after the statewide shutdown of nonessential businesses and the closure of all gaming properties that triggered layoffs and furloughs by operators such as Caesars Entertainment, Boyd Gaming and MGM Resorts International.

More than 92,000 Nevadans filed for unemployment insurance in the first week of the shutdown, starting a four-week run that would reach more than 302,000 initial unemployment claims. For context, during the Great Recession the highest initial unemployment claims total for a four-week period was 32,800 in January 2009. The scope of unemployment will become clearer with new data releases, but the staggering trends in unemployment insurance claims suggest the statewide unemployment rate has already topped 20 percent.

To help offset the damage to the national economy, the federal government passed the Coronavirus Aid, Relief and Economic Security (CARES) Act in late March. The act provided $2.2 trillion in federal grants, loans and other aid to assist individuals, businesses and state and local governments in weathering the economic upheaval. Programs include Economic Impact Payments that provide $1,200 per adult and $500 per child under 17, the Paycheck Protection Program intended to help small businesses retain employees, $1.25 billion from the Coronavirus Relief Fund to help Nevada’s state and local governments cover expenses related to the outbreak, and several emergency unemployment insurance programs that include an additional $600 per week through July 25, 2020. In total, CARES Act programs are projected to direct at least $14 billion to Nevada, and a new legislation under consideration is expected to augment programs and funding streams to boost the nation’s fiscal response to the economic fallout.

COVID-19 has brought the global economy to a standstill, and an uncertain future remains. In the U.S., elected leaders, scientists and health experts are working in concert to control the virus’s spread and eventually restart the limping economy. What form or fashion that takes in Nevada is as unclear as the timeframe for people feeling safe enough to return to their pre-COVID-19 lifestyles. In the meantime, scientists are working on treatments and vaccines to make that happen as soon as possible, and when it does, Nevada will be waiting with open arms.

March 2020

In recent years, the state’s rapid population growth has led to significant housing demand, which has been reflected in the House Price Index published by the Federal Housing Finance Agency. From 2013 through 2018, annual growth rates in the Purchase-Only House Price Index in the state ranged between 9.5 percent and 22.5 percent, regularly putting Nevada at or near the top of state rankings. In 2018, the end-of-year growth rate in Nevada was 10.7 percent, the second-fastest growth rate among all states. By the end of 2019, the index’s annual growth rate dropped to 3.7 percent, which was the ninth-lowest rate in the country.

In Southern Nevada, home price growth trends have also slowed compared to prior years. In December 2019, the median closing price of an existing home stood at $280,000, up 7.7 percent from a year earlier, according to SalesTraq. That monthly year-over-year increase was the highest since February 2019 in a year that was generally marked by more modest price growth. On a trailing 12-month average basis, the median existing home price grew by 6.1 percent in 2019, the slowest year-end growth rate since 2011. Total existing home sales in 2019 dropped 4.2 percent to 45,841, continuing the sales volume decline that carried through most of the year. 2019 was the second consecutive year of declining existing home closings, suggesting that longer-term trends of rising prices and limited inventory have begun to affect sales activity.

Southern Nevada’s new home market reported similar trends, with the median price in December 2019 dipping 8.6 percent over the year to $374,944, and total new home closings decreasing by a modest 1.3 percent to 9,816. New home building showed indications of slowing, as the number of residential building permits issued in 2019 totaled 10,506, a 2.6 percent decline from the year before. As costs for land, labor and materials remain elevated, the mix and average size of new home product being sold have contributed to new home pricing trends.

In Northern Nevada, sales price and activity trends were mixed to close 2019. In the existing home market, the median closing price finished the year at $369,500, up 11.7 percent from $330,750 in the prior year, while existing home closings increased by 0.5 percent to a total of 7,806. The new home segment reported a 3.6 percent dip in median sales prices from $453,753 to $437,241, a price decline that likely contributed to a modest 2.6 percent rise in new home closings, which totaled 1,834 for the year.

Residential permits issued in Northern Nevada increased by 16.6 percent in 2019, growing from 4,450 permits to 5,189. Permitting growth was entirely attributable to multi-family unit permits, which increased by 41.5 percent to 3,106 in 2019. By contrast, the number of single-family units permitted in the region fell by 7.6 percent to 2,083. This trend suggests that building activity is shifting to accommodate a rapidly growing workforce and population base while balancing the need for affordability.

Nevada’s residential real estate market has experienced remarkable growth in line with population and employment growth trends. Those trends showed signs of moderating at the end of 2019 and may face additional declines pending the effects of the COVID-19 outbreak. Reduced travel across the nation and widespread cancellations of sporting events, conventions and other large public gatherings are expected to have a significant effect on Nevada’s tourism sector and the economy as a whole. While the potential and actual effects are as of yet unknown, a downturn in the local economy will most likely become evident throughout the state’s housing market.

February 2020

Though Nevada’s economy has meaningfully diversified in recent years, tourism remains the main driver of the state’s economy. Currently, the tourism industry employs almost one in four Nevadans and pays out nearly 20 percent of all wages. In particular, the health of Southern Nevada’s tourism industry defines the state’s economy, because such a large portion of visitors to Nevada are going to Southern Nevada. The region’s tourism industry saw slight across-the-board improvements in 2019 over 2018. Metrics that improved included visitor volume, convention attendance, occupancy rates, downtown Las Vegas gaming revenues and average daily room rates. The only metric that did not improve was Las Vegas Strip gaming revenue, which held flat.

After decreases in 2017 and 2018, visitation increased in 2019 by 1.1 percent to 42.6 million people, which was the highest total since 2016 and the second-highest total on record. Strong convention attendance helped drive visitor growth, increasing by 2.3 percent in 2019 to 6.6 million, the highest total since 2017. Convention visitors accounted for 15.6 percent of all visitors in 2019. Convention attendance in 2019 was bolstered by the return of conventions such as the American Society of Health-System Pharmacists to Las Vegas (adding 20,000 attendees according to the Las Vegas Convention and Visitors Authority). Additionally, McCarran International Airport continued to experience strong passenger volumes, with total passengers at the airport surpassing 50 million for the first time in 2019. Passengers at McCarran in 2019 totaled 51.5 million, an increase of 3.7 percent over the 2018 total.

Hotels throughout the Las Vegas area also experienced performance improvements during 2019. Average occupancy rates during 2019 increased by 0.8 percentage points to 89.0 percent, while average daily room rates also increased by 3.3 percent during 2019, growing from $128.74 to $133.05. Not only did Southern Nevada’s hotels charge more and fill more rooms, but they also generated more revenue from available hotel inventory. Revenue per available room (RevPAR) increased by 4.2 percent during 2019, growing from $113.54 to $118.33. Average occupancy rates, average daily room rates and RevPAR all returned to pre-recessionary peaks in 2019. Gaming revenue, particularly in downtown Las Vegas, performed well in 2019. Downtown revenues once again experienced strong growth in 2019, increasing by 5.4 percent during 2019 to $684.9 million, the highest total since 2001. Gaming revenues on the Strip held flat at $6.6 billion during 2019, but this total and the 2018 total were the two highest values for Strip gaming revenue since 2007.

Looking ahead through 2020 and beyond, planned and under-construction investments throughout Southern Nevada reflect an optimistic outlook on the state’s tourism economy and will give the industry increased staying power for the long term. Currently there are $18.6 billion of planned and under-construction tourism projects in Southern Nevada, with $11.0 billion of these investments currently under construction. Under-construction projects expected to complete within the next two years include new resorts, events centers and convention center spaces including Resorts World Las Vegas, Allegiant Stadium, the Las Vegas Convention Center expansion and the Caesars FORUM Conference Center. Resorts World Las Vegas will add an additional 3,500 rooms of inventory on the northern end of the Las Vegas Strip, while Allegiant Stadium will serve as the home of the Raiders, bringing even more tourists to Las Vegas during the NFL season.

New convention space completing within the next two years, including the Wynn Convention Center, the Caesars FORUM and the expanded Las Vegas Convention Center, will attract even more convention visitors with an additional 2.4 million square feet of convention and meeting space. Furthermore, the FORUM will be able to accommodate an additional 10,000 patrons at a time; when considered with the additional space completing in the next two years, Las Vegas will have substantially newer and greater capacity to host conventions and trade shows. If these projects complete in a successful and timely fashion, they should help Las Vegas maintain its position as a powerhouse in the tourism space.

January 2020

A growing taxable retail sales base is a sign of a healthy economy as consumers and businesses have the means to purchase goods of all types. Over the past decade, sustained growth in Nevada’s taxable retail sales has mirrored the recovery and growth of the state economy. Retail sales growth in the Silver State has remained strong throughout the past 10 years and was on pace to close the decade with one of the best years of the period.

At their lowest point over the past decade, trailing 12-month taxable sales totaled $38.4 billion in 2009. From 2009 to 2018 (the last full year of sales data), annual taxable retail sales increased by $22.4 billion, or 58.4 percent with a compound annual growth rate of 5.2 percent. On a trailing 12-month basis, taxable sales have continued to grow in 2019, with the latest total in October 2019 reaching $63.8 billion, an increase of 6.3 percent from the year before.

Clark and Washoe counties have driven the growth in taxable retail sales over the course of the last decade, as sales in these jurisdictions account for 73.4 and 14.1 percent of statewide figures, respectively. From 2009 to 2018, Clark County’s annual taxable retail sales grew by $15.8 billion, at a compound annual growth rate of 5.0 percent. During the same period, Washoe County’s annual taxable retail sales grew by $3.4 billion, at a compound annual growth rate of 5.8 percent.

Nevada’s overall economic turnaround and rapid population growth have been primary drivers of taxable retail sales growth. From 2010 to 2019, Nevada’s population grew by 377,800 people, or 14.0 percent. During the same period, employment grew by 321,700 to 1.4 million (an increase of 28.6 percent), while average weekly wages increased by $308 (or 31.7 percent) to $1,279. More people with jobs and earning more money in their pockets leads to more discretionary purchases such as dining out, buying vehicles and purchasing clothing. Over the past 12 months, these three categories have accounted for 37.1 percent of all taxable retail sales in Nevada. Food services and drinking sales totaled $12.7 billion (19.8 percent of all sales), motor vehicle and parts dealer sales totaled $7.2 billion (11.3 percent of all sales) and clothing and clothing accessories stores sales totaled $3.8 billion (6.0 percent of statewide sales).

Clark County accounts for nearly three-quarters of Nevada’s taxable retail sales, meaning its strong performance has been the main engine of the state’s retail sales growth. In particular, food services and drinking places sales in Clark County have been important to the county’s sales growth because they account for 23.6 percent of all taxable sales. From 2009 to 2018, food services and drinking places annual taxable sales grew from $6.1 billion to $10.5 billion, an increase of $4.4 billion, or 6.2 percent. This positive momentum has continued into 2019, with trailing 12-month sales up to $10.8 billion as of October 2019, an increase of 4.1 percent from the year before.

Like the state as a whole, a strong local economy means that consumer discretionary spending at places such as bars and restaurants will help drive growth for food services and drinking places and taxable retail sales as a whole. Employment in Clark County increased by 236,700 jobs to 1.04 million (29.4 percent growth) between October 2009 and October 2019. During the same period, average weekly wages grew by 32.1 percent from $710 to $937. This suggests that residents were finding work and experiencing growing wages, two factors that would likely increase discretionary spending.

A healthy national economy is also critical to Clark County’s taxable retail sales as visitor spending on dining and shopping contribute more than $9 billion in annual taxable retail sales, or more than a 21 percent of all taxable sales in the county. A low national unemployment rate of 3.4 percent in December 2019 and other positive national economic indicators that have contributed to the longest economic expansion in United States history should support stable visitor volume trends (42.3 million visitors in the 12 months through October) while contributing to further growth in taxable retail sales.

December 2019

California has been the primary source of new residents in Nevada throughout the state’s history of growth. This was true once again in 2018, when the Silver State’s 2.1 percent population growth rate ranked first in the country, according to the U.S. Census Bureau. More than 50,000 Californians moved to Nevada during that time, accounting for more than four in 10 new residents relocating to Nevada. As home to three-quarters of the state population, Southern Nevada and its 2.2 percent population growth rate played a significant role in the statewide trends. And similarly to the statewide numbers, Californians typically account for more than a third of incoming residents.

For Californians, Southern Nevada has been a particularly appealing place to move to because of its comparably low cost of living. Southern Nevada’s affordability is measured by the cost-of-living index, a metric published by The Council for Community and Economic Research that compares affordability of metro areas across the nation. In the third quarter of 2019, the Las Vegas metro area received a cost-of-living index score of 102.8, meaning the cost of living in the region is 2.8 percent higher than the national average. This score is substantially lower than those for California’s three largest metro areas, Los Angeles, San Francisco and San Diego, meaning that Las Vegas is more affordable. The Los Angeles, San Francisco and San Diego metro areas had respective cost-of-living indices of 148.1, 200.1 and 143.3. From a purchasing power perspective, $1.00 spent in the Las Vegas metro area has as much purchasing power as $1.44 in Los Angeles, $1.95 in San Francisco and $1.39 in San Diego.

Housing accounts for the largest cost-of-living differences between Southern Nevada and the California metro areas. In the third quarter of 2019, the Las Vegas metro area’s housing cost-of-living index score was 115.8, meaning it was 15.8 percent higher than the national average, yet that was still roughly two to three times lower than the scores for the Los Angeles, San Francisco and San Diego metro areas. The Los Angeles metro area had a housing index score of 230.8, the San Francisco area had a score of 361.3 and the San Diego area had a score of 214.4. Though housing costs in Southern Nevada have increased considerably in recent years, they are likely to remain meaningfully lower than any of the three California metro areas for the foreseeable future, providing a major incentive for residents to relocate to the Las Vegas area.

Beyond housing, every other cost-of-living indicator was higher in these California metro areas compared to Las Vegas. Transportation in the Las Vegas area had an index value of 110.8, between 15 and 30 points lower than the three major California metro areas. Utilities in Las Vegas had an index value of 99.9, which was between 6 and 22 points lower than the three California metro areas. The cost of healthcare in Las Vegas had an index value of 99.6, between 10 and 28 percent lower than the three major California metro areas, while the cost of groceries in Las Vegas had an index value of 95.1, between 21 and 32 points lower than the three major California metro areas.

The substantially lower cost of living in Southern Nevada helps make up for the region’s comparatively lower wages. Average weekly wages in the Las Vegas metro area were $830.03 in of October 2019, compared to between $1,047 and $1,374 for the three major California metropolitan areas. On its face, this difference would seem to be a disadvantage for workers in Southern Nevada. However, after accounting for the cost-of-living differences, weekly wages in the California metro areas would equate to between $706 and $765 in Southern Nevada, significantly lower than the average weekly wage in the Las Vegas area. Simply, this means that a dollar earned in Southern Nevada goes farther than a dollar earned in the California metro areas.

Over many decades, the relative affordability of Southern Nevada has been a primary factor in convincing thousands of Californians to relocate there. Though the Las Vegas metro area’s cost-of-living index, especially for housing, has increased in recent years, it is likely to remain meaningfully lower than in the Los Angeles, San Francisco and San Diego metro areas, and the trend of tens of thousands of Californians becoming new Nevadans each year appears unlikely to change anytime soon.

November 2019

Nevada has experienced some of the strongest employment growth in the country in recent years, and although annual job growth in both the country and state has slowed, the Silver State remains well ahead of the national average. Since the start of 2019, year-over-year employment growth in the United States has dipped from 2.0 percent to 1.5 percent in September. In Nevada, job growth has dipped from 4.2 percent to 3.2 percent during the same period; however, Nevada’s latest job growth rate was more than twice the national rate and topped all other states.

Nevada’s job growth over the past year equated to 45,100 more jobs. This growth was primarily driven by gains in two major sectors, with the construction sector adding 9,800 new jobs and the professional and business services sector adding 9,700. These two sectors alone accounted for 43.2 percent of all jobs added in Nevada during the past year.

Continued population growth and major construction projects throughout the state helped drive job gains in the construction sector, which led all sectors with a year-over-year job growth rate of 10.6 percent. Employment in the professional and business services sector also experienced strong growth over the past year, increasing by 5.0 percent. The statewide demand for workers has driven wages upward, with the strongest gains in construction. Average weekly wages in the industry increased by $326, or 29.4 percent, from $1,107 to $1,432. Overall average weekly wages increased by 6.6 percent to $865. Broad employment growth has driven down the statewide unemployment rate from 4.5 percent in September 2018 to 3.8 percent a year later, marking the fourth time this year that the statewide rate has dipped below 4.0 percent. Prior to 2019, the unemployment rate hadn’t reached that level since 2006.

The Las Vegas metropolitan area experienced solid employment job gains as total employment increased by 2.3 percent, or 23,100 jobs, over the past year. The leisure and hospitality sector and the construction sector contributed the majority of new jobs to the region, adding 8,300 jobs and 5,900 jobs, respectively. The combined 14,200 new jobs in these sectors accounted for 61.5 percent of all new jobs in the Las Vegas area during the past year. Construction was also the fastest-growing sector in the Las Vegas region, with total employment increasing by 9.0 percent. Job growth in the Las Vegas region has been reflected in the local unemployment rate, which dropped to 4.0 percent in September 2019, an improvement from the 4.8 percent recorded a year ago and among the lowest rates recorded in more than a dozen years.

The Reno metro area has experienced more robust employment growth over the past year, with employment increasing by 5.4 percent to 13,300. This growth was driven by increases in the professional and business services sector, the manufacturing sector and the trade, transportation and utilities sector. On a combined basis, employment in these three sectors grew by 9,700 jobs over the past year, accounting for 72.9 percent of all job growth in the Reno area.

The professional and business services sector and the manufacturing sector not only accounted for the largest number of new jobs, they also represented the two fastest-growing sectors in the region. Over the past year, employment in the professional and business services sector increased by 14.1 percent, while manufacturing employment grew by 10.5 percent. Trade, transportation and utilities employment also experienced a strong year, with annual growth of 4.7 percent to 2,500 new jobs. Reno’s striking employment growth during the past year has driven the unemployment rate to 2.9 percent, the first sub-3.0 percent rate since 1999.

Continued investment in both Las Vegas and Reno bodes well for future job growth. With $39.7 billion of planned and under construction investments throughout the state, there is likely to be sustained demand for construction jobs in the near-term future. Furthermore, $19.1 billion of tourism investments either planned or under construction in the Las Vegas region alone will help support new leisure and hospitality jobs, while large non-tourism investments throughout the state, such as the Tesla Gigafactory, Google Data Center and Switch Citadel, will support further growth in the state’s technology-related sectors.

October 2019

Over the past few years, Nevada has been one of the nation’s fastest-growing economies. On a year-over-year basis, total nonfarm employment grew by 3.0 percent in Nevada from August 2018 to August 2019, good for second-highest behind Utah. The statewide unemployment rate has continued to drop as well, decreasing by 0.3 percentage points over the past year to 4.2 percent as of August 2019. This strong growth trend, now many years in, has naturally attracted investment and development of all kinds, including hospitality and technology investments that will help the state’s economy continue to be strong, diverse and sustainable going into the future.

Hospitality remains the core of the Las Vegas metropolitan area’s economy, and there are a number of investments in the pipeline that are under construction or close to completion that will help strengthen the regional economy’s core by creating jobs and attracting visitors. Three of the largest tourism-related investments are Resorts World Las Vegas, Allegiant Stadium and the expansion of the Las Vegas Convention Center, all of which are scheduled to complete in 2020 for a combined cost of $7.6 billion. These three projects will not only create a substantial number of local jobs, they all appeal to distinctive segments of the tourism market, such as the convention market or football fans, which helps diversify the visitor base. Other projects among the $19.1 billion in total tourism-related investments include the MSG Sphere and the Wynn Convention Center, which are both under construction, and planned projects such as The Drew and the Moulin Rouge casino-hotels.

Southern Nevada has a number of impactful non-tourism projects under construction that will help diversify the local economy. These include Union Village (expected to complete in 2025 at a cost of $1.2 billion) and the Google Data Center (expected to complete in late 2020 at a cost of $600 million). Union Village is a sprawling health-based community in Henderson that will include a dialysis clinic, a gym, multiple condominium projects, a hotel and retail space, among other amenities. The Google Data Center, also in Henderson, will both support internet infrastructure and create high-paying jobs.

The Reno metropolitan area is seeing a number of large-scale investments that are contributing to the ongoing transformation of the regional economy. In total, $15.2 billion of investments are planned or under construction in Northern Nevada, with two of these, the Tesla Gigafactory ($6.0 billion) and the Switch Citadel ($4.0 billion) making up nearly two-thirds of this total. The second phase of the Gigafactory is anticipated to complete in 2020, while the second phase of the Switch Citadel is expected to be completed in 2025. Upon completion, the Tesla Gigafactory is expected to be the largest building in the world and entirely powered by renewable energy. Similarly, the Switch Citadel is also expected to be entirely powered by renewable energy, and at final build will include 7.2 million square feet of data center space. Switch’s current 1.3 million-square-foot facility is the largest data center in the world. These two investments are helping make Northern Nevada a major technology hub with global significance.

Many of the state’s recently completed and ongoing projects are part of a sustained effort to diversify and bolster Nevada’s economy. One metric of economic diversity, the Hachman Index, measures the overall diversity of an area’s economy compared to the country as a whole, with a score closer to 100 meaning that the local economy is more diverse. In the last 10 years, Nevada’s economy has become substantially more diverse, as its Hachman score increased from 73.6 to 80.7, an increase of 7.1 percentage points or 9.6 percent. The Hachman Index for the Las Vegas metropolitan area increased by 7.2 points to 73.3, an increase of 10.9 percent, and the Northern Nevada economy saw its Hachman score increase by 1.6 points, or 1.8 percent. Continued investment plays a critical role in driving these scores upwards, as new developments create jobs that attract people, which in turn leads to the creation of new jobs across different industries.

September 2019

One of the many bright spots of Nevada’s economic expansion has been the recovery of the housing market, which was one of the nation’s hardest hit during the economic downturn of a decade ago. Strong employment and population growth trends since then have driven the state’s economic growth, and the rise in incomes and residents has helped drive demand for housing throughout the state.

Nevada’s home price appreciation has been at or near the top of the national rankings for the past several years. In seven of the past eight quarters through June 2019, Nevada was among the top three states in year-over-year home price appreciation, with three months in the top spot, according to the Federal Housing Finance Agency’s House Price Index. Meanwhile, Southern Nevada was the hottest housing market in the country for much of 2018, with S&P CoreLogic Case-Shiller Home Price Index values rising by as much as 14 percent on a year-over-year basis. That trend has continued into 2019, as Southern Nevada was the nation’s second-hottest market in June 2019 behind Phoenix as home prices increased by 5.5 percent on a year-over-year basis.

The Southern Nevada new home market has benefitted from increasing home prices and sales as it has expanded to meet the demands of the expanding economic and population base. The median new home price reached a peak of $410,000 in December 2018, while new home closings over the past year have hovered near 10,000 on a trailing 12-month basis, the highest totals in more than a decade. These indicators both climbed along with new permits issued for to-be-sold homes, as homebuilders ramped up activity from under 4,000 permits a year in 2011 to more than 10,000 in 2018.

Like the broader housing market, the long-term upward trends in the new home segment have shown recent signs of slowing down in Southern Nevada. The months of effective inventory for single-family residences in the region has increased from under two months, which was the case for much of 2017 and 2018, to roughly two-and-a-half months of effective inventory as of August 2019.

Total trailing 12-month new home closings have recorded a decline in year-over-year growth rates for much of 2019. These totals rose by double-digit year-over-year growth rates for 11 consecutive months and 41 of 43 months until the 13.3 percent recorded in February 2019. Since then, year-over-year growth rates have fallen to 0.8 percent in July 2019, the most recent data available. The median new home closing price has followed suit, falling from the December 2018 high of $410,000 to $381,490 in July 2019. By comparison, trailing 12-month totals for existing home closings have fallen in 11 consecutive months, but existing home prices have continued to rise, climbing 5.8 percent year-over-year to $275,000 in July 2019.

The cooldown in the Southern Nevada new home market has been reflected in local new residential permitting activity, where year-over-year growth rates for trailing 12-month residential permitting activity for to-be-sold homes have decreased for the three consecutive months through July 2019. Labor shortages, higher labor costs and rising materials costs may also be factoring into declining homebuilding activity.

The situation in Washoe County has not followed Southern Nevada’s trends, as home prices and closings have continued to rise throughout 2019. The trailing 12-month total for new home closings has increased for 17 consecutive months in Washoe County, with growth rates above 10 percent in 10 of the past 12 months. Meanwhile, new home prices in Washoe County have continued to increase, suggesting a steady pool of new home buyers who are willing to buy new homes regardless of increasing prices amid the region’s rapidly expanding economy.

Homebuilding activity and a hot real estate market in both Southern and Northern Nevada have contributed to the state’s booming construction economy. Over the past year, statewide construction employment has grown to 98,600 (as of July 2019), an increase of 7,800 jobs over the year (+8.5 percent). Statewide growth in average weekly construction wages has been even more substantial, with the statewide average weekly wage for construction workers reaching $1,427 as of July 2019, an increase of $326, or 29.6 percent, over the same period last year.

Nevada’s new home market has grown in concert with the state’s economic fortunes, and ongoing positive trends in population, job growth and other core economic indicators should continue to support homebuilding to meet higher demand for homes across the state.

August 2019

The Federal Reserve’s recent cut of the key interest rate was the first such move since it cut rates to nearly zero during the financial crisis a decade ago. The move reduced the federal funds rate, which is what banks charge each other to borrow money from one another, from 2.5 percent to 2.25 percent. The Federal Reserve uses interest rates as a lever to either stimulate or moderate the economy while balancing maximum employment with stable inflation. In the case of the most recent rate cut, the Federal Reserve said the rationale was to protect the growing economy from uncertain international trade factors and slowing growth abroad.

Interest rates can have a meaningful impact on employment because the cost of borrowing is passed from banks to businesses, which in turn may have to decrease investment or even lay off workers if operating costs are too high as a result of higher interest costs. As a consequence, this leads to decreases in consumer spending and demand for products, which in turn leads to cutting wages in other sectors of the economy. On the other hand, if interest rates are cut, banks will lower their interest rates, which encourages spending by businesses and households.

On the national level, core inflation been tracking below the Federal Reserve’s target level of 2 percent, while the unemployment rate has held steady near 4 percent. Ideally, the United States economy will operate at full employment, also known as the non-accelerating inflation rate of unemployment (“NAIRU”). Although it is referred to as full employment, NAIRU does not mean an unemployment rate of zero, but instead signifies the inflection point when inflation will begin to increase. NAIRU is important in the national economy because once the unemployment rate drops below that level, inflation will theoretically accelerate. The theory behind this inverse relationship is that when unemployment rates drop, firms need to attract workers by increasing wages for the same work. Those firms then raise prices on their goods and services to compensate for the rising cost of labor. According to the St. Louis Federal Reserve, NAIRU currently stands at 4.6 percent, meaning that the unemployment rate is theoretically low enough where inflation should start to increase. Despite this theory, inflation has not yet begun to increase in the expected fashion.

In Nevada’s expanding economy, average wages have climbed considerably as employment has grown and unemployment has dropped. The state has enjoyed the highest job growth rate in the United States for the past nine months, and over the past 12 months, total nonfarm employment in Nevada has grown by 3.4 percent, with 46,700 jobs gained in the state’s economy. The state’s employment growth rate has consistently been among the top five states since June 2016. As a result, the statewide unemployment rate is at 4.5 percent, which is near pre-recession levels for Nevada and slightly above the national unemployment rate of 3.7 percent.

While Nevada’s unemployment rate is higher than the national average, recent wage growth in the state has easily outpaced national wage growth. Over the past 12 months, average weekly wages in the state have increased by 8.2 percent, growing from $792 to $858 as of June 2019. Over the same period, national weekly earnings have increased by 2.8 percent, less than half the growth rate in Nevada. The parallel positive trends in job and wage growth suggest that Nevada’s labor market has additional capacity for continued expansion.

Another positive for the state is that wages have risen faster than inflation, meaning more purchasing power for every dollar earned by Nevadans. Over the past year, the Consumer Price Index for Urban Consumers in the Western United States increased by 2.7 percent compared to statewide wage growth of 8.2 percent. This equates to real wage growth of 5.5 percent for Nevada workers. On a regional basis, average weekly wages in the Las Vegas metropolitan area grew by 3.1 percent in the first quarter of 2019 over the prior year, while wages in the Reno metropolitan area grew by 19.9 percent. When adjusted based on each area’s respective cost of living indices, the purchasing power of wages increased by 1.0 percent in Southern Nevada and by 18.1 percent in Northern Nevada, where average weekly wages climbed 19.9 percent over the prior year.

The Federal Reserve’s recent rate cut, and the potential for another in the coming months, could lead to higher prices in the near future, but for now, Nevadans are experiencing the benefits created by rising wages and relatively low inflation.

July 2019

Gasoline prices in the United States have been on a roller coaster in recent months. Following a steady rise from 2016 into October 2018, the average weekly regular gas price tumbled roughly 65 cents per gallon from $2.88 to $2.24 by January 2019, the lowest price in two years. Since then, the price rebounded to $2.90 in May, dipped 25 cents by late June and climbed back to just under $2.80 by mid-July, according to the U.S. Energy Information Administration (“EIA”). Despite the summer price bump, the average price remained 3 cents per gallon lower than a year ago.

In comparison, Nevadans are paying about 50 cents more per gallon at $3.30, while gas prices for regular gas in the Las Vegas metropolitan area stood at $3.27, according to AAA. Drivers in the Reno metropolitan area were paying even more with an average price per gallon of $3.46. On average, prices per gallon compared to a year ago were up 5 cents per gallon statewide, 7 cents per gallon in the Las Vegas area and 3 cents per gallon in the Reno area.

Rising gasoline prices typically lead to reduced consumption by drivers. However, during most of the recovery period that has marked the longest economic expansion in U.S. history, total gasoline consumption has increased in Clark County every year since 2011. Notably, gasoline consumption growth outgrew the region’s population growth in both the state and in Clark County between 2015 and 2017, suggesting that consumer behavior was relatively unaffected by the price increases.

That trend has since changed. In 2017, gallons of gasoline sold per person statewide totaled 409.7 gallons, and in Clark County they totaled 384.1 gallons per person. A year later, the statewide number dropped to 407.7, and the Clark County number dropped to 379.5 gallons per person. Rolling 12-month sales totals for gallons of gasoline were down 1 percent year over year in April 2019, while measures of population growth such as electric meter hookups and driver’s license surrenders had increased by at least twice that. This data suggests that the slowing gasoline consumption trend in Nevada could continue through 2019 as population rises faster than gasoline consumption.

Any rise in gas prices also has the potential to affect Las Vegas area visitation, as just over half of visitors to Las Vegas arrive via road transportation. Southern California is the origin for about 19 percent of all annual visits to Las Vegas, and the vast majority of those eight million visitors drive up Interstate 15 as their preferred travel option. California is home to the nation’s highest gas prices, which typically exceed Nevada’s average price by about 50 cents. For example, the latest average price per gallon for regular gasoline was $3.75, nearly a dollar higher than the national average and about 10 cents per gallon higher than the state’s average a year ago.

Yet that price increase appears to have had little effect so far on driving visitors, as daily average auto traffic at the Nevada-California border has dipped only 0.1 percent year over year on a trailing 12-month average basis. Fortunately for drivers from California and the rest of the nation, the EIA believes that gasoline prices have already peaked in 2019 when they approached $2.90 per gallon in May. The agency forecasts the average national gas price to hover around $2.65 per gallon for the remainder of the year, providing Nevadans, Californians and Americans with additional income to spend on other goods or services.

The EIA’s forecast is based on global supply and demand trends in the crude oil market. On the supply side, the 14-member Organization of the Petroleum Exporting Countries (“OPEC”) is expected to continue to slow production. However, that slowdown is expected to be offset by supply growth by non-OPEC nations including the United States, which surpassed 12 million barrels a month for the first time in April. On the demand side, the EIA forecasts slowing global oil consumption due to a slowing worldwide economy. Combined, these factors are expected to keep downward pressure on gasoline prices across the nation through the end of the year and into the next.

July 2019

Gasoline prices in the United States have been on a roller coaster in recent months. Following a steady rise from 2016 into October 2018, the average weekly regular gas price tumbled roughly 65 cents per gallon from $2.88 to $2.24 by January 2019, the lowest price in two years. Since then, the price rebounded to $2.90 in May, dipped 25 cents by late June and climbed back to just under $2.80 by mid-July, according to the U.S. Energy Information Administration (“EIA”). Despite the summer price bump, the average price remained 3 cents per gallon lower than a year ago.

In comparison, Nevadans are paying about 50 cents more per gallon at $3.30, while gas prices for regular gas in the Las Vegas metropolitan area stood at $3.27, according to AAA. Drivers in the Reno metropolitan area were paying even more with an average price per gallon of $3.46. On average, prices per gallon compared to a year ago were up 5 cents per gallon statewide, 7 cents per gallon in the Las Vegas area and 3 cents per gallon in the Reno area.

Rising gasoline prices typically lead to reduced consumption by drivers. However, during most of the recovery period that has marked the longest economic expansion in U.S. history, total gasoline consumption has increased in Clark County every year since 2011. Notably, gasoline consumption growth outgrew the region’s population growth in both the state and in Clark County between 2015 and 2017, suggesting that consumer behavior was relatively unaffected by the price increases.

That trend has since changed. In 2017, gallons of gasoline sold per person statewide totaled 409.7 gallons, and in Clark County they totaled 384.1 gallons per person. A year later, the statewide number dropped to 407.7, and the Clark County number dropped to 379.5 gallons per person. Rolling 12-month sales totals for gallons of gasoline were down 1 percent year over year in April 2019, while measures of population growth such as electric meter hookups and driver’s license surrenders had increased by at least twice that. This data suggests that the slowing gasoline consumption trend in Nevada could continue through 2019 as population rises faster than gasoline consumption.

Any rise in gas prices also has the potential to affect Las Vegas area visitation, as just over half of visitors to Las Vegas arrive via road transportation. Southern California is the origin for about 19 percent of all annual visits to Las Vegas, and the vast majority of those eight million visitors drive up Interstate 15 as their preferred travel option. California is home to the nation’s highest gas prices, which typically exceed Nevada’s average price by about 50 cents. For example, the latest average price per gallon for regular gasoline was $3.75, nearly a dollar higher than the national average and about 10 cents per gallon higher than the state’s average a year ago.

Yet that price increase appears to have had little effect so far on driving visitors, as daily average auto traffic at the Nevada-California border has dipped only 0.1 percent year over year on a trailing 12-month average basis. Fortunately for drivers from California and the rest of the nation, the EIA believes that gasoline prices have already peaked in 2019 when they approached $2.90 per gallon in May. The agency forecasts the average national gas price to hover around $2.65 per gallon for the remainder of the year, providing Nevadans, Californians and Americans with additional income to spend on other goods or services.

The EIA’s forecast is based on global supply and demand trends in the crude oil market. On the supply side, the 14-member Organization of the Petroleum Exporting Countries (“OPEC”) is expected to continue to slow production. However, that slowdown is expected to be offset by supply growth by non-OPEC nations including the United States, which surpassed 12 million barrels a month for the first time in April. On the demand side, the EIA forecasts slowing global oil consumption due to a slowing worldwide economy. Combined, these factors are expected to keep downward pressure on gasoline prices across the nation through the end of the year and into the next.

June 2019

Nevada has sustained strong economic growth for several years, consistently at or near the top of national rankings for various growth measures, including population, employment, and wages, among other metrics. But as strong as the state’s economy has been, Northern Nevada and the Reno area in particular have seen impressive growth buoyed by the rapid expansion of the manufacturing and technology industries in the region and a boom of investment and development projects. Tesla has surpassed its hiring and payroll goals for the Gigafactory, companies such as Apple and Google continue to build and expand data centers at the Tahoe Reno Industrial Center (TRIC), and cutting-edge startups like the finance technology and blockchain company Figure Technologies as well as Blockchains, LLC have expanded operations in Reno and have large plans for the future, just to name a few developments driving growth in the region.

Over the 12 months through April 2019, manufacturing employment in the Reno metropolitan area rose by 17.7 percent, or roughly 4,000 jobs, making it the fastest growing sector in the region. Since the beginning of 2017 the sector has added over 11,000 jobs, nearly one-third of the 35,000 total new jobs created in the period. This has increased manufacturing’s overall share of employment in the Reno area from 8.2 percent to 10.2 percent. While Tesla and Gigafactory co-tenant Panasonic have accounted for a significant portion of the sector’s growth with roughly 7,000 jobs, other manufacturers have grown along with them to significantly increase the sector’s presence in the region.

The manufacturing sector is not the sole source of Northern Nevada’s rapid economic ascent, however, as nearly every sector has shown year-over-year employment growth. Through April 2019, overall employment in the Reno area was up 5.6 percent year-over-year, well above Nevada’s statewide growth of 3.6 percent and more than three times the national growth rate of 1.6 percent. In fact, Reno ranks second among all U.S. metro areas for employment growth, trailing only Ocean City, New Jersey, which has an employment base just one-sixth the size of Reno’s. This growth has lowered Reno’s unemployment rate to its lowest point in 20 years at 2.9 percent, significantly lower than the Nevada and United States unemployment rates of 4.0 and 3.6 percent, respectively.

Much of Reno’s employment growth has come in relatively high-wage industries, including manufacturing (17.7 percent year-over-year growth) as well as professional and business services (12.8 percent growth) and construction (9.0 percent growth). This concentration of new high-wage jobs has led to significant increases in the average weekly wage for Reno-area workers. Over the past year, Nevada has seen the average weekly wage for private sector workers increase by 5.8 percent, the second-fastest growth rate in the country behind Wyoming. In the same period, the average wage in the Reno area increased by 22.2 percent, more than three times the statewide rate. The average weekly wage for Reno workers across all industries is now $1,008, 20.5 percent higher than the statewide average of $836 per week.

Northern Nevada’s economic growth has been a boon overall, but has also been associated with some challenges in the region. Housing prices in the Reno area have reached their highest levels ever, potentially outstripping wage growth gains. In April 2019, the median new home among single family residences and townhouses/condos in Washoe County sold for more than $462,000, while the median resale home sold for $344,000. In the Las Vegas area, home prices have appreciated rapidly as well, but the overall cost remains much lower, with the median new home selling for $396,855 and median resale home for $269,997. Construction of new housing in Northern Nevada has increased in recent years, but developers have struggled to keep up with increasing demand and the rising cost of inputs, particularly construction wages, which have risen by 28 percent statewide over the past 12 months.

The current expansion is changing the Northern Nevada economy in many ways, creating a more diversified, high-tech and high-wage environment. As long as the national and state economies remain strong, the Reno area should continue to grow and attract more high-tech companies by leveraging its proximity to Silicon Valley, Nevada’s business-friendly reputation, and the region’s logistical strengths.

June 2019

Nevada has sustained strong economic growth for several years, consistently at or near the top of national rankings for various growth measures, including population, employment, and wages, among other metrics. But as strong as the state’s economy has been, Northern Nevada and the Reno area in particular have seen impressive growth buoyed by the rapid expansion of the manufacturing and technology industries in the region and a boom of investment and development projects. Tesla has surpassed its hiring and payroll goals for the Gigafactory, companies such as Apple and Google continue to build and expand data centers at the Tahoe Reno Industrial Center (TRIC), and cutting-edge startups like the finance technology and blockchain company Figure Technologies as well as Blockchains, LLC have expanded operations in Reno and have large plans for the future, just to name a few developments driving growth in the region.

Over the 12 months through April 2019, manufacturing employment in the Reno metropolitan area rose by 17.7 percent, or roughly 4,000 jobs, making it the fastest growing sector in the region. Since the beginning of 2017 the sector has added over 11,000 jobs, nearly one-third of the 35,000 total new jobs created in the period. This has increased manufacturing’s overall share of employment in the Reno area from 8.2 percent to 10.2 percent. While Tesla and Gigafactory co-tenant Panasonic have accounted for a significant portion of the sector’s growth with roughly 7,000 jobs, other manufacturers have grown along with them to significantly increase the sector’s presence in the region.

The manufacturing sector is not the sole source of Northern Nevada’s rapid economic ascent, however, as nearly every sector has shown year-over-year employment growth. Through April 2019, overall employment in the Reno area was up 5.6 percent year-over-year, well above Nevada’s statewide growth of 3.6 percent and more than three times the national growth rate of 1.6 percent. In fact, Reno ranks second among all U.S. metro areas for employment growth, trailing only Ocean City, New Jersey, which has an employment base just one-sixth the size of Reno’s. This growth has lowered Reno’s unemployment rate to its lowest point in 20 years at 2.9 percent, significantly lower than the Nevada and United States unemployment rates of 4.0 and 3.6 percent, respectively.

Much of Reno’s employment growth has come in relatively high-wage industries, including manufacturing (17.7 percent year-over-year growth) as well as professional and business services (12.8 percent growth) and construction (9.0 percent growth). This concentration of new high-wage jobs has led to significant increases in the average weekly wage for Reno-area workers. Over the past year, Nevada has seen the average weekly wage for private sector workers increase by 5.8 percent, the second-fastest growth rate in the country behind Wyoming. In the same period, the average wage in the Reno area increased by 22.2 percent, more than three times the statewide rate. The average weekly wage for Reno workers across all industries is now $1,008, 20.5 percent higher than the statewide average of $836 per week.

Northern Nevada’s economic growth has been a boon overall, but has also been associated with some challenges in the region. Housing prices in the Reno area have reached their highest levels ever, potentially outstripping wage growth gains. In April 2019, the median new home among single family residences and townhouses/condos in Washoe County sold for more than $462,000, while the median resale home sold for $344,000. In the Las Vegas area, home prices have appreciated rapidly as well, but the overall cost remains much lower, with the median new home selling for $396,855 and median resale home for $269,997. Construction of new housing in Northern Nevada has increased in recent years, but developers have struggled to keep up with increasing demand and the rising cost of inputs, particularly construction wages, which have risen by 28 percent statewide over the past 12 months.

The current expansion is changing the Northern Nevada economy in many ways, creating a more diversified, high-tech and high-wage environment. As long as the national and state economies remain strong, the Reno area should continue to grow and attract more high-tech companies by leveraging its proximity to Silicon Valley, Nevada’s business-friendly reputation, and the region’s logistical strengths.

May 2019

Due to a strong fourth quarter, total gross gaming revenue in Nevada closed 2018 with the best annual growth in more than a decade. Statewide gaming revenue totaled $11.9 billion for the year, a 3.0 percent improvement over the prior year, marking the highest annual growth rate since the 8.3 percent of 2006. However, the momentum from the end of 2018 has not carried into 2019. Through the first quarter of the year, gaming revenue totals have shown signs of slowing, but a closer examination reveals that much of the slowdown is linked to the volatile trends of the table game baccarat.

In the 12 months through March 2019, gaming revenue generated in Nevada totaled $11.9 billion, up 1.9 percent from a year ago. The growth in statewide gaming revenue over that time was driven largely by a 3.8 percent increase in slot machine revenues to $7.8 billion. That growth was partially offset by the 1.5 percent decrease in table game revenue to $4.1 billion. In terms of actual gains and losses over the past 12 months, slot machine revenue grew by $285.7 million while table game revenue fell by $62.0 million.

The statewide trends were largely influenced by Clark County, which accounts for 86.0 percent of gaming revenue in Nevada. Total gaming revenue in Clark County was up 1.8 percent from the prior year in the 12 months through March 2019 due to 3.9 percent growth in slot machine revenues. Slot machine revenues over that time totaled $6.4 billion, driven by 4.7 percent growth in penny slot revenues to $2.7 billion and a 3.7 percent gain in multi-denominational slot revenues to $2.6 billion. Growth in slot revenues overcame a 1.6 percent drop in table game revenue, which fell to $3.8 billion.

The decline was largely attributable to a 13.4 percent decline in baccarat revenue, which dropped by $166.9 million to $1.1 billion in the 12 months through March 2019. The impact of baccarat, the high stakes card game favored by wealthy Asian players, on overall trends is attributable to its outsized share of gaming revenue. Baccarat accounts for 9.1 percent of all gaming revenue in Nevada, roughly the same as the 9.8 percent generated by blackjack. However, on a per-table basis, baccarat generates more than six times the revenue of blackjack. Baccarat revenue is also highly volatile and can swing overall trends based on a single underperforming month. To put that in perspective for the 12 months through March 2019, statewide gaming revenue growth would have nearly doubled to 3.7 percent with baccarat excluded.

Nearly all of the state’s baccarat tables are concentrated on the Las Vegas Strip, which bore the brunt of baccarat’s revenue decline. Table game revenue along the Strip dipped 2.9 percent to $3.2 billion, and slot machine revenue climbed 3.5 percent to $3.3 billion, with the two segments combining for a slight increase in total revenue of 0.3 percent. In areas with little to no baccarat play, gaming revenue trends were more positive. The Las Vegas locals market reported gaming revenue growth of 5.1 percent to $2.4 billion, and the downtown Las Vegas market reported 4.8 percent growth in total gaming revenue to $655.0 million.

In Washoe County, which has no baccarat tables, gross gaming revenue increased by 2.4 percent to $860.9 million in the 12 months through March 2019. Growth in Washoe County was entirely driven by slot revenue growth, as table game revenues declined by 0.3 percent from the prior year. Furthermore, almost half of all slot revenue was generated by multi-denominational slot machines. These machines accounted for $335.5 million of slot machine revenue during the trailing 12 months, 10.5 percent higher than the prior year.

Despite the recent slowdown in overall growth, Nevada’s gaming revenue has maintained a 34-month string of positive year-over-year growth in trailing 12-month totals. The volatility of baccarat revenue has tempered some of the gains, but the underlying trends suggest steady growth in the broader gaming segments will help maintain the positive trajectory for this important revenue source.

April 2019

Wages are an important indicator of economic health, as they are a key component of consumer spending, the primary driver of economic activity. For workers in Nevada and across the United States, wages have been steadily rising amid falling unemployment during the second-longest economic expansion in the country’s history. Nationally, wages in February 2019 grew by 3.1 percent over the past year, a healthy amount that was dwarfed by the 8.2 percent wage growth in Nevada.

Rapid growth in statewide wages is more notable given the simultaneous rise in both population (2.1 percent) and employment (3.5 percent), both areas where Nevada leads the nation. With large increases in population and workforce, one would generally expect wages to grow more slowly, given the rising availability of workers. However, the demand for labor in Nevada has been strong enough to defy this norm, as the expanding economy continues to absorb the influx of new workers and the unemployment rate falls. Nevada’s 8.2 percent wage growth in February 2019 ranked second among all states, trailing only Wyoming.

Regionally, the statewide wage trend has been driven by exceptionally strong growth in Northern Nevada. Through February 2019, average weekly wages in the Reno metropolitan area had climbed over the past year from $805 to $941, an annual increase of 16.8 percent. The trend accelerated in the later part of 2018 and has continued through the first part of 2019, with five of the past six months reporting double-digit annual growth rates, reaching as high as 20.7 percent in January 2019. During the same timeframe, Southern Nevada reported annual wage growth of 3.4 percent, which followed three months of more than 5.0 percent annual growth rates.

In the state and the nation, wage growth is often correlated with unemployment as businesses competing to hire and retain a smaller pool of qualified workers typically raise wages to do so. Nevada’s recent rise in wages has coincided with the falling unemployment rate, which dropped to 4.1 percent in February 2019, the lowest point in a dozen years. Southern Nevada’s unemployment rate dropped to 4.2 percent during the same time period, while Northern Nevada’s rate dipped to 3.7 percent, the 10th month under 4 percent over the past year. These trends in falling unemployment suggest wage growth will continue to experience an upward trajectory.

While the average wages for all private workers in the state have shown considerable growth, the level of growth has differed significantly among various industries. Nevada’s construction industry has reported significant wage growth during the state’s ongoing building boom. Employment in the sector has grown by 11.7 percent over the past year, while wage growth within the construction industry has climbed 15.3 percent. This growth has made the construction industry one of the highest paying sectors of the Nevada economy, with workers averaging a weekly wage of $1,246, 50 percent higher than the average across all industries. By comparison, in the leisure and hospitality sector, the largest sector of the Nevada economy with a quarter of all employment, the average weekly wage has increased by 4.5 percent over the past year. However, the industry’s average weekly wage of $519 was 37.6 percent below the statewide average.

The wage growth disparities between industries highlight an underlying factor in Nevada’s rising wage trends – the diversification of the state’s economy. Over the past year, employment in Nevada has increased by 3.5 percent. There are three sectors of the economy that have seen employment levels grow faster than the statewide average: manufacturing (12.2 percent), construction (11.7 percent) and professional and business services (6.6 percent). These industries all have above-average wage levels, and as they begin to make up a larger share of the state economy, the statewide average wage should continue to rise. Since the start of 2015, these three industries have increased their share of statewide employment from 21.9 percent to 25.0 percent.

Nevada’s ongoing economic expansion has shown little sign of slowing, as employment and population growth have been at or near the top of national rankings in recent years. These macroeconomic trends have driven the state’s ever-growing and diversifying economy, benefiting Nevada’s businesses and residents. As these trends continue, Nevada’s workers are likely to continue experiencing the benefits of greater economic opportunity and rising wages.

March 2019

Nevada’s housing market finished 2018 where it began – as one of the fastest-appreciating markets in the nation. At the close of 2017, Nevada’s annual home price appreciation of 11.5 percent ranked third-fastest in the United States, according to the Federal Housing Finance Agency’s House Price Index. Twelve months later, the state’s annual home price growth rate dipped slightly to 11.2 percent, yet the state’s ranking climbed by one spot to second. Not coincidentally, the top three states in home price appreciation – Idaho, Nevada and Utah – were also the three fastest-growing states in population in 2018, illustrating the relationship between growing housing demand and rising home prices.

Nevada’s 11.2 percent growth rate in the FHFA’s purchase-only House Price Index was 10 times the national average of 1.1 percent. Southern Nevada drove the statewide trend with a 13.3 percent annual increase in its House Price Index, which ranked third among the 100 largest metropolitan areas. Using the all-transactions House Price Index, a similar measure that includes refinance mortgages, the Las Vegas metro area’s 17.6 percent home price appreciation was the fastest in the country, while the Reno metro area ranked seventh with an annual growth rate of 11.8 percent.

By the end of 2018, the median closing price for an existing home in Southern Nevada was $260,000, an increase of 9.2 percent, or $22,000, from the prior year mark of $238,000. The median price of a new home rose by 7.9 percent during the same period, growing from roughly $380,000 to $410,000, an increase of $30,000. The median price for a new home dwarfs the pre-recession peak of $343,900 that was reached in August 2007, while the median price for existing homes remained $30,000 below the pre-recession peak of $290,000 in October 2006.

Rapidly rising home prices may be having an effect on slowing demand in the existing home market. Closings in the resale segment in Southern Nevada dropped by 2.8 percent in 2018, declining from 49,200 closings to 47,900 closings. It is possible that potential homebuyers are being deterred by fast-rising prices, though the same trend has not been evident in the new home segment. New home closings increased by 13.8 percent in 2018, rising from 8,700 to 9,900.

In Northern Nevada, the variance in home price growth between the existing and new home segments was more pronounced. At the end of 2018, the median price for existing homes in Washoe County increased by 1.8 percent to $330,800, while the median price for new homes jumped by 14.3 percent from $397,000 to $453,800. Despite the large increase in median new home prices, new home sales did not slow and actually grew at a faster rate than prices with closings increasing by 19.4 percent from 1,498 in 2017 to 1,788 in 2018. Though prices for existing homes have grown at a slower rate, the number of closings in Washoe County declined by 11.3 percent to 7,800 closings.

Strong demand for new homes in Southern Nevada was met by substantial growth in homebuilding activity in 2018. New residential permits over the year grew by 13.3 percent, rising from 9,500 to 10,800. Meanwhile, in Washoe County, permitting activity declined from 5,200 permits to 4,500 permits over the year. The overall decline was a product of a 29.9 percent decline in multi-family unit permitting, which was offset by 13.5 percent growth in permits for single-family residences.

Throughout the state, the multi-year trend of rapid population and employment growth has propelled the housing market as demand for homes remained robust. Those trends have shown little signs of slowing, as Nevada led all states with 4.0 percent year-over-year employment growth in January 2019 and thousands of new residents arrive each month. If these trends extend through 2019, Nevada’s housing market should experience another year of benefits driven by demand.

February 2019

Nevada’s leisure and hospitality industry is the most important in the state as it employs nearly one out of every four workers in the state and pays out over 20 percent of all wages. Given the importance of the industry to the state economy, the health and outlook of the leisure and hospitality industry play key roles in the state economy as a whole.

The number of visitors to Southern Nevada declined slightly for the second consecutive year in 2018, dropping 0.2 percent from 42.2 million visitors in 2017 to 42.1 million in 2018. The Las Vegas Convention and Visitors Authority noted that Las Vegas’s convention attendance also declined from 6.6 million in 2017 to 6.5 million in 2018, a decrease of 2.2 percent. A number of tradeshows rotated out of Las Vegas in 2018, including the CONEXPO-CON/AGG tradeshow in March, which contributed to the dip in convention attendance. These declines were reflected in the citywide occupancy rate, which declined by 0.5 percentage points from 88.7 percent in 2017 to 88.2 percent in 2018. The impact of decreased occupancy was softened by growth in the average daily room rate for hotels in the Las Vegas area, which increased from $126.92 in 2017 to $128.74 in 2018, an increase of 1.4 percent. The average daily room rate in 2018 was the second-highest rate in the 21st century and the highest rate since 2007. Growth in average daily room rates also drove increases in revenue per available room (RevPAR) in the Las Vegas area in 2018. Over the past year, RevPAR climbed from $112.51 in 2017 to $113.52 in 2018, an increase of 0.9 percent.

Despite the lack of growth in visitation, there were a number of significant improvements for Southern Nevada’s tourism industry in 2018. McCarran International Airport again set a record in passenger volume, recording an annual increase of 2.5 percent to 49.7 million passengers. Gross gaming revenue in Southern Nevada’s two major tourist destinations, the Las Vegas Strip and Downtown Las Vegas, continued to grow in 2018, marking the third consecutive year both submarkets have experienced growth in gaming revenue. From 2017 to 2018, gaming revenue on the Las Vegas Strip increased by 2.0 percent from $6.5 billion in 2017 to $6.6 billion in 2018. Gaming revenue on the Strip reached its highest value since 2007, when it reached $6.9 billion. Downtown Las Vegas gaming revenues grew for the fifth year in a row in 2018, increasing 3.0 percent from $631 million in 2017 to $650 million in 2018. Gaming revenue in Downtown Las Vegas reached $650 million for the first time since 2005, when casinos in Downtown generated $655 million of gross gaming revenue.

New planned and under construction projects throughout Nevada suggest optimism about the future of tourism in the state. Such projects include Resorts World Las Vegas, The Drew, the Las Vegas Stadium, the MSG Sphere, and the Caesars FORUM conference center. Resorts World Las Vegas will add an additional 3,400 hotel rooms to the Strip and the Caesars FORUM will add 550,000 square feet of conference center space. Besides new construction projects, there are a number of renovation projects and expansions underway to existing facilities which are expected to attract and accommodate increased demand. In Southern Nevada, these projects include the expansion and renovation of the Las Vegas Convention Center as well as renovations to the Palms, the Hard Rock Hotel, the Stratosphere and the SLS.

These projects are slated for completion within the next two years and will position the Southern Nevada tourism industry for future growth and expansion.

January 2019

Nevada’s trailing 12-month taxable retail sales total eclipsed $60 billion in October 2018 for the first time in state history. This milestone was the culmination of nine years of consistent growth since 2009, when taxable retail sales in Nevada were at their lowest amid the recession, falling to $38.4 billion. From 2009 to 2017 (the last complete calendar year of taxable retail sales data), Nevada’s taxable retail sales increased $19.3 billion, growing from $38.4 billion to $57.7 billion (50.2 percent growth) at a compound annual growth rate (CAGR) of 5.2 percent.

This growth was primarily driven by Clark and Washoe counties, which account for about 73 percent and 14 percent of statewide taxable retail sales, respectively. From 2009 to 2017, Clark County’s taxable retail sales increased by $13.0 billion to $41.5 billion (45.5 percent growth), growing at a CAGR of 4.8 percent. Washoe County’s taxable retail sales increased by $3.0 billion (56.3 percent) from 2009 to 2017, growing at a CAGR of 5.7 percent.

The turnaround in taxable retail sales is attributable to the state’s population and economic growth over the past decade. Since 2009, Nevada’s population has grown by 350,000, or 13.0 percent, and surpassed 3.0 million people for the first time in 2018. This increased population base means increased taxable retail sales spending in categories such as food services and drinking places (20.6 percent of Nevada’s October 2018 taxable retail sales) or motor vehicle and parts dealers (11.2 percent of Nevada’s October 2018 taxable retail sales). These two categories are worth noting because they make up the largest shares of taxable retail sales, accounting for nearly one-third of all taxable retail sales in Nevada.

Between 2009 and 2017, the statewide unemployment rate dropped by 6.3 percentage points, decreasing from 11.3 percent in 2009 to 5.0 percent in 2017 (dropping even further to 4.2 percent in October 2018). During the same time, average weekly wages increased from $700 to $768 (reaching $802 as of October 2018), suggesting that the state’s workforce is not only expanding and finding work with greater success, but is also earning more, thus increasing overall spending trends.

In Clark County, much of the growth in taxable retail sales can be attributed to increases in sales at food services and drinking places, which are mainly restaurants and bars that are tracked as part of the leisure and hospitality supersector. From 2009 to 2017, annual taxable retail sales from food services and drinking places increased from $6.1 billion to $10.7 billion, an increase of $4.6 billion that accounted for 35.5 percent of total retail sales growth during that period. The food services and drinking places sector makes up about 24 percent of all taxable retail sales in Clark County, thus its performance plays a large role in overall retail spending trends.

Similar to the rest of the state, growth in taxable retail sales in Clark County is a credit to improved economic conditions. Clark County population increased from 1.9 million in 2009 to 2.3 million in 2018, meaning a larger local customer base. Also, the average weekly wages of private sector employees in Clark County increased from $708 in 2009 to $780 in 2017 after falling to as low as $660 in 2011. As of October 2018, the average weekly wage was $802 as the wage growth trend growth continued well into 2018. With the falling unemployment rate – 4.4 percent in October 2018 from 11.5 percent in 2009 – rising wages and an increasing employment base suggest continued positive retail spending trends into 2019, both in Southern Nevada and across the state.

December 2018

Nevada’s economy remains one of the fastest-growing in the United States, and nowhere is that more apparent than in the state’s employment growth numbers. The state is approaching eight consecutive years of positive year-over-year job creation, which has been a key driver of economic recovery and expansion over that timeframe. That extended trend pushed statewide employment over 1.4 million for the first time in September 2018, and job creation trends suggest Nevada’s place among the nation’s fastest-growing economies will be secure into the foreseeable future.

In the most recent national job data available, Nevada employment increased by 46,900 jobs between October 2017 and October 2018, pushing total employment to a new high of 1.41 million. Those numbers equate to a 3.4 percent year-over-year job growth rate, ranking first among all the states and doubling the national growth rate of 1.7 percent. Nevada’s October 2018 job growth rate extended a streak of ranking among the top five states to 29 consecutive months. During that period, Nevada has ranked first in year-over-year job growth eight times and second 11 times. That consistent trend contributed to the addition of 128,000 jobs over the past three years, a 10.0 percent growth rate that ranks best in the nation.

Notable employment growth throughout Nevada has contributed to the statewide trends, as Southern Nevada surpassed 1.0 million jobs earlier this year and Northern Nevada is approaching 250,000 total jobs. The Las Vegas metropolitan area added 33,900 jobs between October 2017 and October 2018, equating to a 3.4 percent year-over-year growth rate that ranked fifth among the 30 largest metropolitan areas. The Reno metropolitan area reported adding 10,700 jobs during that time, a 4.5 percent growth rate.

As employment has climbed, the unemployment rates throughout Nevada have declined. The statewide unemployment rate dropped from a 10-year peak of 13.9 percent in January 2011 to 4.2 percent in October 2018, a decrease of 9.7 percentage points that was the largest improvement for any state. Similarly, the Las Vegas area unemployment rate declined to 4.4 percent in October 2018, a 9.6 percentage point improvement from January 2011, while the Reno area unemployment rate dropped to 3.3 percent, a 10.6 percentage point improvement from a high of 13.9 percent.

Nevada’s employment expansion over the past year has been broad based, with five major industries adding at least 6,000 jobs. The professional and business services sector led the way with 10,200 new jobs, followed by construction with 9,600 and manufacturing with 7,000. The manufacturing sector grew fastest with a 14.0 percent year-over-year growth rate, followed by the 11.2 percent growth rate for the construction industry. Construction, in particular, has reported a consistent long-term growth trend that has added 34,900 jobs over the past five years.

Growth in the construction sector has coincided with rapid population growth throughout the state. Nevada ranked second in annual population growth in each of the past two years and surpassed 3 million residents for the first time in 2017. The influx of new residents has increased demand for housing, and homebuilders have responded with new construction activity. On a trailing 12-month basis, total residential permits in Nevada have grown by 24.3 percent, with homebuilders adding 18,000 units per year. The majority of that activity is taking place in Southern Nevada, where, on a trailing 12-month basis, total new home permits issued over the past year climbed 16.8 percent from 9,262 to 10,816 permits.

Throughout the state, more than $25 billion in major new investments and ongoing construction projects are underway. In Southern Nevada, ongoing projects include the $7 billion Resorts World Las Vegas, the $1.8 billion Las Vegas Stadium, and the $1.4 billion expansion and renovation of the Las Vegas Convention Center. In Northern Nevada, projects include the $5.4 billion Tesla Gigafactory, the $4.0 billion Switch Citadel and the $2.6 billion Apple Data Center Expansion.

These projects, along with more than $9 billion in other planned investments, suggest continued expansion of not only the construction industry but of the Nevada economy as a whole. And as the economy’s expansion continues, so too will statewide employment.

November 2018

Governor Brian Sandoval entered office during the most trying economic environment in Nevada’s modern history. The Great Recession might have ended in June 2009, but its effects lingered in the Silver State years later. By the time Sandoval was sworn into office on January 3, 2011, the economic downturn had claimed nearly 200,000 jobs, shuttered 6,400 businesses and catapulted the unemployment rate to a national high of 13.9 percent. As Sandoval prepares to leave office eight years later, Nevada is once again among the nation’s leaders in job growth, population expansion, business investment and other key indicators of a solid economic footing. While the turnaround shares many causes, Sandoval’s policies and administration played key roles in Nevada’s economic rebound.

One of Sandoval’s primary platforms upon entering the Governor’s Mansion was improving economic diversification throughout the state. Nevada’s reliance on the tourism and construction industries made it more susceptible to volatile national and global economic cycles, and diversification creates a broader and more stable economy to better withstand economic downturns. To this end, Sandoval established the Nevada Governor’s Office of Economic Development (GOED), a collaboration between the Governor’s Office and the Nevada Legislature.

In coordination with regional development agencies, GOED helped focus statewide economic development efforts and provided new tools and strategies to promote economic diversification in the state. GOED has helped in that aim through assisting companies relocating to or expanding in Nevada, supporting a range of workforce training programs in cooperation with the educational and business communities, providing grants to fund new research and commercialization efforts and expanding opportunities in global markets through trade missions around the world.

GOED’s efforts have brought businesses of all sizes into the Silver State, though the most-visible of its achievements has been the rapid development of the high-tech hub in Northern Nevada. In September 2014, the Tahoe-Reno Industrial Center was selected as the site of the first Tesla Gigafactory, a partnership with Panasonic that has become the largest automotive battery factory in the world. More than $3.7 billion has been invested in the plant, which employs more than 3,200 workers. Other high-profile technology companies, including Apple, Google and Switch, have also established a presence in the region, boosting the number of well-paying jobs as well as the economy’s diversification.

Another of Sandoval’s signature achievements centered on the state’s education system. Sandoval’s education reform agenda added programs and funding to help improve student and school performance throughout Nevada. Funded through $1.5 billion in revenues over the biennium, the 2015 education reform package passed with broad bipartisan support and included bills that established new funding for students who are English language learners, live in poverty or are enrolled in gifted and talented programs. It also funded full-day kindergarten at all schools, created the Read by Three program and expanded eligibility for the Millennium Scholarship.

Sandoval continued his push for education during the 2017 legislative session, increasing funding for the Opportunity Scholarship program in a compromise over establishing education savings accounts, creating the Nevada Promise Scholarship to cover community college tuition costs beyond state and federal aid and providing operational and capital funding for the University of Nevada, Las Vegas School of Medicine, among other legislative achievements. These many investments in education are expected to provide lasting impacts throughout Nevada long after the Sandoval administration ends.

As he closes out his two terms as governor, Sandoval remains one of the most popular chief executives in the U.S. His political leadership and administrative style certainly contribute to that standing. So too does his economic track record. In purely economic terms, under Sandoval statewide employment grew from roughly 1.1 million to approximately 1.4 million, an increase of 295,200 jobs, or 26.7 percent. Average weekly wages grew from $661 to $813, an increase of 23.0 percent. Lastly, Nevada’s unemployment rate returned to pre-recession levels, dropping by 9.5 percentage points to 4.4 percent, the largest improvement of any state. By nearly every economic measure, Nevada is better off today than when Sandoval took office, leaving a lasting legacy and an indelible fingerprint on the Silver State.

October 2018

Nevada’s robust job growth and rising population trend continue to drive the upward trajectory of the state’s economy. These factors are having a particular effect on the statewide housing market, which remains in an extended period of high demand and rising price appreciation. Southern Nevada is home to the hottest market in the country, as home values increased by 13 percent on a year-over-year basis, according to the latest S&P CoreLogic Case-Shiller Index. Seattle and San Francisco came in behind Southern Nevada with price growth of 12.8 percent and 10.7 percent, respectively.

Rising home prices and sales volumes have been evident in both the resale and new home markets, with limited availability of resale homes, which has averaged less than two months of effective inventory over the past year, helping to drive growth in the new home segment. The latest trends in new home closings and prices reflect a strong appetite for new housing units and a willingness to pay a premium for new construction. In the 12 months through August 2018, new home closings in Southern Nevada totaled 9,833, an increase of 15.8 percent from the 8,490 closings in the prior year, according to SalesTraq. The 9,833 closings marked the highest 12-month total since November 2008 and reflected a significant recovery from the low of 3,781 closing in the 12 months through January 2012. New home prices continued to climb and reached a record high in August 2018. The median new home closing price of $400,000 rose 14.9 percent higher than the $348,000 recorded the year before, according to SalesTraq.

The demand and willingness to pay a higher price for a new home has translated into growth of new homebuilding activity. In the 12 months through June 2018, 10,124 permits for new residential for-sale units were issued in Clark County, up 13.6 percent from the year before when 8,989 new residential permits were issued. This represented the 26th consecutive month of double-digit growth in new residential permits issued on a trailing 12-month basis. Moreover, permitting growth in Southern Nevada was more than double the national year-over-year growth rate of 5.0 percent.

Northern Nevada’s housing market has experienced similar trends. In the 12 months through July 2018, 1,683 new home closings were reported in Washoe County, an increase of 12.6 percent from the year prior. This represented the fifth consecutive month of positive year-over-year growth in Washoe County following 10 consecutive months of decreasing closings to end 2017. The new home median closing price increased 3.2 percent over the prior year, reaching an all-time high of $443,538.

The growth in homebuilding as well as the overall construction activity in an expanding economy has sparked notable expansion of the state’s construction workforce. Construction employment reached 93,600 in August 2018, up 10.9 percent over the prior year, making it the fastest-growing industry in Nevada. Construction employment has grown steadily since 2012, with 73 consecutive months of year-over-year growth. Demand for construction workers is influencing construction wages, which have grown 14 consecutive months on a year-over-year basis. As of August 2018, the average weekly wage for Nevada’s construction workers stood at $1,140, up 11.5 percent from the year before and 40.6 percent higher than the statewide average weekly wage of $811.

The strength of the statewide economy as demonstrated by growth in employment, population and wages suggests that current trends in housing sales volumes, prices and homebuilding will continue along with rising housing demand created by the influx of new residents moving to Nevada.

September 2018

Northern Nevada’s economic resurgence has been a key element to the state’s overall recovery and growth since the downturn. The region continues to report notable growth across a number of important economic indicators, and in many cases is outpacing the rest of the state.

Reno metropolitan area employment grew by 3.7 percent year over year in July 2018 (not seasonally adjusted), matching the statewide figure that ranked second in the nation. Reno employment gains have come while its unemployment rate has been well below state and national averages. In July, the unemployment rate for the Reno metropolitan area stood at 3.5 percent compared to 4.1 percent for the United States, 4.5 percent in Nevada, and 4.7 percent in Southern Nevada. The manufacturing sector has led the way for employment growth in Reno, adding 2,700 jobs over the past year for a 15.2 percent growth rate.

Northern Nevada’s tight labor market is contributing to wage growth faster than the rest of the state. In July, the average weekly wage in Reno climbed 5.4 percent over the prior year, which outpaced the statewide rate of 3.1 percent and the 2.6 percent reported in Southern Nevada. Reno’s average weekly wage of $844 also surpassed that of Nevada ($799) and Southern Nevada ($814).

Taxable retail sales growth in Northern Nevada has also exceeded the state average over the past year. Through June 2018, the trailing 12-month taxable sales for Nevada grew 4.2 percent year over year. By comparison, Washoe County taxable sales grew by 6.8 percent, while 8.5 percent growth in Carson City more than doubled the statewide rate. In Storey County, which is part of the Reno metropolitan statistical area, total taxable sales declined 20.8 percent over the past year, though the drop is a result of astronomical growth in mid-2017, when total sales rocketed from $240.8 million to $1.6 billion, rather than an economic slowdown.

The growth trend in Storey County is linked to the rapid expansion of the Tahoe-Reno Industrial Center, which has attracted billions of dollars of investment from major companies such as FedEx, Google, Switch, Tesla and Walmart. While total taxable sales in June 2018 declined from the prior year, the current total of $1.3 billion in taxable sales remained more than five times higher than two years ago. As a result of this growth, Storey County’s taxable sales per capita dwarf those of the state as a whole. While Nevada has recorded taxable sales of roughly $19,700 per resident over the past 12 months, Storey County has recorded taxable sales of $318,400 per resident – more than 16 times the statewide average.

Northern Nevada’s rising economic trajectory includes the housing market. According to the Federal Housing Finance Agency’s All-Transactions House Price Index, the Las Vegas and Reno metropolitan areas rank in the top five markets in terms of housing price appreciation. Reno’s annual growth rate of 13.8 percent ranked fifth, while the Las Vegas growth rate of 16.6 percent topped all U.S. metro areas.

The tourism industry in Northern Nevada has also reported notable gains over the past year, in contrast to recent trends in Southern Nevada. Trailing 12-month visitor volume in Washoe County rose 2.0 percent in July 2018, while the same measure declined by 2.0 percent in the Las Vegas area. Reno-Tahoe International Airport passenger volumes remained on a positive trajectory in July, topping 400,000 monthly passengers for only the second time since 2008 and growing 7.0 percent on a trailing 12-month basis. Year-over-year growth in Washoe County’s trailing 12-month gross gaming revenue has also been a bright spot, topping 6.0 percent year-over-year growth for the second consecutive month. The last time the gaming revenue growth rate reached that level was in 2000.

Northern Nevada’s economic growth has helped spur and support broader positive statewide trends, and ongoing and future investments suggest the region will remain a hub of economic activity and innovation that benefits not only the region, but Nevada as a whole.

August 2018

Nevada continues to boast one of the highest employment growth rates in the nation. The Silver State recorded the third-fastest employment growth rate in June 2018, adding 45,100 jobs over the previous year, a growth rate of 2.9 percent. The state has been consistently among the top 10 states for growth each month over the past five years. Consequently, the not-seasonally-adjusted unemployment rate of 4.5 percent in June was near pre-recession levels and stood just above the national rate of 4.2 percent.

The national unemployment rate is at historically low levels, close to what is commonly known as full employment. Economists also call this the non-accelerating inflation rate of unemployment (“NAIRU”). Full employment, or NAIRU, does not mean that unemployment is zero, but rather it describes the relationship between employment and inflation. Current estimates of the NAIRU are around 4.7 percent, which is well above the current unemployment rate. It is important to note that the NAIRU is not a static number, and it reacts to changes in demographics, technology, relative prices, and other non-monetary and non-fiscal policies.

The theory behind the NAIRU is that when unemployment is low, firms must pay higher wages to compete for workers in the labor market. This increases costs for firms, who pass along these higher costs to consumers in the form of higher prices. Employment data show average weekly wages in Nevada increasing 3.9 percent over June of last year, while the Consumer Price Index for the western states rose by 3.2 percent during the same period. After adjusting for inflation, the purchasing power of the average weekly wage increased by 0.9 percent. Inflation and wage growth are expected to increase as the unemployment rate remains at or below the NAIRU.

Inflation also relates to monetary policy. The dual mandate of the Federal Reserve is promoting stable prices and full employment. To achieve these goals, current monetary policy aims to keep the inflation rate at 2 percent per year. The Fed has been gradually raising the federal funds rate since December 2016 to its current level of 2 percent in response to rising inflation. In response to federal funds rate hikes, the average 30-year fixed rate mortgage rate has risen from 3.4 percent in 2016 to over 4.5 percent in 2018. Rising borrowing costs alone increased the cost of buying a home by roughly 15 percent, much higher than any increase in wages during the same period. This increase in interest payments translates to less spending on other goods and services, keeping the economy from overheating and inflation near the target level. All current signals, including statements from the Federal Reserve Board of Governors, suggest three or four rate increases in both 2018 and 2019, although the bank continually assesses the state of the economy and may alter course.

Other factors could slow the U.S. economy. Large economic shocks, like the 2008 housing crisis or the 2001 dot com bubble, may reduce overall demand. Other countries could see deep recessions that lead to instability and greatly increase geopolitical risk in the European Union and the Middle East. Ongoing changes to U.S. trade policies, and the subsequent reactions, could reduce demand for exported U.S. goods and services, potentially cooling the economy. Recently enacted fiscal policy that reduced taxes and increased the federal deficit could manifest in higher deficits and more federal debt, causing inflation to accelerate above the Fed’s target, raising interest rates and reducing consumers’ ability to borrow.

The near-term outlook for the U.S. economy is strong, but it is always evolving in reaction to new events and changing conditions. Shifts in the world economy and recent changes in domestic monetary and fiscal policy will bear monitoring for their potential impacts on the national and state economies in the months to come.

July 2018

After multiple years of gasoline prices below the $3.00 mark in Nevada, prices have surged in recent months, with the average price of unleaded gasoline surpassing $3.00 in March and climbing to $3.22 per gallon as of July 16, 2018, according to AAA. The national average at the same time was just $2.88, placing Nevada’s price 12.0 percent higher than the national average and 22.5 percent higher than Nevada prices one year ago. The Nevada average masks some significant differences throughout the state. In the Las Vegas area, gas was priced at roughly $3.18, or 10.4 percent above the national average, while Reno-area motorists paid an average of $3.42, or 18.8 percent above the national average.

Rising gasoline prices have little effect on gasoline consumption, so higher prices at the pump usually equate to less spending on other consumer goods and services. According to the U.S. Bureau of Labor Statistics’ Consumer Expenditure Survey, the average household spent $1,934 on gasoline or other motor fuel over the 12 months through June 2017. The 12-month average price of gasoline on the West Coast is 14.4 percent higher than last year, according to the U.S. Energy Information Administration (EIA), which translates to $278 in additional annual spending per household on gasoline and $293 million in additional gasoline spending in Nevada.

Total gallons of gasoline sold in Nevada increased by 3.4 percent year-over-year in April 2018, the first full month of $3.00 gas in the state. Over the past 12 months, sales have grown more slowly, increasing 2.8 percent from the prior 12-month total. This is much slower than taxable retail sales growth, which grew 8.6 percent year-over-year in April 2018 and by 4.7 percent on a trailing-12-month basis. In Washoe County, the trailing-12-month total of gasoline sold through April grew 3.1 percent but trailed general retail sales growth of 6.9 percent over the same time period. Clark County has trailed the rest of the state significantly in both of these measures. Gasoline sales have grown 2.2 percent over the past 12 months despite gas prices below the state average, and trail retail sales growth of 3.6 percent during that time.

Rising gas prices have the potential to impact the tourism industry, particularly in southern Nevada where 54 percent of the 42.2 million visitors in 2017 arrived by ground transportation. Higher summer gas prices do not appear to have affected visitation in April or May (latest data available), as each month showed slight year-over-year increases in visitor volume following 10 months of year-over-year declines. Additionally, auto traffic on Interstate 15 at the Nevada-California border increased 5.7 percent year-over-year in May, a significantly faster growth rate than the trailing 12-month average of 0.6 percent. The summer is generally the busiest time for tourism in Las Vegas, and this growth despite elevated gas prices is a positive sign heading into peak season.

Gas prices have levelled off in recent weeks, and EIA forecasts have projected that prices are past their peak for 2018. The July 16, 2018, price of gas in Nevada of $3.22 represents a slight decline of 2.9 percent from $3.32 per gallon one month earlier. This comes despite the continued increase in the price of WTI crude oil, which rose 4.6 percent from $65 per barrel to $68 in the same timeframe. Gas prices remain well below their historical peaks in the summer of 2008. In Nevada, the highest average price recorded was $4.27 on June 20, 2008, 32.6 percent higher than the current average. On the same day, WTI crude oil reached nearly $135 per barrel, 98.5 percent above current levels. Record-setting domestic oil production has helped keep oil prices moderated in recent years, and prices should decline slightly after the summer peak. However, without a significant decline in crude oil prices, gasoline prices are expected to remain above 2017 levels.

June 2018

Nevada is once again one of the fastest-growing states in the nation, a trend driven primarily by in-migration of new residents from around the United States. About three-quarters of incoming new residents move to southern Nevada, which had the second-fastest growth rate among the 30 largest metropolitan areas in 2017. The reasons for southern Nevada’s attractiveness remain the same as those that have driven the region’s rapid growth over the past 50 years – job growth and economic opportunity, a beneficial tax environment for both individuals and businesses, and a relatively low cost of living.

The last factor is especially relevant in comparison to California, which alone accounts for one-third of all residents moving into the Silver State. Southern Nevada’s affordability is illustrated by the cost-of-living index, a comparative measure of affordability for metro areas across the nation published by The Council for Community and Economic Research. The overall index consists of separate indices that compare the costs of essentials, such as food, housing, transportation and healthcare, to the national average. In 2017, the Las Vegas metro area recorded a cost-of-living index of 102.5, or 2.5 percent higher than the national average of 100. While southern Nevada’s cost of living has traditionally been slightly higher than the national average, it is significantly more affordable compared to southern California.

Los Angeles County, the main source for new Nevada residents, recorded a cost-of-living index of 148.0. In terms of purchasing power, this means a dollar in Los Angeles is equivalent to $1.44 in southern Nevada. Other southern California counties that provide large portions of in-migration also have relatively high costs of living, including Orange County (152.6) and San Diego County (146.1). Data for Riverside and San Bernardino counties was unavailable.

On a category basis, the largest gap in affordability between southern Nevada and those California counties is housing. Southern Nevada recorded a housing cost-of-living index of 109.7, about 10 percent higher than the national average. In southern California, housing cost-of-living indexes were more than twice as high, ranging from 237.8 in San Diego County to 256.9 in Orange County. Southern Nevada’s housing cost-of-living index did rise 1.3 percent in 2017, though while housing costs in the region have been climbing, they remain far more affordable relative to southern California and are likely to remain a key factor in relocations to southern Nevada.

Other notable, albeit smaller, cost-of-living differences exist in transportation, utilities and groceries. The 2017 transportation cost-of-living index in southern Nevada was 107.3, between 15 and 25 index points lower than the southern California counties. Southern Nevada’s utilities cost-of-living index measured 86.7, ranging from 16 to 20 index points lower than the three California counties. Over the same period, the cost of groceries index in southern Nevada decreased 2.5 percent to 102.3, while grocery costs increased between 1.3 percent and 1.6 percent in southern California. Overall, the cost of living in southern Nevada improved in 2017 as the index decreased by 1.7 percent. During the same period, the southern California counties each reported rising costs of living, with Los Angeles County reporting the highest increase of 4.0 percent.

Southern California’s high cost of living is tempered somewhat by higher wages for workers. In the fourth quarter of 2017, average weekly wages in the three southern California counties ranged from $1,221 to $1,343, while the average southern Nevada worker earned $938. However, after adjusting wages by the respective cost-of-living indexes, average weekly wages in southern Nevada rise to an equivalent of between $1,337 and $1,396 among the three southern California counties, significantly minimizing or eliminating the pay gap in terms of true purchasing power.

Southern Nevada’s relatively low cost of living compared to southern California has long served as a key driver of relocations between the Golden State and the Silver State. That trend is ongoing and appears likely to extend into the foreseeable future, motivating tens of thousands of southern Californians each year to make the trip up Interstate 15 and call Nevada home.

May 2018

Despite the legalization of gambling in many states throughout the country in recent years and the prospect of sports betting following a recent U.S. Supreme Court decision, Nevada remains a dominant force in the industry. Gaming companies in Nevada report roughly the same gaming revenue as the next four largest state markets (Pennsylvania, New Jersey, Louisiana and Illinois) combined. Nevada accounts for roughly 30 percent of all legal commercial gaming revenue in the United States, and the industry continues to grow.

Nevada’s gaming industry has had a strong start to 2018, registering gross gaming revenue of over $1 billion for three straight months. It is the first time that gross gaming revenue has surpassed the $1 billion mark in consecutive months since 2008, when a string of five straight billion-dollar months ended in April of that year. The combined revenue during the first quarter was 2.9 percent ahead of the first quarter of 2017, despite 2.1 and 3.4 percent decreases in the number of slot machines and table games statewide, respectively. Over the past 12 months, gaming revenue totaled $11.7 billion, an increase of 2.3 percent from $11.4 billion reported in the prior 12 months.

Clark County, the largest source of gaming revenue in Nevada, has reported slightly slower growth than the rest of the state. Gaming revenue over the past 12 months has grown 1.9 percent to total slightly over $10 billion. Like the rest of the state, growth has accelerated in 2018, but first quarter growth of 2.3 percent in Clark County slightly trailed the statewide increase. Specifically, slot machine revenue in Clark County has slowed the overall growth rate. Over the past 12 months, slot machine revenue has increased 2.8 percent in Clark County compared to 3.3 percent across Nevada. In the first quarter, slot machine growth slowed to 0.8 percent year-over-year in Clark County and 1.8 percent statewide.

Table games, in particular baccarat, have driven growth early in 2018. While table game revenue in Clark County is up 0.5 percent over the last 12 months, first quarter year-over-year growth was 4.6 percent, or nearly $48 million. Baccarat has reported significantly more growth so far this year, with revenue from the game growing 30 percent in the first quarter, a roughly $94 million increase. Collectively, revenue from all other table games in Clark County declined by 6.4 percent in the first quarter. Despite the recent boom, baccarat revenue in Clark County is up a modest 0.1 percent over the past 12 months.

Washoe County has reported strong gaming revenue growth across different game types. Slot machine revenue in Washoe County during the first quarter of 2018 grew by 5.8 percent year-over-year, accelerating from the trailing 12-month growth rate of 4.2 percent, while slot growth statewide slowed. Table and game revenue has also grown more significantly in Washoe County, posting growth of 6.6 percent in the first quarter and 4.3 percent over the past 12 months. These components have helped grow gross gaming revenue in Washoe County to $840.4 million over the past 12 months, a 4.2 percent increase from $806.2 million during the previous 12-month period. In the first quarter of 2018, Washoe County reported $196.1 million in gaming revenue, 5.9 percent more than the first quarter last year.

If gaming establishments throughout the state continue their performance so far in 2018 through the rest of the year, Nevada could post gross gaming revenue of over $12 billion and Clark County could surpass the $10 billion mark, both for the first time since 2007. Clark County nearly accomplished the feat in 2017, falling just short at $9.98 billion. In Washoe County a continuation of early year trends could push gaming revenue toward $900 million, which was last reached in 2008.

As legalized gambling has proliferated throughout the United States, gaming operators in Nevada and particularly in southern Nevada have evolved to offer a wider variety of non-gaming amenities for visitors. Despite the reduced reliance on gaming revenue among the state’s gaming operators, gaming revenue still accounts for more than 40 percent of total revenue, and thus it plays an important role in the bottom lines of gaming companies and the economic impact of the tourism industry in Nevada.

April 2018

Nevada has returned to prominence as one of the most dynamic economies in the United States over the past few years. This prolonged period of stable growth has many planning for the future in anticipation of more to come. Throughout the state numerous private and public investments are set to usher in an era of growth that capitalizes on Nevada’s existing strengths, expands the state’s level of economic diversity and improves the long-term stability of the state economy.

In southern Nevada, several resort properties are planned or under construction, and upon completion will be the first major additions to the Strip since 2009. Resorts World Las Vegas, Wynn Paradise Park, and The Drew, formerly Fontainebleau, will add 9,000 hotel rooms to the region. Many other properties are planning or undergoing renovations, including the Monte Carlo (which is rebranding as Park MGM), Palms, Palace Station, Stratosphere, Cosmopolitan, SLS and the Flamingo.

Along with the new and improved hotel rooms are several major projects designed to help fill them, including: the NFL stadium project, which will host the Raiders, UNLV football and dozens of other sporting and entertainment events; the MSG Sphere from Madison Square Garden Company and Las Vegas Sands, a groundbreaking venue that will provide unique entertainment experiences; and The Edge extreme sports park, which will cater to thrill-seeking visitors. Additionally, planned and ongoing investments in convention space at locations including Aria, MGM Grand, and the Las Vegas Convention Center will add 3 million square feet of meeting and convention space, enhancing southern Nevada’s competitive position as it builds upon the record convention attendance of 2017.

While a majority of the most visible and impactful investments are concentrated in the state’s largest industry, many others are taking place outside the tourism sector, a signal of greater diversification in the state’s present and future economy. Tesla’s Gigafactory in northern Nevada continues to make progress toward full buildout and operation. The facility will include the world’s largest rooftop solar panel array as Tesla intends to run the factory on 100 percent renewable energy. Data center giant Switch, which is investing $4 billion in data center facilities in Nevada, has partnered with other companies to vastly expand solar power in Nevada. In February 2018 Switch announced a partnership with Capital Dynamics to create Gigawatt 1, the largest solar project in the country, with the ability to power 1 million homes. Nevada is already the national leader in terms of solar power production per capita, and increased investments in renewable resources will help build a more sustainable future while diversifying the economy.

Throughout the state, investments in infrastructure have been ongoing to keep pace with the demands of population growth. The Nevada Department of Transportation has roughly $1.5 billion in major roadway projects under construction, including the $900 million Project Neon, the Interstate 11 Boulder City bypass, numerous improvements to Interstate 15 near Las Vegas, and improvements to both U.S. Highways 95 and 93. Another $1.8 billion in highway improvements are planned throughout the state over the next decade. These projects provide not only a short-term stimulus to the economy during the construction phases, but should also support future growth and economic activity.

Investments in education have also been on the rise. The University of Nevada, Reno and University of Nevada, Las Vegas together have over $530 million of new facilities or renovations currently planned or under construction, and the College of Southern Nevada plans to spend $80 million next year to build new student unions at its three campuses. The Clark County School District completed $247 million worth of new school buildings prior to the 2017 school year and will open another four new elementary schools for the 2018 school year at a cost of $95 million. The Washoe County School District has similar plans to expand school facilities, including the construction of 15 new schools between 2018 and 2025.

Overall, more than $31.8 billion of investments are planned or under construction throughout the state, including $12.8 billion in Reno and $19.0 billion in Las Vegas. While major projects are not new to Nevada, the diversity of investments today is unprecedented. As the state’s core industry, tourism remains a focal point for investment and growth; however, investments in education, infrastructure, technology, renewable energy and other industries illustrate the continuing diversification of the state economy.

March 2018

Nevada’s population growth is again near the top of the national rankings, as the state’s employment opportunities, business environment and other advantages are attracting thousands of new residents from across the United States and especially the West. That influx of residents is being felt throughout the economy, from increased employment to higher levels of consumer spending. Population growth is also impacting the state’s housing market, which finished 2017 with rising home values, climbing sales volumes and increasing homebuilding activity.

Home prices in Nevada appreciated by 11.6 percent over the year, the third-fastest growth among all states, according to the Federal Housing Finance Agency’s House Price Index (HPI) for the fourth quarter of 2017. The Las Vegas and Reno metropolitan areas each reported significant growth over the year, fueling Nevada’s strong showing. Las Vegas reported HPI growth of 12.6 percent, ranking fourth among the country’s 100 largest metropolitan areas. Reno’s home values grew by 11.8 percent, ranking 17th out of all 403 U.S. metropolitan areas ranked in the House Price Index.

In southern Nevada, the median sales price of existing homes reached $238,000 in December 2017, the highest level since January 2008 but well below the all-time high of $290,000 in June 2006. By comparison, new home prices have surpassed prior peak levels, reaching nearly $380,000 in December 2017, well above the pre-recession high of $344,000 in August 2007. Existing homes in the Las Vegas area appreciated faster than new homes over the year, rising 17.8 percent compared to 11.7 percent for the new home market. Tight supply of existing homes on the market contributed to 10.1 percent annual growth of new home sales to 8,739, more than doubling the 4.9 percent growth rate for existing home sales, which totaled 49,232 transactions on the year.

In Washoe County, the monthly median closing price of new homes rose to over $400,000 during 2017, reaching $430,000 in July, the highest number on record, before declining slightly to end the year at $399,000. The December price represented a 2.6 percent decline year-over-year. The existing home market in Washoe County came close to setting a record, as the $350,000 median price in July trailed only the January 2006 level of $370,000. Existing home prices also leveled off later in the year, settling at $345,000 in December. Unlike the new home market, the slight decline from the peak in July did not significantly impact overall price appreciation, which grew 16.0 percent over the prior year. The existing home market also saw significantly more activity than that for new homes. Existing home closings in Washoe County were up 3.7 percent to 7,182 in 2017, while total new home closings declined 16.0 percent year-over-year to 1,394.

The demand for housing has risen significantly over the past few years as the state’s economy rebounded and population has grown. Nevada has ranked among the five fastest-growing states for four straight years, and homebuilders have taken notice. In 2017, permits for the construction of over 4,500 new residential units were issued in Washoe County, 26.7 percent more than the total for 2016. Clark County data show that over 13,900 new units were permitted, a 2.4 percent increase from the prior year. This follows growth of 28.0 percent in residential permits for Clark County during 2016. As the population continues to grow and the state sets new records for total employment, demand for housing is expected to remain strong and result in continued price appreciation, even as builders ramp up production.

Rising home prices reduced the share of Nevada homeowners with negative equity to 8 percent in the fourth quarter of 2017, according to CoreLogic. While that rate ranked fourth-highest in the nation, it marks a significant improvement from 72.7 percent in early 2010. Foreclosures in Clark County also dropped significantly in 2017, declining 55.3 percent over the year to 1,669, continuing the improvement since the 2009 peak of 34,000 foreclosure filings. By most measures, Nevada’s housing market closed 2017 by continuing the momentum of recent years and remains on solid footing for a positive 2018.

February 2018

The leisure and hospitality industry is the most important sector in Nevada, directly employing more than one out of every four workers across the state and generating 20 percent of all worker wages. Given the industry’s role in the state, its trajectory and trends play key roles in the health of the overall economy. Nevada’s tourism industry closed 2017 in mostly positive territory, with underlying fundamentals pointing to near-term stability and ongoing investments suggesting growth on the horizon.

After setting annual visitation records for three consecutive years, the Las Vegas area recorded 42.2 million visitors in 2017, a 1.7 percent annual decline. The Las Vegas Convention and Visitors Authority attributed the slight decrease to a number of factors. The closure of some smaller hotels reduced room inventory by roughly 400 from 2016 levels, and renovations at multiple properties throughout southern Nevada temporarily reduced the number of rooms available for rent. Additionally, the 1 October tragedy factored in a downward visitation trend in the final quarter of 2017, resulting in a slight decline in annual occupancy rate to 88.6 percent.

In contrast to those declines, other industry indicators reported strong results for the year. Average daily room rate finished 2017 at $129.41, a 2.7 percent increase over 2016. Rising room rates translated into increased revenue per available room, which improved 2.0 percent to $114.59.

Although overall visitation declined, the convention visitor segment reported a record year. Convention attendance rose 5.3 percent to 6.6 million in 2017, continuing a seven-year upward trend. The growth of the convention market has been an important element in southern Nevada’s tourism industry, and its impact should rise with the completion of multiple projects that will both increase the region’s available meeting space as well as improve the quality of existing space. The largest such project is the $1.4 billion expansion and renovation of the Las Vegas Convention Center, and MGM Resorts International, Caesars Entertainment, and Wynn Resorts are also in the process of adding convention space. In all, those projects will increase available space by 1.3 million square feet, or the equivalent of the fifth-largest convention center in the country. Las Vegas has been named the top trade show destination in the nation for 23 consecutive years by the Trade Show News Network, and these new projects will allow the region to solidify its position in the market and attract even more conventions and meetings in future years.

Nearly half of Las Vegas visitors arrive via McCarran International Airport, which set an annual record in 2017 with 48.5 million passengers. That total improved upon the 2016 number by 2.3 percent and it surpassed the previous record set in 2007 by nearly 800,000 passengers. Gross gaming revenue in Clark County also reported gains, growing by 2.7 percent in 2017 and approaching $10 billion for the year. The last time gross gaming revenue exceeded $10 billion for a year was 2007.

In northern Nevada, the tourism industry reported overall positive trends, starting with a 5.2 percent increase in total visitation to 5.1 million. The Reno-Tahoe International Airport reported large increases in passenger volume as well, with year-to-date passenger volume through November (latest available) up 9.9 percent compared to 2016. Other positive indicators in Washoe County included a 2.2 percentage point increase in the trailing 12-month average for hotel/motel occupancy rate through October (latest available), and a 2.4 percent year-over-year increase in gross gaming revenue in 2017.

As the calendar turned to 2018, planned and ongoing developments in the state’s tourism industry pointed toward continued growth and investment. New Las Vegas Strip resort projects, such as Resorts World Las Vegas, Wynn Paradise Park and the recently announced The Drew at the site of the Fontainebleau, are on course to add nearly 9,000 new hotel rooms in 2020, the largest single-year increase since the building boom of the early 1990s. Construction of sports and entertainment facilities, including the $1.8 billion Las Vegas Stadium and Madison Square Garden’s sphere-shaped performance venue, signal the ongoing expansion of southern Nevada’s tourism amenities. If underlying economic fundamentals in the United States and around the world remain pointed in a positive direction, Nevada’s tourism industry, and the economy as a whole, stand poised to realize the  benefits.

January 2018

National measures of consumer confidence in the economy have showed significant improvement over the course of 2017, climbing to their highest level since 2000. People are spending more, as national retail sales have grown 4.2 percent this year compared to 3.2 percent in 2016. Nevada has easily outpaced the national average in terms of retail sales growth in recent years, and that growth accelerated in 2017, with the trailing 12-month total for taxable retail sales through October 2017 trending 6.6 percent ahead of the prior year. In 2016, taxable retail sales in Nevada grew 5.1 percent year-over-year. If that 6.6 percent growth is maintained throughout the final two months of 2017, it would be the best year for statewide taxable retail sales growth since 2011, when growth reached 7.1. Odds are that the full-year 2017 numbers will roughly maintain that level of growth, as December is traditionally the most significant month for retail sales and national retailers reported record holiday season spending of nearly $600 billion in 2017.

Throughout the state, growth in retail sales has varied significantly between counties. For example, for the 12 months ending in October 2017, Clark County retail sales increased 3.8 percent year-over-year while Washoe County increased by 6.0 percent, both below the state total of 6.6 percent. The biggest recent gains have come in Storey County, buoyed by the significant developments at the Tahoe-Reno Industrial Center. Retail sales in Storey County grew by 215 percent in 2016 and are up 242 percent in the 12 months through October 2017. This rapid growth has propelled Storey County, the third-smallest in Nevada by population, from 13th out of 17 Nevada counties for taxable retail sales in 2015 to third in 2017. In the past 12 months, this translates to over $420,000 in sales per capita in Storey County, compared to roughly $18,000 per capita in Washoe County and $19,000 in Clark County.

While much of the state has shown strong growth in taxable retail sales, certain sectors have contributed to that growth differently throughout Nevada. Large construction projects and increasing homebuilding across the state are driving demand for building and construction materials, which has expanded taxable sales by 13.7 percent in Clark County and 9.8 percent in Washoe County over the past 12 months ending in October. Growth for specialty trade contractors, often the businesses performing construction work, has shown more significant divergence. Clark County has registered a 2.5 percent decrease in the sector this year while Washoe County saw growth of 12.4 percent. Statewide growth for the sector over the past 12 months has been 9.7 percent, well above the 6.6 growth in total taxable retail sales.

Food services and drinking places are the largest source of retail sales throughout the state, but unlike construction have not captured an outsize proportion of the recent growth. In Washoe County, bars and restaurants have performed well, with sales growth of 8.6 percent through October. In Clark County, growth was above average, expanding by 4.1 percent compared to the 3.8 percent average across all sectors. Across the state, the sector has shown below-average growth of 4.4 percent during the period.

Overall, individuals and businesses in Nevada continue to show an increasing willingness to spend money, whether on consumer products or business investments. The growth in taxable retail sales is relatively evenly distributed around the state as 12 of 17 counties have recorded growth while the two most populous counties, which account for over 86 percent of all taxable retail sales in the state, actually lowered the state average. This growth is also well distributed throughout the economy, contributing positively to manufacturing, construction, retail, and various service industries. As construction projects around the state continue providing short-term stimulus and an increasingly tight labor market puts upward pressure on wages, Nevada should continue to see taxable retail sales increase and extend the streak of annual growth that dates back to 2010.

December 2017

When assessing the general health of the economy, a key aspect to the equation involves a consideration of the wages that workers take home. Wages provide the most common means of earning a living for people in the United States. Rising wages typically signify a strengthening labor market, where employment opportunities are expanding and employers must raise pay to attract and retain qualified employees. Higher take home pay in turn contributes to increased consumer spending, which accounts for two-thirds of the national economy.

Nationally, average weekly wages grew by 2.3 percent in October 2017, continuing an extended trend that has pushed the trailing 12-month growth rate up to 2.5 percent, the highest level since 2012. This trend has come amid a positive economic environment where the unemployment rate is at its lowest point since the turn of the century, the rate of job openings is at its highest point since at least 2000, and voluntary worker quits have reached their highest point in a decade. Together, these metrics signify a national economy with too few workers to fill a growing number of job opportunities. Thus, employers competing for a limited pool of workers are raising worker compensation.

In Nevada, the economy remains on a positive trajectory of its own, including a nation-leading 2.8 percent year-over-year job growth rate in October 2017, record taxable retail sales and a population growth rate that ranked second fastest in the country. Yet the state’s wage growth rate trails the national average. Average weekly wages grew 1.9 percent year-over-year in October 2017 to $780.39. The wage level represents the highest value on record, while the growth rate ranked 34th in the nation. The state’s wage growth can be attributed to strong gains in the southern part of the state, as average weekly wages for the Las Vegas metropolitan area increased by 4.3 percent on the year to a record level of $793.36. That year-over-year growth rate ranked as the ninth-fastest among the 30 largest metro areas. Meanwhile, average weekly wages in the Reno metropolitan area increased by 1.6 percent year over year to $813.38 in October 2017.

Even with an overwhelmingly positive economic environment in Nevada, the state’s weekly wage growth has not kept pace with the rest of the country. The state’s wage growth outpaced the national rate in 2014 and 2015 but has slowed in more recent years. A key factor for the slower-than-average wage growth is the state’s faster-than-average growth in employment and population. As it has for decades, Nevada is attracting new residents into the state to work, while other workers are returning to the labor force after years of discouragement. These new workers increased the size of the labor force, or the pool of workers in jobs or actively seeking a job, by 1.3 percent in October 2017, nearly twice the national average of 0.7 percent. Growth in the available labor pool generally reduces upward pressure on wages as employers have more workers to choose from.

Worker supply and demand trends apply to industry level wages, as well. Wages earned by Nevada construction workers increased 5.7 percent to $1,054.02, compared to 4.0 percent growth for the entire United States. The construction industry wage trend is notable as construction has been the fastest-growing employment sector in the state, expanding by 13.6 percent in the past year. This suggests that demand for construction workers remains high as homebuilding escalates and major commercial projects are either underway or on the horizon. Average weekly earnings by financial services professionals have also exceeded national growth, rising 6.7 percent to $999.40 from one year ago, doubling the national growth rate of 3.2 percent.

National and state economic indicators suggest continued growth for their relative economies into the foreseeable future, and statewide population and employment growth trends remain pointed toward positive territory. As the national and state economies expand, wages stand poised to benefit, improving the financial well-being of workers and their families while spurring additional consumer expenditures in support of broader economic growth.

November 2017

Nevada’s attractive labor market and positive broad economic conditions continue to generate nation-leading job growth for the Silver State. The state recorded 2.7 percent year-over-year job growth in September 2017, adding 36,100 jobs over the prior year. Although the growth rate represents a four-year low, it more than doubled the national rate of 1.3 percent and ranked first among all states. In fact, job growth in Nevada has ranked first nationally for four consecutive months and has placed no lower than third in 2017. At the regional level, the Las Vegas metropolitan statistical area (2.4 percent) and the Reno metropolitan statistical area (1.9 percent) both exceeded the national job growth rate.

While statewide job growth exceeds national levels, the unemployment rate remains elevated compared to the United States. In September, Nevada’s unemployment rate was 5.0 percent compared to the national figure of 4.1 percent. Over the past 12 months, Nevada’s figure has fallen by 0.4 percentage points, and the United States number has dipped by 0.7 percent. This is a sign of greater underlying growth in Nevada’s labor force as the economy attracts residents re-entering the workforce and new residents moving into the state to pursue employment opportunities.

Nevada’s job gains over the past 12 months have been shared across most industries. The construction industry has reported the largest gain since September 2016, adding 11,100 jobs for a 14.2 percent growth rate. In recent history, construction has been the most volatile industry in Nevada in terms of employment, as it lost over 100,000 jobs during the economic downturn. While construction has been an important driver of the current economic expansion, it accounts for a smaller share of employment than it did a decade ago, an indication of greater economic diversity throughout the state.

Over the past year, the construction industry has led employment growth in both the Las Vegas and Reno metropolitan areas, with growth rates of 18.0 percent and 9.2 percent, respectively. After construction, the metropolitan areas have reported top job gains across varying sectors. In the Las Vegas metro area, the three fastest-growing industries beyond construction were education and health services (4.2 percent), professional and business services (3.7 percent), and financial activities (3.1 percent). Education and health services employment has been growing steadily around the state for years as the healthcare industry keeps pace with the state’s significant population growth. The recovery of the real estate market has been an important factor in the growing number of financial jobs, and as new businesses continue to locate themselves in the Las Vegas area, the demand for professional services grows as well.

In the Reno metro area, the three top-growing industries after construction were information (4.8 percent), manufacturing (4.2 percent), and education and health services (3.9 percent). Reno’s information job growth, which exceeded state and national levels, is tied to the region’s expanding data center operations such as Apple and Switch, while manufacturing job growth can be attributed in part to rising employment at Tesla’s Gigafactory.

Over the past year, Nevada has reported some of the most consistent and notable employment growth in the United States. The expanding labor market is a primary factor behind the return of prolific population growth in the state in recent years, and that population growth is a key driver of the overall economic health of Nevada. The underlying conditions that made that possible appear poised to carry the nation-leading job market of 2017 well into 2018.

October 2017

Nevada’s healthcare industry has been one of the state’s fastest-growing economic sectors in recent years, easily outpacing the growth of Nevada’s economy as a whole. However, despite this strong and steady growth, Nevada continues to have a significantly smaller healthcare sector compared to the national average, both in terms of healthcare GDP per capita and the industry’s share of overall GDP. While the sector’s relatively small size has in some ways impacted the efficacy of the state’s healthcare system as the population has grown, it is also an indication of potential growth opportunities for an industry that has been resilient even during recessionary periods.

In 2016 Nevada’s healthcare and social assistance industry contributed $8.9 billion to the state’s GDP, roughly 6 percent of Nevada’s total output, up from 4.2 percent in 2005. Much of healthcare’s gain relative to the rest of the state economy came during the Great Recession and subsequent downturn. Between 2005 and 2012 the state averaged 0.8 percent annual GDP growth, weighed down by the negative recession years. During the same period the healthcare sector grew 4.9 percent annually, and it has grown even faster in the years since, expanding by 5.9 percent annually between 2013 and 2016. Despite this rapid expansion, Nevada’s healthcare industry’s relative size trails that of the national healthcare sector, which accounts for 7.4 percent of U.S. GDP.

Contributing to the small size of Nevada’s healthcare system is the rapid population growth that the state has experienced over the past few decades. While the state’s population has exploded, averaging 3.7 percent growth per year since 1980 compared to 1.0 percent nationwide, the number of doctors and medical professionals who call the state home has struggled to keep up. Nevada ranks 48th in the nation in terms of doctors per 100,000 residents with 244.9, well behind the national average of 344.4, according to the U.S. Health Resources and Services Administration. The state has made a number of changes to help alleviate the strain of this physician shortage, including allowing nurse practitioners (APNs) and physician’s assistants (PAs) greater freedom in their practices. The number of APNs and PAs in Nevada has grown considerably in recent years, both more than doubling in number per 100,000 residents over the past decade. However, even with these increases, Nevada ranks 38th in PAs per 100,000 residents and last in the country for the number of APNs.

The recent expansion of Nevada’s healthcare industry has also been fueled by increasing demand as the number of people with health insurance has increased significantly. Since the Affordable Care Act was passed in 2010, Nevada has seen the largest reduction in the rate of uninsured people of any state with an improvement of over 11 percentage points. The expansion of Medicaid has played a significant role in that improvement. Since expansion began in 2014, Medicaid has added over 300,000 people, roughly doubling the total number of enrollees in Nevada during that time. Despite this improvement, Nevada continues to have the eighth-highest uninsured rate in the country and the second-highest among the 31 states that opted-in to Medicaid expansion, according to a recent WalletHub study.

The state continues to work on addressing the size of the healthcare industry, with one of the highest-profile endeavors being the new University of Nevada, Las Vegas School of Medicine. The school admitted its first class of students this year, began classes in July, and this month the design contract for the future campus was awarded. Upon completion of the permanent facilities, school leaders anticipate annual class sizes of roughly 120 students. This would triple the number of MD graduates in the state each year, as the University of Nevada, Reno’s School of Medicine currently graduates roughly 60 students annually.

Ongoing efforts such as these to increase the number of healthcare professionals throughout Nevada will play a critical role in expanding the economic impacts of the healthcare sector as well as meeting the medical and healthcare needs of the state’s fast-growing population.

September 2017

Over the past decade, the construction industry in Nevada has expanded and shrunk along with the highs and lows of the state economy. Today, the industry that was hardest hit during the economic downturn is booming again as Nevada’s fastest-growing employment sector of the economy. This resurgence has had positive effects not only to those employed within the sector, but also to the overall state economy by adding jobs and infrastructure to meet the rising demands of a fast-growing state.

Over the past year, Nevada has consistently recorded some the best job growth in the nation, and the construction sector has been a key component of that growth. Through July 2017, total employment in Nevada has expanded year-over-year for 79 consecutive months, with 43 of the past 44 months reaching or exceeding 3.0 percent. Statewide construction employment reached a post-recession high of 87,000 workers in July 2017, a gain of 12.7 percent over the previous year. For comparison, national construction sector employment rose only 2.5 percent during the same period. The rapid growth in Nevada’s construction workforce has provided a significant boost to statewide employment numbers. Construction added 9,800 jobs over the past year, which accounted for 25.5 percent of the 38,400 new jobs across the state. The only sector to add more jobs was professional and business services with 11,400.

Statewide population growth has been an important factor in the growth of the construction industry. For five consecutive years, Nevada has ranked among the top 10 states with the fastest population growth, and last year it ranked second with 1.95 percent annual growth. Notably, the Las Vegas metropolitan area’s population expanded at the fourth-fastest rate in the nation with 2.2 percent growth during the same period.

Steadily rising population and personal income in Nevada have elevated demand for new housing throughout the state, providing a key driver of construction industry growth. In Washoe County, 4,350 residential units were permitted for the 12 months through June 2017, the highest 12-month total in more than a decade and a 73.9 percent improvement over the June 2016 total of 2,501. In Clark County, the number of new home permit filings increased 10.5 percent to 8,910 during the same period. Both metropolitan areas of the state have reported quickly-appreciating resale home values, with increased closings and low inventory, which is placing additional pressure on home builders to deliver new product.

Nevada’s resurgent economy has also generated a long list of commercial construction projects, including high-profile investments such as the Tesla Gigafactory, T-Mobile Arena, Resorts World Las Vegas, the expansion and renovation of the Las Vegas Convention Center, and the Las Vegas stadium. With over $18.0 billion in investments currently under construction statewide ($7.4 billion in southern Nevada and $10.7 billion in northern Nevada), construction workers understand there is no shortage of projects within the state of Nevada. Another $9.6 billion remains in “planned” status for future development. Statewide completed projects for 2017 have amounted to nearly $645.9 million, with several hundred million more to complete by year’s end.

Construction workers nationwide flock to where the work is, and these opportunities will continue to attract a much-needed supply of construction workers to Nevada, where they can earn nearly 50 percent more in wages compared to the national average. Fast growth in the construction sector may warrant some caution, particularly given the memories of the boom period leading into the Great Recession. Today, construction employment accounts for 6.5 percent of the workforce, which is about a third higher than the national average. However, that figure is only about half the pre-recession peak of 11.5 percent in June 2006, an indication of a more diverse economy that is less susceptible to the volatility of the construction sector.

Nevada’s construction industry has experienced a notable turnaround in recent years, and that momentum is likely to continue as ongoing population growth drives overall expansion of the economy and demand for new homes and businesses.

August 2017

Millions of students across the United States are heading to college campuses this month to start or continue their higher education. The majority of those students are learning, training and preparing to take the next steps in their lives and enter the workforce. For the students who complete their degrees, their academic achievements will give them an advantage in the job search over candidates who haven’t finished college, and they will earn bigger paychecks and enjoy more job stability throughout their lives.

These advantages highlight the importance of a post-secondary education, which is more vital today than ever as the national labor market demands more skills and knowledge from its workers. College enrollment is rising as a result. The number of students enrolled in college nationwide has been increasing at a steady rate of 2.2 percent for the past decade, bringing the total to about 17 million in 2015 (latest available), according to the U.S. Census Bureau. Nevada has experienced a similar trend, with annual average enrollment growth of 3.4 percent since 2005. In 2015, the number of college students in the Silver State climbed to 141,000, and more recent enrollment data may reflect even stronger growth as the state’s population has expanded at one of the fastest rates in the country over the past two years.

The payoff for college students is the promise of more income and more stability in their economic lives. According to a 2016 study by the Federal Reserve on the economic well-being of U.S. households, adults with a college degree were more likely to be “doing okay” or “living comfortably” than their counterparts without degrees. The study also found that people with a bachelor's degree or more were nearly five times more likely than those without any college to live in households earning more than $100,000 per year.

The link between higher education and income is clear. In Nevada, the median individual income in 2015 was about $33,800, according to Census Bureau data. Workers with only a high school diploma earned about 10 percent less at $30,300. Those with some college or an associate’s degree earned slightly less than the median at $33,300, according to the data. Meanwhile, workers with a bachelor’s degree earned $46,000, about 1.5 times more than the median earnings for high school graduates and 1.4 times the earnings of associate’s degree holders. Workers who completed an advanced degree earned $62,200, double the earnings of those who never went to college.

For many students, financial hurdles threaten their ability to complete their degrees. College affordability is an increasing concern for households across the nation, as rising tuition, escalating costs and climbing student loan debt can push dreams of higher education out of reach. While many Nevadans face these same obstacles, pursing a post-secondary education in the Silver State is less of a financial burden than in most other states.

Average in-state tuition and fees for Nevada’s four-year public institutions increased a modest 2.8 percent in 2016-17 to $6,904 per year, according to The College Board data. Tuition growth over the past five years was 7.3 percent, lower than the national average of 9.4 percent. Nevada’s in-state public university tuition costs also fall 28.4 percent lower than the national average of $9,650, which equates to saving nearly $11,000 over a four-year college education.

Lower costs combined with financial aid programs such as the Millennium Scholarship and federal Pell grants have kept loan debt to a minimum for Nevada’s students. According to the Institute for College Access and Success, Nevada’s average debt for students at public and private four-year colleges in 2013-14 was $20,200, the third-lowest in the U.S. Additionally, the state’s proportion of students with student loan debt was 46 percent, the second-lowest rate in the nation.

Nevada has long had one of the lowest rates of college-level educational attainment in the U.S. That has improved in recent years as the state has attracted and developed a more educated workforce. As Nevada continues to develop industries such as advanced manufacturing and healthcare, higher education will prove to be a critical component for improving the lives of individual workers while helping to diversify and strengthen the statewide economy as a whole.

July 2017

When crude oil prices plummeted in 2014, most economic observers did not anticipate a long-term depression in oil prices. They predicted that OPEC, whose 14 member nations control about 40 percent of world oil production and more than 70 percent of oil reserves, would make supply corrections that would rebound oil prices above $100 a barrel. However, for three years prices have hovered near $50 a barrel, and no correction is in sight. While this doesn’t bode well for OPEC nations, lower oil prices translate into lower gasoline prices, which have been an economic boon for Nevada consumers and businesses.

OPEC’s influence in the global oil market has been weakened by sluggish worldwide demand and increasing production from other nations, such as the United States and its expanding shale oil operations. In May, OPEC announced another production cutback designed to reduce oil supplies and increase prices. The strategy has not yet had the desired effect as production has climbed in other countries, particularly the United States, which has seen its oil production surge to the near-record levels of two years ago.

Nevadans have reaped the benefits of the long-term stagnation in gas prices. The current statewide average for regular gasoline is $2.56 per gallon, according to AAA. While that represents a 1.5 percent price increase over the past year, it remains about a third lower than the recent price peak in the summer of 2014. According to the U.S. Consumer Expenditure Survey, the average American household spent $1,932 on gasoline and motor oil in 2016, about $536 less than the amount spent before gas prices fell in 2014. That difference equates to an estimated $570 million in extra discretionary income for Nevada households to spend on other goods and services. Many of those goods are also cheaper since it costs less to drive or fly them into the state, an important consideration since Nevada imports so much of what it needs. The total impact of lower gas prices is also evident in overall gasoline sales. In the 12 months through April 2017, nearly 1.2 billion gallons of gasoline were sold in Nevada. Compared to the recent gas price peak in the summer of 2014, Nevadans pay an average of $1.19 less per gallon today, which equates to $1.4 billion in annual savings.

Those savings have played a role in the statewide economic rebound of the past several years, though to what degree is unclear. However, what is clear is that Nevadans are driving more today than before the Great Recession, an indicator of more population, more employment, more commerce and other positive economic factors. In 2015 Nevadans traveled 25.1 billion miles on roads and highways in the state, an increase of 13.0 percent from 2007, according to the most recent data available from the Nevada Department of Transportation. In southern Nevada, average daily traffic counts on major highways climbed to 115,200 last year, the highest level ever recorded and 32.5 percent higher than the pre-recession peak of 87,000 in 2006. Clark County’s population rose 21.4 percent during that period, suggesting that more economic activity has been responsible for about a third of the increase in highway traffic.

The extended run of reduced gas prices likely helped win voter support for Fuel Revenue Indexing in Clark County. Passed in November 2016, the indexing will add roughly 3 cents per gallon to fund important road and highway infrastructure projects over the next decade. According to the Regional Transportation Commission of Southern Nevada, Fuel Revenue Indexing will generate up to $3 billion for roadway projects and is expected to create 25,000 jobs. These infrastructure investments will be critical to supporting continued economic growth for the fast-growing region.

The long-term prospects for lower gas prices are unknown, as OPEC continues to evaluate the global market and adjust production in an attempt to boost prices. Additionally, world events can suddenly shift supply and demand factors that could trigger a rise in gas prices. For now, however, Nevadans can enjoy paying less at the pump and all the benefits that entails.

June 2017

The Nevada State Legislature closed its 79th session this month having passed several bills that support growth and development of the state’s renewable energy industry. Perhaps the most notable bill of the group was Assembly Bill 405, which revises solar net metering rates and is expected to revive the state’s rooftop solar industry. In all, the new green legislation builds upon years of renewable energy development and policy in Nevada, which has made significant strides in weaning itself off coal and increasing production of renewable sources of energy, particularly solar and geothermal.

A dozen years ago, 7.4 percent of Nevada’s electricity was generated from renewable energy sources. Since then, the amount of green energy production in the state has nearly tripled, and last year renewable energy sources accounted for 21.6 percent of total production. The largest strides in clean energy production came in geothermal and solar power. Since 2006, geothermal electricity production has grown by 79 percent, and the 3.8 million megawatt-hours produced in Nevada last year was the second-most in the country. Solar energy production in the state surged from none a decade ago to 2.5 million megawatt-hours last year, the fourth-most solar energy production in the nation. Meanwhile, coal’s share of energy production has fallen by more than half over the same time period, and it will shrink further with the recent closure of the Reid Gardner Generating Station outside Las Vegas. Notably, 2016 marked the first year that Nevada generated more energy from the sun than from coal. In all, Nevada produced the 17th-highest proportion of renewable power in the United States, according to data from the U.S. Energy Information Administration.

The shift to clean energy has been driven by a combination of economic and environmental benefits. Prices for renewable energy, specifically solar, have fallen dramatically in recent years. For example, the Boulder Solar II plant that opened earlier this year produces electricity at 4.0 cents per kilowatt-hour, less than a third of the 13.3 cents per kilowatt-hour for electricity generated at the Apex Solar Power plant that came online just five years ago.

Along with the price savings realized as renewable energy becomes cheaper and more efficient, many Nevada companies are pursuing green energy initiatives and seeking to increase their portfolios of renewable power. In the past two years, NV Energy signed an agreement with Switch to provide solar electricity for 100 percent of its operations in Nevada, and the power producer also signed an agreement with Apple to expand its existing solar farm capacity by 200 megawatts to support its growing data center in Reno. Other initiatives include MGM Resorts International’s recent installation of the largest rooftop solar project in the United States at Mandalay Bay and Tesla’s plans to power its Gigafactory in northern Nevada entirely with solar energy.

While some of Nevada’s largest companies implement green energy initiatives, the industry remains a key focus for the Governor’s Office of Economic Development. With its wide open spaces and abundance of sun, wind and geothermal energy, Nevada is a natural fit for investment in renewable energy development. Those investments support thousands of jobs statewide. According to a recently released report by the U.S. Department of Energy, the state’s solar power generation industry employs 11,200 workers, the fifth-highest total in the nation.

More solar jobs are expected to be created with the passage of Assembly Bill 405, perhaps the most notable green energy bill of the 2017 legislative session. The bill is expected to revive Nevada’s rooftop solar market by reinstating net metering rates for residential solar customers. Rooftop solar system installers such as Vivint Solar, Sunrun and SolarCity have announced they will return to Nevada with passage of the bill. An estimated 2,600 jobs were lost when the companies left the state after the Nevada Public Utilities Commission changed previous net metering rates in 2015. Under net metering, rooftop solar customers receive a credit for the excess electricity produced by their systems.

In just a decade, Nevada’s clean energy industry has experienced significant growth, and with continuing commitments from state civic and corporate leaders, the state is poised to build upon that success in the years to come.

May 2017

The recent purchase by Google of 1,210 acres of land at the Tahoe Reno Industrial Center signaled another significant development for the region’s high-tech economic expansion. Google, which indicated that the land will house a data center in the future, joins a growing list of technology giants that have expanded or started operations in Northern Nevada. In recent years, the region has attracted companies including Tesla, Panasonic, Microsoft, Switch, Ebay and Apple, all of which have helped diversify the regional and state economies while advancing Nevada’s reputation as a business-friendly location for Silicon Valley stalwarts.

Apple, which opened its Northern Nevada data center in 2012, announced earlier this month that it would invest an additional $1 billion in its data center at the Reno Technology Park. The company will also purchase a warehouse in downtown Reno to support its data center operations. That news followed an Apple announcement earlier in the year of a 200-megawatt expansion of its solar power operations for its data center. Such long-term investments by one of the world’s largest and most successful technology companies help solidify Nevada’s attractiveness to other high-tech firms seeking to expand or enhance operations.

Meanwhile, electric automaker Tesla continues to make strides at its Gigafactory at the Tahoe Reno Industrial Center and on Wall Street. In the past two months, the company’s stock price increased by about 35 percent while its market capitalization surpassed that of a well-established rival, Ford. Investor confidence in Tesla is partly sourced to the company’s promise to deliver a highly-anticipated mass market model for which nearly 400,000 people have put down a $1,000 deposit. At the Gigafactory outside Reno, which will play a key role in manufacturing Tesla vehicles, Tesla and partner Panasonic have continued to invest capital and hire workers. The most-recent compliance audit for the Governor’s Office of Economic Development showed that through September 2016, total capital investment in the project surpassed $839 million, which has supported 2,500 construction jobs. Tesla has also hired more than 1,000 permanent employees and continues to add 150 to 200 more each month.

Activity at the Gigafactory and throughout the region as a whole is evident in ongoing job trends. On a trailing 12-month average basis, construction and manufacturing employment have increased for 55 and 25 consecutive months, respectively. In March 2017, the construction industry added about 1,100 jobs on a trailing 12-month basis from a year ago, representing growth of 8.1 percent. The manufacturing industry also showed significant gains with the addition of 900 jobs on a trailing 12-month basis, a 6.8 percent expansion over the same period.

These industry-specific trends are part of larger growth trends in the Northern Nevada economy. In March 2017, the number of jobs in the Reno metropolitan area grew 4.5 percent to 222,500 on a trailing 12-month basis. With an increasing number of jobs, the number of unemployed is decreasing. On a trailing 12-month average basis, unemployment fell 21 percent over the past year to 10,861, the lowest level since 2008. Meanwhile, the labor force grew by 1.3 percent over the past year, three times the statewide growth rate of 0.4 percent. This suggests that many unemployed workers are now finding jobs and that new employment opportunities are attracting workers into the region.

Growth of this magnitude is a source of prosperity and better economic conditions for most people in the region. However, it is important to recognize potential impacts of rapid growth, such as the increased cost of housing. Rents in the Reno area have climbed to record levels as unit availability has tightened. If the housing stock does not keep up the increasing demand, upward pressure on housing prices and rents could make housing affordability a growing concern.

In the meantime, ongoing investment by Tesla, Apple and other technology companies will continue to drive Northern Nevada’s economic expansion. At the same time, their success and strengthening ties to the region will encourage other companies to pursue opportunities in Northern Nevada, which will support additional expansion and growth in the region’s technology sector.

April 2017

It is no surprise that the performance of the housing market can ebb and flow along with the broader economy. While not necessarily reflective of the entire industry, KB Home, one of the largest homebuilders in the United States, reported a 30-percent year-over-year increase in order volume for last quarter. The surge in activity is reflective of rising demand for new housing units across the nation. National new home sales totaled 566,000 in the 12 months through February 2017, representing a 13.0-percent annual increase and the highest 12-month total since mid-2008. In explaining his company’s sales growth, KB Home Chief Executive Officer Jeffrey Mezger pointed to a shortage of supply and strong demand in all of his company’s markets.

Positive new home market trends are evident in Nevada, and in some cases, the industry in the Silver State is outperforming the national trends. In Southern Nevada, new home closings during the 12 months ending February 2017 grew by 17.3 percent to 8,198, the highest 12-month total in nearly eight years. The latest results also continued a 19-month streak of double-digit annual growth in new home sales activity. Pricing within the new home segment moved directionally consistent with rising sales numbers. In February, the median closing price for a new home in southern Nevada was $329,992, representing a 4.8-percent year-over-year growth rate.

Homebuilders in Southern Nevada are responding to rising demand by making additional investments in inventory. According to SalesTraq, new residential housing permits in the Las Vegas Area in the 12 months ending February 2017 increased a notable 12.1 percent to 8,617, the highest total since 2008. However, growth in new residential permits in the United States has flattened in recent months, and on a trailing 12-month basis recorded a 0.5-percent dip in February 2017.

In Northern Nevada, the new home market has also experienced gains over the past year, yet a slowdown appears to be emerging. In the 12 months ending February 2017, new home closings in Washoe County reached 1,535, a 3.2-percent increase over the prior year. Median new home prices continue to expand, but at a slower pace. On a trailing 12-month average basis, the median new home closing price in Washoe County increased 10.1 percent to $387,085 in February 2017, which marked ten consecutive months of double-digit growth.

Expanding homebuilding activity, combined with broader construction activity associated with Nevada’s strengthening economy, has provided for respectable gains in the state’s construction sector. The industry was devastated during the past economic downturn, losing more than 100,000 jobs statewide. Since reaching a low of 47,600 positions in February 2012, the sector has expanded by 30,500 jobs over the ensuing five years to reach 78,100 in February 2017. The 5,600 construction jobs gained between February 2016 and February 2017 represents a 7.7-percent growth rate. Construction employment growth during the same period in Southern Nevada (+7.7 percent) and Northern Nevada (+10.5 percent) illustrates that statewide growth is distributed in both major metropolitan areas within the state. Comparatively, construction employment in the United States grew by 3.3 percent over the same timeframe.

Continued strength in the fundamentals of Nevada’s economy and ongoing population growth point to positive demand for new housing in the near future. Statewide employment grew by 3.1 percent year-over-year in February 2017 to 1.3 million, while average weekly wages edged up 1.7 percent during the same period. Expanding job opportunities are a key driver of the state’s population growth, which ranked second in the nation in 2016 with a 2.0-percent growth rate. Tight housing supply, which in Southern Nevada averages 2.4 months of housing inventory, will also contribute to stabilizing prices in the housing sector. However, it is important to remain mindful of broader factors, including rising interest rates and the strength of the national economic climate.

March 2017

As the proliferation of non-gaming amenities such as restaurants, entertainment and shopping at Nevada’s resort-casinos attract higher levels of visitor spending each year, gaming revenue has become a smaller piece of the revenue picture. Since the early 2000s, gaming revenue at the state’s non-restricted casinos has dropped from half of all revenues to 43 percent in 2016, and among Las Vegas Strip properties the share of gaming revenue has dipped to about a third of all revenue. While gaming revenue may be a shrinking share of the resort industry’s profit profile, it remains a key source of revenue as well as an important contributor to the state general fund.

Because of the continued importance of gaming revenue in the state, recent growth trends are welcome news for both gaming operators and the Nevada budget. Following mostly flat growth in 2015 and early 2016, trailing 12-month statewide gaming revenue closed 2016 on a seven-month streak of positive year-over-year growth. The positive trend continued into January 2017 (latest data available), when trailing 12-month gaming revenue increased 2.5 percent to $11.4 billion. That month’s growth rate marked only the second time since August 2014 that the year-over-year growth rate eclipsed 2.0 percent. Despite the recent positive trends, trailing 12-month gaming revenue remains well below the $13.0 billion peak recorded in late 2007.

The statewide trend is influenced by gaming revenue at Las Vegas Strip properties, which account for more than half of Nevada’s gross gaming revenues. In January 2017, trailing 12-month gaming revenue for Strip properties increased to $6.5 billion, a 2.4 percent growth rate that was the highest in any month since October 2014. Similar to the statewide trend, trailing 12-month gaming revenue on the Strip recorded seven months of positive year-over-year growth following 16 consecutive months of negative growth.

Other areas throughout Nevada recorded even stronger gains in gaming revenue. In Downtown Las Vegas, trailing 12-month gaming revenue in January 2017 increased by 6.0 percent to $578.1 million, while gaming revenue in North Las Vegas grew 2.7 percent to $281.2 million. In Washoe County, gross gaming revenue increased by 3.9 percent to $805.5 million over the same period.

Over the past decade, one casino game in particular has grown significantly in its influence on overall gaming revenue trends – baccarat. The game, which is popular among high-stakes gamblers, accounts for about 11 percent of all statewide gaming revenue, roughly double the share of a decade ago. Baccarat revenue tends to be highly volatile, experiencing extended periods of double-digit annual growth and double-digit annual decline over the past three years. During periods of growth in 2013 and 2014, baccarat supported most of the overall gaming revenue growth while all other gaming revenue streams remained flat. That trend has since reversed as trailing 12-month baccarat revenue recorded negative growth rates in 24 of the past 26 months.

By contrast, gaming revenue excluding baccarat has recorded 24 consecutive months of annual growth, with 15 of those months reporting at least a 2.0 percent growth rate. Baccarat revenue did report a positive 1.9 percent year-over-year growth rate in January 2017, which was the first month of positive annual growth in nearly two years, but the majority of gaming revenue growth during the past two years has been attributable to non-baccarat sources.

The trend in non-baccarat gaming revenue suggests broader gambling activity throughout the state and improving economic fundamentals in both Nevada and the United States. In the state, the seasonally adjusted unemployment rate fell to 5.0 percent in January 2017, the lowest level in nearly a decade. Meanwhile, average weekly wages increased 4.8 percent to $775 during the same period. On a national level, the seasonally adjusted unemployment rate dipped to 4.7 percent, 0.2 percentage points lower than the prior year, and average weekly wages grew by 2.5 percent year over year to $898 in February 2017. These trends helped contribute to a record 42.9 million Las Vegas visitors in 2016 and, when combined with positive growth trends for gaming revenue, suggest continued expansion of economic activity in the leisure and hospitality industry that is the lifeblood of Nevada’s economy.

February 2017

Positive economic conditions in Nevada were evident in the housing market last year as several key metrics continued their upward trends. Specifically, key indicators such as price appreciation, home selling activity, and non-distressed sales showed notable growth, solidifying the return of a stable housing market as the state enters a new period of rising housing demand.

According to the most recent data from Federal Housing Finance Agency, home prices in Nevada reported positive annual growth that pushed the home price index up by 7.8 percent in the third quarter of 2016, which ranked Nevada as seventh in the nation in year-over-year home price appreciation. That year-over-year growth is responsible for increasing the median home price in Nevada.

At the regional level, home price appreciation was roughly the same in both southern and northern Nevada. In the Las Vegas area, the median price for existing homes in December increased by 7.4 percent to $202,000 over the year. This annual price growth rate was down slightly from the 8.9 percent reported in 2015. In the north, the existing single-family median home price increased by 8.4 percent in the third quarter of 2016 compared to the prior year. That growth rate was a significant drop from the previous year’s growth of 15.7 percent but remained slightly higher than the national median home price appreciation rate of 7.9 percent.

New home prices also showed strong growth in the state. In the Las Vegas area, the new home median price grew by 9.0 percent to $340,067 in 2016, a growth rate that exceeded the 2015 figure of 6.3 percent. In northern Nevada, the new home median sales price showed signs of slowing. The median price increased by 3.9 percent in 2016 to $380,545, which was a fraction of the 15.0 percent growth in the prior year.

Strong growth in home prices increased equity for homeowners across the state and reduced the number of underwater mortgages. According to real estate research firm CoreLogic, average year-over-year equity growth in Nevada was $16,000 in the third quarter of 2016 (latest available), ranking it seventh in the nation. This trend has helped many home mortgages return to positive equity, as the share of underwater mortgages dropped from 19.0 percent to 14.2 percent over the year.

Home selling activity in southern Nevada continued to gain momentum through the end of the year. In Las Vegas, existing home sales in 2016 increased by 6.6 percent to 46,911, the largest annual sales volume since 2013. Additionally, Las Vegas area new homes sales in 2016 reached 7,934, an increase of 14.2 percent from the previous year and the highest annual total since 2008.

A closer look at the resale home closing mix reveals that most sales are now non-distressed, which is a marked departure from most of the post-recession period when the vast majority of sales were foreclosures, short sales or other distressed sales. According to SalesTraq, the number of distressed sales as a percentage of total sales in southern Nevada was 72.8 percent in 2011. Over the past five years, the percentage of distressed sales in the region has fallen to 12.3 percent.

In recent years, economic growth in Nevada has been nothing short of impressive as the state recovered from the downturn. The housing market has experienced a notable recovery of its own and is now in a period of stable, steady growth in terms of price and sales volumes. Overall trends in the economy, particularly growth in jobs, wages, and population, suggest housing demand will persist.

January 2017

The leisure and hospitality industry is the most important sector in Nevada, as it directly employs one out of every four workers across the state and generates nearly 20 percent of all worker wages. Given the tourism industry’s critical importance to the economic health of the state, its record-breaking performance in 2016 signals a positive year of growth and stability for both the industry and the overall economy of Nevada.

Las Vegas closed the year with an all-time high in visitation with 42.9 million visitors, which eclipsed the previous record of 42.3 million in 2015. Roughly 600,000 more visitors came to Las Vegas in 2016, marking the third consecutive year with a new visitation record for the region. Total visitation to Las Vegas received a significant boost from the convention segment. The year closed with more than 6.3 million trade show attendees, a new record that eclipsed the previous high of 6.2 million set in 2007. The rise in convention attendance coincided with strong growth in the number of conventions held. In the 12 months through November 2016 (latest data available), the number of trade shows in Las Vegas climbed to 22,130, up 6.0 percent from the previous year.

The positive trend for Southern Nevada visitation is evident in air and ground transportation data for incoming traffic to the region. The annual passenger count at McCarran International Airport climbed by 2.3 million passengers to 47.4 million in the 12 months through November 2016 (latest data available). If year-end passenger totals reflect the 5.1 percent annual growth rate to date, the airport will approach, and could surpass, the annual passenger record of 47.7 million set in 2007. Auto traffic into Southern Nevada set a record of its own, with annual average daily traffic counts on Interstate 15 at the Nevada-California border rising to 45,300 in November 2016. That figure represented a 2.2 percent increase over the prior year and reflects ongoing strength in the Southern California visitor segment, which accounts for 25 percent of annual visitation to Las Vegas.

In conjunction with the growth in annual visitation, the average daily room rate in the Las Vegas area rose to $125.28 in the 12 months through November 2016, an increase of 4.6 percent over the prior year. Meanwhile, the average hotel/motel occupancy rate improved by 1.3 percentage points over the same time frame. The 89.0 percent occupancy rate represents the highest year-end level since 2007.

Northern Nevada recorded similarly positive tourism trends. Total visitation climbed 3.8 percent to 4.9 million in the 12 months through November 2016. If that visitation growth trend continues through December, the annual total would mark the highest point since the 5.1 million visitors in 2007. Concurrently, the Reno-Tahoe International Airport recorded strong passenger growth in 2016, with the trailing 12-month total reaching 3.6 million in November 2016, a 6.6 percent improvement over the year. That annual growth rate would mark the best performance since 2004.

The rising tide of tourism across the state was reflected in climbing job numbers for the industry. Statewide leisure and hospitality employment climbed by 6,100 in the 12 months through November 2016, accounting for roughly one in six new jobs created during the year. In sum, 2016 marked another year of records for the statewide tourism sector and another year of positive growth for Nevada’s core industry.

December 2016

Nevada’s economy reached a notable milestone recently when total employment climbed to an all-time high in October. The 1.31 million jobs reported statewide that month meant more than a new record; they also signaled an important landmark in the years-long recovery from the Great Recession as the state regained all of the jobs lost during the economic crisis.

The jobs recovery took nine years, but the state has regained the nearly 200,000 jobs it lost to surpass the pre-recession peak of 1.30 million jobs in May 2007, according to the latest Bureau of Labor Statistics estimates. While it took almost a decade for employment to come back to the pre-recession peak, it is important to note that employment growth in the early to mid-2000s was fueled by rapid growth in construction and tourism-related jobs. Both industries are very sensitive to the business cycle, which resulted in a disproportionate amount of economic hardship in Nevada compared to the rest of the nation. As the economic crisis continued, the state employment level steadily decreased to a low of 1.1 million in January 2010. Since that point annual job growth has averaged 2.4 percent, including a nearly two-year stretch of 3.6 percent average annual growth. Over that timeframe, Nevada’s job growth rate has exceeded the national rate of 1.7 percent.

While the return of all the lost jobs is a positive development by itself, the jobs that were regained reflect a more diverse economy than before the recession. Nevada’s primary industry, leisure and hospitality, reflects this diversification. Even though total employment in the industry has increased by 5,600 over the span of nine years, the proportion of workers employed in the industry has remained relatively constant at 26 percent. However, casino hotels employment in October 2016 was 177,200, a 12 percent decline from the pre-recession peak. This trend illustrates that jobs are moving away from casino hotels and into other areas of the leisure and hospitality industry, such as full-service restaurants, which grew by 12,300 jobs over the same time period.

On a broader scale, the statewide employment mix is also more diverse now than in 2007. This is largely due to changes in the construction industry, which employed one in 10 Nevadans before the recession. The downturn resulted in a loss of 90,000 construction jobs by February 2012. Currently, the construction industry employs 82,100 people in Nevada, or 6.3 percent of workers compared to 10.2 percent before the recession. This decrease in the concentration of employment with increasing total employment means less dependence on the volatile construction industry. Meanwhile, those lost construction jobs have been replaced by strong employment gains across a number of industries, notably the trade, transportation and utilities and education and health services sectors. These two industries added 26,000 and 19,200 jobs over the past four years, respectively.

Nevada’s rising employment diversity is reflected in the Hachman Diversity Index, which measures regional concentration of employment relative to the national average. An index value of 100 indicates that a region’s industry concentration is the same as the national average. While Nevada’s score of 76 remains below the national average, it is six points higher than before the recession as a result of improving diversification. This increase in economic diversity signals that the Nevada economy is maturing and more prepared to weather the next downturn.

November 2016

Heading into the holiday shopping season, retailers won’t be the only ones closely watching consumer behavior throughout the United States and Nevada. Economists will also be watching because consumer spending plays a critical role in the national economy.

Consumer spending accounts for two-thirds of the U.S. economy, so any shift in spending, either up or down, can shift the economy’s overall performance. In the latest quarter (Q3 2016), consumer spending in the U.S. climbed to $12.8 trillion, which was up from the $12.4 trillion of the prior year. That growth of more than $450 billion made up 88 percent of the year’s growth in gross domestic product, which also includes domestic investment, net exports and government spending. On an annual basis, consumer spending in the U.S. grew by 3.6 percent in the third quarter of 2016. That rate was up slightly from the 3.5 percent in the prior year, but it trailed the nearly 5 percent growth rate in the third quarter of 2014.

Over the past two years, growth in Nevada’s own measure of consumer spending – taxable retail sales – has generally outpaced national growth as the state economy returned to a period of stability and growth. In contrast to slowing growth for national consumer spending, Nevada’s retail sales have remained near or above 4.5 percent annual growth for much of the past year. Through August (latest data available), statewide retail sales for the prior 12 months reached $53.4 billion, an all-time high. That figure represented a 5.1 percent growth rate from the prior year and marked the first time in 2016 that annual growth topped the 5 percent mark.

These trends on the national and state levels bode well for their respective economies, especially in the midst of the holiday shopping season. These trends also reflect on the general confidence of the American consumer and the national economy, which remains in a period of job growth, lowered unemployment and rising wages. When consumers have more job security and more money, they tend to be more willing to spend their earnings, which benefits the overall economy.

Although consumer spending has continued on a positive trend, more insight into the consumer psyche can be gleaned from consumer confidence surveys, such as the Consumer Confidence Index published by The Conference Board. On a rolling annual average basis, the index has remained relatively stable in the past 12 months through October (latest data available), ranging between a low of 96.3 and a high of 98.0.

The Consumer Confidence Index is composed of two parts – an assessment of consumers’ present situation and their expectations for the six months ahead of them. On a rolling annual average basis, the present situation index has remained well above 110 for most of the past year and in October climbed to 117.8, the highest level since early 2008. In contrast, the expectations index has been gradually falling over the past year on an annual rolling average basis. In October, the index reached a two-year low of 82.9, a signal that consumers aren’t as optimistic about the near future as they are about the here and now.

The takeaway is that American consumers feel better today than nearly a decade ago, yet they don’t feel as confident about the future. One potential factor influencing consumer confidence has been the national election. Now that the uncertain and contentious campaign has concluded, American consumers are likely to shift their attention to shopping for Christmas and other wintertime holidays. And you can bet that retailers and economists will be watching very closely.

October 2016

With national economic growth picking up over the second half of the year, Federal Reserve Chairwoman Janet Yellen has stated that the case for an interest rate increase has “strengthened,” implying that the United States has come a long way from the Great Recession. A great deal of uncertainty lies in the outcome of an increase in the interest rate. On one hand, it can boost investor confidence in the economic conditions, resulting in more investments.

On the other hand, the cost of borrowing money increases, which potentially deters future investments. The Federal Reserve continually changes its target interest rate based on its dual mandates: maximum employment and stable prices. While prices have been stable for quite some time, recent trends in employment across the nation and in Nevada suggest that the state is prepared to weather a rate increase should the Fed move forward with one.

Nevada suffered immensely through the downturn with the unemployment rate peaking at 13.7 percent in September 2010, roughly 4 percentage points higher than the rest of the country. Over the past six years, the state’s unemployment rate has been steadily shrinking, resulting in a 6.3 percent unemployment rate in August 2016 (latest available). While the state’s unemployment rate is still 1.4 percentage points higher than the United States, the recovery has been much stronger in Nevada as the employment rate came down by nearly 7.4 percent compared to a 4.5 percent decrease in the national average. The downward trend in unemployment is also evident in initial unemployment insurance claims figures. In Nevada, unemployment claims decreased by 48 percent between August 2010 and August 2016, a signal that workers can more easily find other job opportunities in today’s economy.

In addition to the decrease in unemployment, establishment-based employment has grown at an impressive rate. Employment in Nevada increased by 17.7 percent between August 2010 and August 2016 compared to the 10.9 percent national average. The rise in employment is stemming from both a decrease in unemployment and an increase in the size of labor force as people are returning to work due to the abundance of job opportunities.

Another key aspect of the recovery has been wage growth. The growth in wages is closely tied to better overall economic conditions. Since the downturn, weekly wages in Nevada’s private sector grew from $657 to $761, a 15.8 percent growth rate that is almost 2 percentage points higher than the national average. The growth in wages has resulted in rising median household incomes. Last month, the U.S. Census Bureau released a report showing that the median household income in the United States grew by 5.2 percent in 2015. While Nevada experienced similar growth, its increase was slightly lower at 5.12 percent. It is important to note that these income trends mean little if they do not translate into more economic activity. In Nevada, that has been the case as the overall condition of the economy is significantly better compared to the downturn.

The growth of private businesses has grown steadily at roughly 2 percent a year, which complements the strengthening labor market. Also, monthly taxable retail sales have surpassed the pre-recession peak of $4.68 billion and hit a new peak of $5.12 billion, a signal of consumer activity and optimism. Additionally, the number of tourists coming to southern Nevada has increased at an annual rate of roughly 2.5 percent since 2010, which is a boon to the state economy and an indication that more people around the nation and the world are enjoying the current economic conditions.

No one knows with full certainty whether the Fed will increase the interest rate in the near future. However, the current economic state of the nation and Nevada, including a strong labor market, falling unemployment and rising wages, demonstrates how far we have come from the downturn of 2008. This strong recovery has solidified the economic fundamentals in Nevada and prepared the state for any uncertainty that lies ahead.

September 2016

Drivers in Nevada and the rest of the United States have enjoyed low gas prices for the past two years, thanks to the age-old fundamentals of any economy: supply and demand. When oil prices were climbing in the wake of the Great Recession, high global demand, particularly in the surging Chinese economy, and limited supply pushed oil prices above $100 per barrel. Today, the price of oil has been cut in half as the result of increased supply and weak demand.

Double-digit economic growth in China is long gone, and the United States has been weaning itself off of foreign oil, partly due to successful efforts to increase energy independence and build domestic oil reserves. Those prevailing competitive forces in the oil market are responsible for reducing the price consumers pay at the pump, and that savings at the pump translates to more spending on other goods and services.
Consumers have enjoyed additional discretionary income from lower gas prices. According to the U.S. Consumer Expenditure Survey, an average household spent $2,090 on gasoline in 2015, which was $666 less than the 2012 estimate. In Nevada, this translates into $694 million in additional discretionary income for the more than 1 million households in the state.

A recent study by JPMorgan Chase & Co. revealed people spent roughly 80 percent of savings from lower gas prices and used the remaining 20 percent to increase savings or pay down debt. In Nevada, taxable retail sales have increased nearly 10 percent from the same time last year, suggesting that Nevadans are using their gas savings to purchase more consumer goods. This additional activity helps the overall economy, of which two-thirds is driven by consumer spending.

Lower gas prices are also a positive sign for the state’s core tourism economy, as they make getting to Nevada a cheaper proposition, whether by ground or by air. Traffic counts between southern Nevada and California have increased 4.7 percent over the past year, while traffic at the California border with Washoe County has climbed 7.5 percent. Lower gas prices might very well be driving additional road trips from Nevada's largest source of visitors, and those visitors will have more money to spend when they arrive.

In addition to spending more on other goods and services, Nevadans appear to be driving more because of the lower gas prices. When Nevadans were paying more than $4.20 per gallon at the pump in recent years, car owners reduced their gas consumption by driving less or buying fuel-efficient cars. From 2008 to 2012, overall gas consumption in Nevada decreased at an average annual rate of 1.3 percent. By contrast, the number of gallons of gasoline sold statewide in June was 8.7 percent higher than June 2014, when gas prices were near their recent peak.

Motorists are also driving more today. In the past 15 years, vehicle miles traveled in Nevada grew at about 2.5 percent annually, according to the Nevada Department of Transportation. In 2014 (most recent year available), annual vehicle miles traveled climbed 8 percent over the prior year, suggesting that drivers in the state were driving more, at least in part because of reduced spending at the pump.

Historically, gas prices were inflated due to high demands and OPEC’s monopoly power. Since 2014, the presence of competition in the oil market, particularly from the United States, has kept downward pressure on gas prices. This trend is forecast to continue through at least next year, putting more money in the pockets of Nevadans and providing a significant boost to the statewide economy.

August 2016

College students across Nevada are heading back to campus this month to pursue their higher education goals. Many of them will go into debt to finance their tuition, rent and other expenses of attending college. These costs are considered an investment toward realizing the greater employment and economic opportunities provided by a college degree. Yet for many college graduates across the nation, especially those who finished school during the nation’s worst economic crisis in eight decades, student loan debt has instead served as a roadblock to establishing financial independence in early adulthood. However, in Nevada the student debt trends run counter to the national narrative, as Silver State students leave college with far less debt than most of their peers around the country.

Across the United States, the collegiate class of 2014 graduated with an average student loan debt balance of $28,950 (a 2 percent increase from 2013), according to an analysis by The Institute for College Access and Success of student debt for graduates of public and private nonprofit four-year institutions. Nevada student debt averaged $20,211, which ranked as the third-lowest in the country behind only Utah and New Mexico. On the high end of the student debt spectrum were East Coast states Delaware, New Hampshire and Pennsylvania, each of which carried average student debt loads of more than $33,000. Nevada also performed well in terms of the proportion of students graduating with college debt. Nationally, seven in 10 graduates had loans to pay off, while in Nevada less than half of the 2014 class (46 percent) graduated with debt. That rate tied with Wyoming for lowest in the country.

Historically, the rise in average student debt has far outpaced the rate of inflation. On a national level, college debt between 2004 and 2014 increased 56 percent, from $18,550 to $28,950, more than twice the inflation rate during that time. Since 2014, Delaware and Maryland saw the greatest increases in graduating class debt as their totals more than doubled, while Idaho, Louisiana and Iowa reported the smallest 10-year increases at less than 25 percent. In Nevada, average student debt load increased by 43 percent (from $14,144 to $20,211), which ranked as the 11th-lowest increase over the decade.

Nevada’s low student debt totals can be attributed to a combination of factors. For one, Nevada offers the seventh most affordable in-state college tuition and fees. In addition, Nevada offers the Millennium Scholarship to college entrants who meet certain GPA, testing and course requirements in high school.

Within Nevada, the state’s two flagship universities recorded noticeable differences in average student debt balances. While the University of Nevada, Reno and the University of Nevada, Las Vegas had comparable yearly in-state tuition and fees ($6,610 at UNR and $6,690 at UNLV), the average debt carried by UNR grads was $22,500, 21 percent higher than the $18,540 for UNLV graduates. At each college, 46 percent of students graduated with debt, matching the statewide average. Part of the difference might be attributed to UNLV students being 6 percent more likely to receive Pell Grants, the federally-funded scholarships awarded based on financial need. Overall, the average UNLV freshman received a financial aid package of $11,030 in grants, loans, scholarships and work-study in the first year in college, which was 33 percent higher than the $8,280 received by the average incoming UNR student.

In today’s economy, a college degree is key for long-term employment and financial security. In 2014, high school graduates with no college experience were twice as likely to be unemployed compared to the portion of the labor force equipped with a bachelor’s degree or higher, and college graduates also earn more over their working lifetimes than workers with high school diplomas or less. Despite these benefits, the financial costs of pursuing a higher education can feel more like a burden than an investment for many Americans. In Nevada, however, low costs and widely accessible scholarship programs have helped students graduate with a degree in hand, but without the high student debt balances of their peers in most other states.

July 2016

Nevada’s healthcare industry plays an important role in both the medical and economic well-being of the state. The sector has been an important source of job growth and economic diversification throughout the state, and it will continue to be so, given the aging and growing population base.

From 2003 to present, Education and Health Services has been the only sector in southern Nevada to demonstrate positive year-over-year growth in private employment every single month. The sector grew even through the economic downturn, and since 2007 it has added 21,658 jobs, more than any other sector. It has remained among the fastest-growing job sectors, recording year-over-year growth of 5 percent or better in each month since April 2015. That rate has accelerated in 2016 with year-over-year growth near or above 8 percent in each month through May, and the 8.2 percent growth recorded in that month ranked second behind only 12.4 percent growth in construction sector employment.

During this long period of consistent growth, Education and Health Services has become a larger share of the southern Nevada job base, growing from 7.7 percent in 2007 to 10.6 percent today. This trend is projected to continue into the coming decade with the addition of 20,000 jobs through 2030, according to the state demographer. Education and Health Services employment in Washoe County has also experienced a growth trend. Since 2007, the sector has expanded 15.6 percent with the addition of 3,200 jobs.

The benefits of employment growth in healthcare are enhanced by the industry’s higher-than-average wages. The average wage in the Education and Health Services sector in southern Nevada pays $8,100 more compared to the average private wage of $43,700 For example, paramedics (most of whom are equipped with a vocational certificate and some college) earn an average salary of $40,400 per year. Physician assistants may begin practicing with a master’s degree and earn an average salary of $94,700 annually in Nevada. Registered nurses are trained through associate’s or bachelor’s degree programs and earn an average annual salary of $79,300 in Nevada.

The growing demand for healthcare services and workers remains a critical issue for the Nevada healthcare industry. With the implementation of the Affordable Care Act (“ACA”) in 2014, the uninsured rate in Nevada dropped from 20.7% in 2013 to 15.2% in 2014. Since Nevada expanded Medicaid eligibility under the ACA, enrollment in the state-run insurance program nearly doubled from 326,000 in 2013 to 623,000 today. Plans through the state’s health insurance marketplace have given coverage to an additional 88,145 Nevadans this year. Enrollment in Medicare, the federal insurance plan for seniors, has increased about 5 percent each year statewide and in Clark and Washoe counties. Medicare enrollment is expected to continue to grow with the aging of the Baby Boom generation and Nevada’s attractiveness as a retirement destination, further increasing demand for healthcare services as older people require more frequent and higher levels of care.

These demand trends will provide both opportunities and challenges for Nevada’s healthcare industry, which has a profound shortage of medical professionals. Overall, healthcare and social assistance workers comprise 9.9 percent of the statewide workforce, which is well below the national average of 15.5 percent. Nevada also trails most of the nation in its supply of doctors. The state ranks 49th in the United States in active licensed physicians per 100,000 residents (179.7 vs. 234.7). To keep par with the national average, the University of Nevada School of Medicine estimates the state needs an additional 2,900 medical doctors.

Recognizing the state’s medical needs and economic opportunities, the Governor’s Office of Economic Development and regional development agencies such as the Las Vegas Global Economic Alliance have identified the healthcare industry as a priority for investment. Other initiatives and investments are focused on growing the healthcare supply, including the ongoing development of the University of Nevada Las Vegas Medical School, the $1.2 billion Union Village medical and wellness project in Henderson, and a potential 165,000-square-foot expansion of the VA Sierra Nevada Health Care System in Reno.

These projects, and many others, will be key to expanding Nevada’s healthcare sector and capitalizing on opportunities to improve and diversify the state economy while enhancing the quality of life for its residents.

June 2016

Within the past year, a number of multimillion-dollar investment projects have been announced or broken ground in southern Nevada. The list includes new properties, expansions or rebrands of existing resorts, and a variety of entertainment and retail projects that expanded Las Vegas’s nongaming amenities. This recent surge in activity signals a renewed confidence in the Las Vegas tourism sector that is grounded in the industry’s rapidly improving fundamental indicators.

In all, over $13.6 billion is currently earmarked for southern Nevada tourism-related investments that are either planned, proposed or under construction. In the past six months, announced projects include the $1.6 billion Wynn Paradise Park, a $1.4 billion domed football stadium proposal by Las Vegas Sands and Majestic Realty, the $450 million Monte Carlo redesign as Park MGM, and a 17,500-seat music venue by Las Vegas Sands and Madison Square Garden Co. These new projects join a number of under-construction or recently completed projects, including the $4 billion Resorts World Las Vegas, $375 million T-Mobile Arena, $373 million Lucky Dragon Hotel and Casino, the $70 million Mandalay Bay Convention Center expansion and a $72 million remodel of the Thomas & Mack Center.

The influx of investment is closely tied to the rising trend in overall Las Vegas visitation. During the recession, southern Nevada’s leisure and hospitality industry was hit hard, dropping by 2.9 million annual visitors to a low of 36.4 million in 2009. Since then, visitation has recovered and surpassed pre-recession highs, setting annual visitor records in 2012, 2014 and 2015. Visitor volume in Las Vegas is on pace to set another high this year. Visitation reached a record of 42.7 million visitors in the 12 months through April 2016, which represented a 3.6 percent increase over April 2015. Visitation trends since the end of 2013 have been particularly strong, growing 7.6 percent with the addition of 3.0 million visitors.

The convention segment of Las Vegas visitation has outperformed broader trends in recent months. In April 2016, trailing 12-month convention attendance climbed 14.9 percent, and the 6.0 million conventioneers during that period marked the highest 12-month total since October 2008. Although the number of annual convention delegates has not returned to pre-recession peaks, the latest figures were just 5.5 percent below the high of 6.4 million annual delegates reported in May 2007. Amid the recent growth trend in convention attendance, a number of recently completed or planned projects involve expanding space to capture convention and meeting business. These include the recently completed Mandalay Bay Convention Center expansion, the planned $1.4 billion Las Vegas Convention Center expansion and renovation, and smaller planned projects at ARIA and Wynn Las Vegas that will increase convention and meeting space.

A key component of southern Nevada’s tourism economy is McCarran International Airport, which is the first stop in Las Vegas for roughly four out of 10 visitors. Annual passenger traffic at McCarran surged 6.9 percent in April 2016 to 46.3 million. That total represents a 16.4 percent improvement over the post-recession low of 39.7 million passengers in the 12 months through September 2010. The majority of that growth has been realized since the end of 2014. Since then, annual passenger totals have grown by 4.4 million, or 10.5 percent. McCarran is well positioned for this growth due to the 2012 opening of the $2.4 billion Terminal 3 and ongoing improvements that include a current $51 million infrastructure project.

The recent growth trends in visitor volume, convention attendance and airport traffic, particularly over the past 18 months, are a welcome sign for a southern Nevada economy that struggled through the economic downturn. They are also welcome to investors who, after a long period of caution, are once again committing significant capital resources to large-scale projects throughout the community.

May 2016

Nevada’s construction industry has long been one of its most important, driving employment and fueling economic activity in support of the state’s fast-growing population. The sector was hit the hardest during the economic downturn, losing more than half of its job base as homebuilding and other construction demands dwindled. However, in recent years the sector has rebounded, posting strong gains among several key indicators as the state’s demand for homes, shopping outlets, tourism amenities and other construction projects has been revived with the overall improvement in the state economy.

At its peak in 2006, the construction industry employed nearly 143,000 people, or about one in 10 working Nevadans. In the ensuing six years, the collapse of the housing market and the economy as a whole triggered the loss of about 91,000 construction jobs, which accounted for roughly two-thirds of all job losses in the state during that period. Yet since the end of 2012, construction employment has grown four consecutive years either at or near double-digit annual rates, adding 19,200 new jobs through March 2016 on a trailing 12-month basis. That gain represents one in every six new jobs in the state over that time.

The majority of the employment increase has been realized in Southern Nevada, where the construction industry added 14,900 jobs, on a trailing 12-month basis, between December 2012 and March 2016. In the most recent data available, construction employment in the region grew to 52,242, which represents the highest 12-month average since June 2010. In Reno, construction jobs rose to 13,108, the highest level since July 2009. Over the past year, construction employment growth statewide (+9.4 percent), in the Las Vegas area (+11.7 percent), and in the Reno area (+10.2 percent) comfortably outpaced job growth rates in all other sectors and Nevada’s overall employment growth rate of 3.0 percent. Despite the recent gains, construction industry employment remains well below pre-recession levels. The trailing 12-month total of 71,125 jobs reported statewide in March 2016 represents less than half of the 143,550 jobs at the peak in October 2006.

The rise and fall in construction jobs has tracked closely with homebuilding activity. New home construction was a primary driver of construction job growth in the mid-2000s, with the combined annual total of residential building permits in Clark and Washoe counties peaking at 45,500 in 2005. Annual homebuilding slowed during the next two years before plummeting during the recession and prolonged economic downturn. The low point came in 2011, when 5,662 residential building permits were issued in Clark and Washoe counties. The number of annual permits has more than doubled since that low. In the 12 months through March 2016, 14,490 residential permits were issued in the two counties, about two and a half times greater than the 2011 low. In the past 12 months, Clark County permitting grew by 14.0 percent, and Washoe County permits expanded by 16.8 percent.

Broader trends suggest demand for new homes will continue. The statewide population grew by 1.8 percent in 2015, ranking fifth in the United States, and its job growth rate has consistently ranked among the top five states since April 2014. Tourism demand has also shown a consistent upward trend, with the trailing 12-month total in Las Vegas visitor volume growing 3.8 percent in March 2016 to an all-time high of 42.7 million people.

In Southern Nevada, recently completed projects such as the T-Mobile Arena, the Thomas & Mack Center renovation, the Mandalay Bay Convention Center expansion, several hospital expansions and shopping mall renovations have helped drive the construction industry rebound. Additional projects either under construction or soon to be under construction such as Resorts World Las Vegas, Faraday Future, Lucky Dragon hotel and Project Neon are among those that will help support the industry in coming years.

April 2016

Across the Nevada economy, the majority of key indicators reported sustained and steady growth through 2015 and into 2016. During that period, employment, wages, taxable retail sales and other important metrics experienced some of the best stretches of annual growth since the recession. One exception has been gaming revenue, which has remained stagnant for a year and a half.

Since November 2014, trailing 12-month growth rates in statewide gross gaming revenue have not exceeded 0.9 percent or dropped by more than 1.7 percent. In the most recent figures, gaming revenue in February 2016 reached $11.2 billion for the prior 12 months, the highest level since August 2014 and a modest 0.8-percent improvement compared to a year earlier. The statewide trend is heavily influenced by gaming on the Las Vegas Strip, where more than half of Nevada’s gaming revenue is generated. In February 2016, trailing 12-month gaming revenue on the Strip dropped 1.3 percent from the prior year to $6.3 billion. That marked the 12th consecutive month of year-over-year decline.

Contrary to the statewide trend, other major gaming markets in Nevada avoided the downward trend and, in some cases, recorded significant annual growth during the same period. Downtown Las Vegas led the positive growth trend as its trailing 12-month gaming revenue increased by 9.0 percent over the prior year to $552.5 million, which is the highest annual total since April 2009. In contrast to the Strip, Downtown Las Vegas gaming revenue has reported 24 consecutive months of annual growth, including growth rates of 3 percent or greater in each of the most-recent 10 months. Meanwhile, the Las Vegas Locals market reported 12-month gaming revenue of $2.2 billion in February 2016, a 4.0-percent increase over the prior year, and in Washoe County, gaming revenue climbed 2.6 percent over the year to $780.5 million.

The recent lackluster results on the Strip, and the state as a whole, can be traced to the influence of baccarat, the high-stakes table game that is popular among Asian gamblers. For much of 2013 and 2014, baccarat winnings accounted for nearly 80 percent of statewide gaming revenue growth. Over that two-year period, trailing 12-month totals for baccarat climbed nearly 18 percent compared to less than 1-percent growth for all other gaming revenues. However, that trend has reversed in the past year amid China's economic slowdown and an ongoing anti-corruption campaign by the Chinese government that has depressed high-end baccarat play in both Macau and Las Vegas. Annual growth in baccarat revenue has declined for 12 straight months, including double-digit declines as high as 23.7 percent in the 10 most-recent months.

Those declines have masked positive growth in all other gaming revenue. Excluding baccarat, annual gaming revenue in Nevada has increased for 13 straight months, including eight consecutive months of at least 2-percent growth. Excluding baccarat, statewide trailing 12-month gaming revenue in February 2016 increased 3.7 percent over the year to $9.9 billion. That was the highest annual total since July 2009 and an illustration of the effect volatile baccarat revenue has in obscuring recent gains by the overall gaming market.

While gaming revenue continues to be a shrinking piece of the revenue pie for casinos across the state, it still accounts for more than 43 percent of all hotel-casino revenue in Nevada. Ongoing struggles in China’s economy could continue to negatively influence baccarat play and revenue, which will impact overall gaming revenue trends on the Strip and statewide. However, it appears that those downward pressures will be eased to some degree by continuing gaming revenue growth in non-Strip markets and by gambling revenue from games other than baccarat.

March 2016

For Nevada’s housing market, 2015 marked a year of steady across-the-board improvement. Some key metrics rebounded after a lackluster 2014, while others continued their strong annual growth trends from the year before. Most industry indicators remain below their pre-recession peak levels, but the widespread gains in 2015 set a solid foundation for continued growth into 2016.

Throughout the state, home prices reported positive growth that pushed Nevada’s seasonally adjusted house price index up 12.7 percent in the fourth quarter. That year-over-year growth rate led the nation and returned Nevada to first place in the national rankings after spending the year’s other three quarters in either second or third place. In 2014, Nevada topped the national rankings in year-over-year home price appreciation in every quarter.

At the regional level, both southern and northern Nevada reported annual home price increases for both the existing and new home markets. In the Las Vegas area, the trailing 12-month median existing home price climbed to $183,606. The 9.1-percent annual growth rate was notable; however, it was not as high as the 13.7 percent reported in 2014. Existing home prices grew faster in Washoe County, where the trailing 12-month median existing home price increased 14.7 percent to $269,192. Washoe County’s 2015 growth outperformed the 13.6-percent growth of the prior year.

While new home prices improved, their growth rate slowed markedly compared to the previous year. In the Las Vegas area, the trailing 12-month median new home price rose 7.0 percent to $312,423, an eight-year high. However, the price growth represented a 5-point drop from the 12.3-percent growth the year before. Meanwhile, in Washoe County new home price growth did not keep pace with the Southern Nevada market. The trailing 12-month median new home price of $343,726 was 4.5 percent higher than in 2014, yet that growth rate was well off the 12.0-percent growth recorded a year earlier.

The home price gains in 2015 helped reduce the number of underwater homes in Nevada to 18.7 percent in the fourth quarter, according to real estate research firm CoreLogic. That was an improvement from the 24.2 percent reported the prior year, yet Nevada still led the nation with the highest share of underwater homes. On a local level, the Las Vegas metropolitan area closed 2015 with the second-highest share of underwater homes at 21.3 percent.

Home-selling activity picked up in 2015, marking a turnaround after declines in 2014. In Las Vegas, existing home sales for the year climbed to 43,127 (+1.8 percent), a significant improvement from the 11.0-percent drop in growth the year before. Washoe County reported an even larger reversal in existing home closings, which grew 9.2 percent to 6,912. In 2014, that figure had declined by 5.5 percent from the prior year. New home closings in Las Vegas last year reached 6,950, a 13.8-percent increase from 2014 made more notable compared to the 13.7-percent decline in annual growth between 2013 and 2014. In Washoe County, new home closings last year surged 50.0 percent to 1,458.

The foreclosure picture in Nevada steadily improved last year as new filings dropped to a post-recession low of 5,404, a 25.2-percent decline from 2014. The number of homes in foreclosure also showed marked decline. In the fourth quarter of 2015, the number of homes in foreclosure dipped 31.5 percent to 9,799, which is a fraction of the 56,028 homes in foreclosure at the peak in early 2010.

Trends in the overall economy, particularly job and population growth, suggest that demand for homes will continue to rise. Price points will be a key element to monitor throughout 2016 as price gains may tighten due to growing concerns over affordability.

February 2016

Last year finished as one of the best in recent memory for Nevada as most key economic indicators continued or improved upon the positive trends of 2014. Growth in the number of jobs, wages, taxable retail sales, and housing prices were among the primary indicators that closed 2015 on an upward trend.

The state’s expanding jobs market led the good economic news headlines all year. By December 2015, the trailing 12-month employment average had grown by 37,900 jobs over the previous year, a 3.1-percent improvement. That growth rate ranked sixth-best in the nation. However, that mark ended a streak of 20 consecutive months where Nevada was ranked fifth or better. If state employment continues to expand at about the same rate in 2016, the total number of jobs will return to pre-recession levels later this year. In both the Las Vegas and Reno metro areas, employment on a trailing 12-month basis increased by 2.9 percent.

Annual job growth reached positive levels in every sector except financial activities, and a number of sectors outperformed the statewide average, including construction (+9.0 percent), education and health services (+5.0 percent), leisure and hospitality (+4.5 percent), and transportation and warehousing (+3.9 percent).

The positive employment trend pushed Nevada’s seasonally adjusted monthly unemployment rate down to 6.4 percent in December 2015, 0.6 percentage points lower than a year earlier. That was the lowest year-over-year improvement since 2011 and did little to improve Nevada’s ranking among states with the highest unemployment rates. In December 2015, the state held the third-highest unemployment rate behind only Alaska and New Mexico.

However, good news concerning Nevada’s labor force underlies the lagging improvement in the unemployment rate. The state’s labor force, which is the group of people who are working or actively looking for a job, grew by a seasonally adjusted 1.9 percent in 2015. That rate, 11th-best in the nation, suggests that Nevada’s job market is attracting new workers through a combination of residents moving in from other states and by formerly discouraged unemployed workers rejoining the labor market because of improving job prospects.

The labor market showed other signs of strength at the end of 2015. Although average weekly hours remained flat at 33.6 (+0.5 percent), average weekly wages continued a two-year surge. For the year, weekly wages on a trailing 12-month average grew by a nation-leading 5.2 percent to $736.92. Over the past two years, weekly wages have increased by 8.9 percent. The rise in wages in Nevada mirrors the national trend where private employers are increasing pay to attract and retain workers in a more competitive labor market. That trend is more pronounced in Nevada, which doubled the U.S. weekly wage growth rate of 2.4 percent.

Other key indicators made positive strides in 2015. Statewide taxable retail sales, the primary measure of consumer activity, climbed to $51.5 billion in November 2015 (latest data available). The 12-month total increased by $2.9 billion for a 5.9-percent annual growth rate. Meanwhile, gross gaming revenue finished the year at $11.1 billion, a 0.9-percent increase over 2014. Finally, housing prices in Nevada continued their strong recovery by recording year-over-year price appreciation of 12.4 percent in the third quarter of 2015 (latest available). Nevada’s housing price increase was second-best in the nation and double the U.S. average of 5.7 percent.

As 2016 began, the Nevada economy was poised to continue building upon the many positive trends that carried it through 2015 and repair more of the lingering damage left behind by the Great Recession.

January 2016

For the second consecutive year, the number of people who visited Las Vegas in 2015 surpassed the projections by the Las Vegas Convention and Visitors Authority. Last year, 42.3 million people visited Las Vegas, a 2.9 percent bump from 2014 and well ahead of the 41.6 million tourism officials had projected.

The health of the state economy is closely interconnected with the health of the tourism industry. Spending by tourists and conventioneers accounts for about a quarter of Nevada’s gross domestic product, while the leisure and hospitality industry accounts for three out of 10 jobs and a quarter of all employee wages in Nevada. Because of this relationship, it is little surprise that Nevada’s positive 2015 was supported by strong fundamental growth within the tourism industry.

In 2015, job growth was one of the strengths for Nevada’s economy. Through November, more than 39,100 jobs were created statewide in the previous 12 months, good for an annual growth rate of 3.2 percent that ranked fourth-best in the nation. Employment within the leisure and hospitality industry grew by 4.7 percent, adding 15,800 jobs, or 40 percent of all new jobs statewide.

Rising employment over the past year has significantly boosted the number of employees per hotel room in Las Vegas. That number plummeted during the Great Recession and has spent the past six years slowly recovering. The industry now employs nearly two workers for every room, the highest level since 2008 and another indicator that the tourism industry is nearer to a full rebound.

Underlying the positive employment trends is a growing revenue trend for casino operators in Nevada. According to the recently released Nevada Gaming Abstract Report, total revenue for casinos climbed from $23.9 billion in fiscal year 2014 to $24.6 billion in fiscal year 2015, a 2.9 percent annual growth rate. That rate came down slightly from the 3.6 percent reported a year earlier.

Last year’s overall revenue growth was boosted by strong performances in several revenue categories. Room and food revenue grew by 5.0 percent and 5.2 percent, respectively, while revenue in the “other” category, which includes entertainment and shopping, climbed 7.7 percent. Beverage revenue grew by 3.0 percent, and gaming revenue dropped by 0.2 percent. Although the dip in gaming revenue was modest, it marked the first year-over-year decline since 2010 and was a significant fall from the 2.4 percent growth in 2014.

Despite the dip, gaming revenue continued to make up the largest share of overall casino revenue (43.2 percent) in Nevada. Remaining revenue was attributed to rooms (22.0 percent), food (15.3 percent), other (12.5 percent), and beverages (7.0 percent).
The statewide trends were mirrored in Clark County, which accounts for 90 percent of casino revenue in Nevada. Overall revenue climbed by 3.0 percent to $22.0 billion, which was down from the 4.0 percent growth rate in 2014. Revenue generated by rooms, food, and “other” grew by 5.4 percent or more, while gaming revenue dipped by 0.6 percent. Like the statewide figure, it was the first gaming revenue drop in Clark County since 2010.
The statewide gaming revenue dip was driven by 2.5 percent decline on the Las Vegas Strip, which brought in $151.5 million less gaming revenue in 2015. However, gaming revenues elsewhere in the state trended in the opposite direction. In Downtown Las Vegas, gaming revenue climbed by $20.2 million (4.0 percent), and in Washoe County it increased by $18.6 million (2.5 percent).

In 2016, continued improvement in the national economy, more direct flights to McCarran International Airport, and key developments such as the opening of T-Mobile Arena in Las Vegas and the presidential debate at University of Nevada, Las Vegas, are setting up to bring another record year for the Nevada tourism industry.

December 2015

The recent announcement that electric auto maker Faraday Future would build its $1 billion manufacturing plan in North Las Vegas marked another milestone for Nevada’s economic development strategy. The Faraday Future agreement was reached about a year after a similar agreement with electric car maker Tesla Motors, which is building a $5-billion battery manufacturing plant near Reno. Combined, Tesla and Faraday Future are expected to create 11,000 new permanent jobs once their plants are built and fully operational.

These announcements, which put Nevada at the heart of electric car manufacturing, have been the most high-profile achievements in the state’s recent efforts to diversify the economy. The seeds of those efforts were planted amid the fallout from the Great Recession, when Nevada was recovering from a nation-leading unemployment rate of 14.0 percent and large job losses in key sectors, including construction and leisure and hospitality. Although heavy concentration in these sectors enabled the state to experience significant growth over multiple decades, that same concentration made it susceptible to extreme volatility triggered by the housing bubble and recession.

This concentration is illustrated by state employment data. In 2007, the leisure and hospitality and construction sectors supported a combined 41.8 percent of all the jobs in Nevada, more than twice the national average of 18.3 percent. At the same time, employment shares in other sectors were significantly underrepresented, including manufacturing (4.5 percent vs. 12.1 percent nationally), information (1.4 percent vs. 2.7 percent nationally), and education and health services (8.1 percent vs. 15.3 percent nationally).

Recognizing the need for a more diverse and stable economy, Governor Brian Sandoval and the state Legislature in 2011 realigned economic development organizations, created new state programs, and targeted key industries for growth. These targeted industries included areas where Nevada lagged, such as healthcare and manufacturing, as well as areas of strength, such as mining, gaming and tourism.

Since then Nevada’s economy has rebounded on many fronts. The unemployment rate remains one of the highest in the nation, but recent statewide job growth has been at or near nation-leading levels. Private-sector employment climbed 8.8 percent between 2011 and 2014, led by strong growth in leisure and hospitality (20,241 jobs), trade, transportation, and utilities (17,757 jobs), professional and business services (16,401 jobs), and construction (11,094 jobs). Among those, construction reported the highest job growth for the period at 21.3 percent, while professional and business services grew the second-fastest at 11.7 percent.

Employment in several key targeted industries also experienced strong growth during that timeframe, including manufacturing (8.6 percent), health care and social assistance (9.2 percent), transportation and warehousing (12.7 percent), and information (9.3 percent). In addition, since 2012 businesses in targeted growth industries have begun relocations or expansions that will create more than 35,000 jobs and more than $12 billion in investment in Nevada. More than half of those jobs are in manufacturing and information technology ecosystems.

Despite those successes, results have been mixed when it comes to creating a more diverse economic base. These results can be illustrated using location quotients, which compare Nevada’s shares of industry employment to national rates. For example, a location quotient of 2.0 would indicate that a state’s employment share in that industry was twice the national average. Between 2007 and 2014, Nevada’s location quotients for leisure and hospitality employment dropped from 2.56 to 2.51, while construction fell significantly from 1.78 to 1.13, indicating a reduced reliance on those industries. A number of sectors markedly improved their location quotients, including health care and social assistance (0.57 to 0.63), transportation and warehousing (1.13 to 1.30), and educational services (0.31 to 0.42). Others reported little or no growth, including manufacturing, information, professional and business services.

These results underscore the reality that economies don’t remake themselves overnight. Economic diversification requires consistent effort and commitment over an extended period of time. Nevada has achieved much success in just a few short years, including the high-profile victories of Tesla and Faraday Future, and is on its way to a more balanced economy that can better weather the ups and downs that will come during economic downturns in the future.

November 2015

When Nevada’s population and economy boom, the construction industry booms along with them. This trend was especially evident in the mid-2000s, as the industry quickly expanded to build new homes, shopping centers, and office complexes to keep up with the Silver State’s fast-growing population. Yet the arrival of the Great Recession and subsequent years of economic downturn slowed population growth to a trickle, pushed unemployment levels to a nationwide worst, and crippled demand for new building. The construction industry suffered more than most during this time. However, since bottoming out in early 2012, the construction sector has reported the fastest-growing employment in a state that once again ranks near the top in population and job growth.

The connection between construction employment and overall job trends in Nevada extends back at least 20 years. In the mid-1990s, the share of construction jobs reached 8 percent of all jobs in the state, a level that remained relatively steady for the following decade as average annual population growth climbed over 4 percent. In January 1994, 50,200 people were employed in Nevada’s construction industry. That number more than doubled over the next 10 years, reaching 102,800 in January 2004. During the following 30 months, the construction sector added nearly as many jobs (46,000) as in the previous decade (52,600). At its peak in June 2006, construction accounted for 148,800 jobs, or about 11 of every 100 jobs in the state.

Construction employment during this period was fueled in large part by new home building. Between January 2004 and June 2006, Clark and Washoe counties issued a combined average of 3,748 new home permits per month, the equivalent of nearly 45,000 new homes per year. Although the Great Recession was still more than a year away, in summer 2006 new home building began to slow and construction employment started to shrink in a sign of what was to come.

The gradual slowdown quickly became a freefall as the nation plunged into recession and the housing market collapsed. By January 2012, Nevada’s construction employment had fallen to a low point of 47,600 jobs, giving back all the jobs the industry had gained since 1994. Home construction fell even further, as the industry in Clark and Washoe counties was adding just about 5,500 houses a year in early 2012, the lowest in more than three decades and a fraction of the 49,206 homes built in the 12 months through May 2006.

The state’s economic troubles touched all industries, but no key sector was hit as hard as construction. Between peak statewide employment in May 2007 and the post-recession valley in January 2012, the construction sector lost 89,500 jobs, a drop of 65.1 percent. For comparison, the leisure and hospitality sector shrank by 32,600 jobs (-9.5 percent), the professional and business services sector declined by 15,900 jobs (-9.9 percent), and retail trade fell by 8,400 jobs (-6.1 percent) during the same period.

Since early 2012, Nevada’s economy has rebounded across the board, and the state is again reporting near nation-leading growth in population and employment. The construction industry has played a key role in that rebound. New home permitting in Clark and Washoe counties has reported 43 consecutive months of growth in rolling 12-month totals, and 39 of those months recorded double-digit growth rates over the previous year. Construction employment has rebounded in stride, adding 24,000 jobs between January 2012 and September 2015, a 50 percent growth rate over the period. That growth far surpasses the rates of other key sectors. Leisure and hospitality grew by 16.1 percent (49,700 jobs), professional and business services grew by 12.7 percent (18,400 jobs), and retail traded expanded by 5.4 percent (7,000 jobs) during that time period. In the past year, construction employment growth (8.6 percent) has more than doubled employment growth in most key sectors and the overall statewide employment growth rate of 3.3 percent. Despite those gains, construction employment (72,000) remains at half of peak levels, while other key sectors have regained all or most of the jobs lost since the peak. The construction sector might not reach those peak employment levels for some time, but its strong recent growth suggests a stabilizing industry that is benefitting once again from rising population and increasing job opportunities across the Nevada economy as a whole.

October 2015

For most of the year, the Federal Reserve Board has signaled that a rise in interest rates was forthcoming as the United States jobless rate fell to the lowest levels since 2008. However, those signals have yet to materialize into action, and the board’s September meeting passed with interest rates remaining at historically low levels. That doesn’t mean an interest rate hike isn’t on the horizon. Federal Reserve Chairwoman Janet Yellen has not ruled out raising rates before the end of the year, though other board members have publicly questioned whether such a move would be premature amid the uncertainty about the national economy’s health. Yet the question on interest rates isn’t if, but when, they will be raised and what that will mean for the economy across the country, including Nevada.

The Fed hasn’t raised interest rates since the economy was soaring in 2006. It slashed rates in the middle of the Great Recession to loosen credit markets, encourage borrowing, and stimulate the economy. The low interest rate environment has helped the nation’s economic recovery, but some at the Fed worry price inflation could take hold if interest rates don’t rise soon. Opponents of an imminent rate hike argue that although unemployment is the lowest since before the recession, wages have stagnated and annual inflation remains well below the target of 2.0 percent.

Uncertainty about the national economy might push an interest rate change into 2016, but when a rate increase does come, it holds ramifications for a Nevada economy that has outperformed recent national trends on many key indicators. Chief among them has been employment growth. Year-over-year job growth in the Silver State has outpaced the U.S. for 38 consecutive months. In August 2015, employment in Nevada grew by 3.0 percent over the previous year, compared to a 2.0 percent rate for the nation. Average hourly wages have spiked in Nevada as well, climbing 5.9 percent in August 2015 over the prior year, nearly tripling the 2.2 percent growth at the national level during that same timeframe.

Underlying Nevada’s positive employment trend has been strong growth in taxable retail sales, an indicator of consumer spending and overall economic health. Retail sales in the state reached a record $50.7 billion in 12 months through July 2015 thanks to consistently strong year-over-year 12-month growth rates that have remained above 6 percent in six of seven months this year. For comparison, the year-over-year growth rate for U.S. retail sales declined from a recent high of 4.0 percent in January 2015 to 3.1 percent in July 2015.

Low interest rates play an important role in spurring consumer spending, particularly when it comes to big-ticket items such as vehicles, appliances and other durable goods. In Nevada, retail sales at motor vehicle and parts dealers for the 12 months ending in July 2015 rose to $5.9 billion, a 10.5 percent growth rate over the prior year that nearly doubled the national rate of 5.8 percent during the same timeframe. Meanwhile, year-over-year 12-month sales of durable goods at merchant wholesalers in Nevada increased by 7.9 percent to $3.4 billion in July 2015. By comparison, national sales of durable goods climbed 3.6 percent during the same period. An interest rate raise by the Federal Reserve could trigger a slowdown of retail sales growth in Nevada and move state trends closer to national levels.

Perhaps the greatest impact of higher borrowing rates will be felt in the state’s housing market. The market has recently stabilized after years of volatility that included the Great Recession collapse and the subsequent investor-fueled recovery. Median sale prices of both new and existing homes continue to rise in Clark and Washoe counties, though that could be attributable to a short supply of houses on the market. For example, the southern Nevada housing market has less than a three-month supply of homes for sale. A normal market would have a six-month supply. Overall home sales activity in Clark and Washoe counties has remained largely stagnant for most of the year, with year-over-year trailing 12-month sales totals declining for 34 consecutive months through July 2015. That trend is unlikely to reverse course when interest rates rise, which would only put the American Dream of home ownership beyond the reach of more Nevadans.

These trends will be closely watched in the months following any interest rate hike, though for now it appears that a change won’t come until the calendar flips to 2016.

September 2015

In the United States, consumer spending on goods and services accounts for two-thirds of the economy. With such a large – and growing – share of the national economy, consumer activity provides an important gauge to measure the overall economic health of the country. Consumer spending is constantly influenced by a complex mix of fluctuations in employment, wages, interest rates, housing prices, consumer confidence, the ability to borrow money, tax rates, personal feelings held by consumers, and other factors in the economy.

In Nevada, consumer spending is reflected in taxable retail sales volumes, which have been on the upswing as several economic indicators continue to report positive trends through June 2015. Taxable retail sales in Nevada have consistently grown since June 2010 when 12-month totals bottomed out at $37.8 billion. Total taxable retail sales surpassed their March 2007 historical high of $49.6 billion in March 2015, and they have continued to post new highs in each of the following months. Through June 2015, statewide taxable sales stood at a record-high of $50.3 billion over the previous 12 months. Additionally, trailing 12-month figures have rebounded 33.3 percent from the June 2010 low point.

Changes in taxable retail sales volumes for Nevada are influenced mostly by activities within Clark County, where trailing 12-month taxable sales climbed to nearly $37.5 billion in June 2015, a 34.2 percent rebound from the recession-low of $27.9 billion in March 2010. Nearly every significant spending category reported gains in trailing 12-month retail sales over the past year. Food services and drinking places (+4.8 percent), motor vehicle and parts dealers (+9.1 percent), merchant wholesalers, durable goods (+11.1 percent) and building materials and garden equipment and supplies (+10.7 percent) were among the best performing categories in the current period.

Another positive economic trend has been the number of private businesses in Nevada, which has grown consistently in each month since July 2011. By the end of the first quarter of 2015, Nevada surpassed its pre-recession high of 76,234 businesses by reporting a record total of 76,413 businesses, many of them retail establishments where consumers can shop and eat. Not surprisingly, 68.9 percent of private businesses were in Clark County, 18.2 percent were in Washoe County, and the remaining 12.9 percent were located in rural counties.

Positive trends in employment and average weekly wages have significant effects on consumer spending as they put more disposable income in the pockets of consumers. Trailing 12-month employment totals for Nevada have remained positive in every period since September 2011. Although total employment of 1.25 million in July 2015 still trails the pre-recession high of 1.30 million, it is on track to exceed that mark within the next six to 12 months. Statewide employment in July 2015 stood 13.6 percent higher than the recession low of 1.1 million in January 2010. Despite employment growth that is among the best in the nation, Nevada’s unemployment rate remains near the bottom with a seasonally adjusted rate of 6.8 percent in July 2015.

Average weekly hours statewide have been relatively flat since the end of the Great Recession, remaining at or near 33.5 hours per week in every period since December 2012. However, average weekly wages have risen 6.8 percent since the same period, with a post-recession high of $733.82 reported in July 2015 (latest data available), equating to a 5.7 percent year-over-year increase.

Consumer spending and the state’s economy are expected to further improve as businesses continue to grow and Nevadans have more disposable income through more jobs, less unemployment, higher wages, and greater opportunity.

August 2015

The unemployment rate is a closely watched indicator of economic health across the country. It dips low when times are good and can skyrocket when times are bad. This up-and-down scenario is all too familiar in Nevada. During the state’s economic boom in the first half of the 2000s, the Silver State’s unemployment rate fell as low as 3.9 percent and consistently tracked about a full percentage point better than the national rate. That trend reversed during the Great Recession. As jobless numbers swelled nationwide, Nevada’s unemployment rate caught and then surpassed the national average. At the nation-leading peak of 13.7 percent in November 2010, the state’s unemployment rate was more than four percentage points higher than the rest of the country.

As the state’s economy has recovered, that gap has closed and Nevada’s unemployment rate has dropped steadily to its lowest point since mid-2008. Up until January 2015, the unemployment rate had fallen 42 consecutive months. Yet through the first half of the year, the rate has hovered around 7.0 percent, and the 6.9 percent recorded in June ranked second-highest in the nation. This might suggest stagnation in the economic recovery after more than three years of steady improvement; however, the unemployment rate doesn’t tell the whole story of employment.

When measured by overall job growth, Nevada ranks among the best in the nation. In June, year-over-year employment grew by 3.5 percent, second behind only Utah and significantly better than national growth of 2.1 percent. In terms of raw numbers, the state added 42,400 jobs between June 2014 and June 2015, with 25,600 of them coming in the first half of 2015. In all, the state has regained 144,900 jobs since employment reached its low point in September 2010. Another year of similar job growth will push statewide employment back to the pre-recession level of 1.3 million.

The strong job growth trend so far this year, however, has had a negligible effect on the unemployment rate. The explanation lies with the growing labor force, which is the number of people who are working or actively looking for work. After the economic downturn, many Nevada workers who lost jobs stayed out of the labor force and stopped looking for new jobs, often because they believed none existed for them. Others left the state for other markets with better job prospects. As Nevada's employment picture improved, the size of the labor force grew modestly over the past five years before surging in the first half of 2015. Between January and June, the state’s labor force added 23,264 workers, the best six-month stretch since 2006. That surge in the labor force has limited the effect of recent job growth on the standard unemployment rate. The net takeaway, however, is that more jobs are available and more people are looking for work as confidence in the job market rises.

Those trends have also slowed improvement in the broader measure of employment (the U-6 rate), which includes discouraged workers who have stopped looking for jobs as well as part-time workers who would like full-time jobs. In the latest figures, the Silver State’s nation-worst U-6 unemployment rate was 15.2 percent. That result was down a full percentage point from the 16.2 percent reported a year earlier, but only slightly below the 15.3 percent reported in the two most recent quarters. Those levels are well below the peak of 23.7 percent in early 2011, yet well above the recent annual low of 6.8 percent in 2006. The numbers make clear the significant improvement in Nevada’s labor market since the economic downturn and the ground still left to make up to reach pre-recession levels. As new unemployment figures are released in coming months, remember that they tell only part of the story about the ongoing rebound in the state’s job market and
overall economy.

July 2015

Southern Nevada has been the focus of Nevada’s economy for most of the past 50 years, but that appears to be changing. The state’s northwestern urban center – commonly known as the Reno-Sparks metropolitan statistical area (MSA) or Washoe County – has recently reported improved measures of economic performance and a number of high-profile projects, suggesting even stronger growth on the horizon may be possible.

It is easy, and accurate, to point to the $5.0 billion Tesla Gigafactory and Switch’s new $1.0 billion SuperNAP data center as evidence of northern Nevada’s economic renaissance. But there is more to it than that, and these admittedly impressive projects may very well be more the result of a fertile economic environment than the catalyst of change. Northern Nevada has all of the pro-business advantages long touted by the south, but it also has better-performing public schools, high quality of life measures and well-positioned economic assets like the 107,000-acre Tahoe-Reno Industrial Center.

Northern Nevada has quietly positioned itself to be remarkably attractive to businesses in a number of sectors. This metamorphosis was often masked by a declining tourism and gaming sector severely impacted by the national proliferation of casino gaming, particularly in northern California. Anchored by a strong university and benefitting from a more diversified economic base compared to the Las Vegas MSA, Reno has retained a greater share of its home-grown talent pool and has been more successful in attracting tech-savvy Millennials and entrepreneurial GenXers. Projects like MidTown Reno and its Startup Row, along with locally based web development success stories like Noble Studios, clearly reflect this evolution.

The underlying statistics are clearly positive. Washoe County’s population is currently 437,600, up 1.2 percent during the past 12 months. Electric meter connections reported by NV Energy suggest growth is continuing in both the single-family and multifamily segments. Moreover, new residential permits totaled 2,535 during the past 12 months, an increase of 41 percent compared to the 1,795 reported just one year ago.

The Reno-Sparks MSA unemployment rate has fallen to 6.1 percent, and employment growth in the region is a robust 3.1 percent. Northern Nevada added 6,300 jobs during the past year, with particularly strong increases in business and professional services (+1,800 jobs, +6.6 percent); leisure and hospitality (+1,700 jobs, +4.5 percent); and trade, transportation and utilities (+1,500 jobs, +3.3 percent).

Other statistics are also worth noting. The number of hours worked per employee, which has been a particularly troubling statistic for Nevada and the Reno-Sparks region, has increased 6.6 percent during the past 12 months, or from 32.0 hours per week to 34.1 hours per week. Similarly, incomes are on the rise. Average weekly earnings are up 3.5 percent year-over-year. By way of comparison, southern Nevada average weekly earnings increased by only 1.1 percent during the same period. Finally, median existing home prices have reported year-over-year increases for the past 12 quarters. They currently stand at $268,000 per unit, 17.6 percent higher than they were one year ago and nearly $100,000 higher than the price reported in the southern portion of the state.

Growth is not all roses and sunshine. Many are asking whether northern Nevada is prepared for the demand that these growth trends will place on resources and infrastructure. Clearly, they are not; but they will be. Local government officials are acutely aware of these challenges and appear ready to face them head on. Land and housing price bubbles will potentially be a problem, as will an oversubscribed talent pool. That said, compared with the problems created by an economy facing decline and even obsolescence, the challenges created by growth and prosperity should be welcomed with open arms.

June 2015

The economic recovery in Nevada has shown few signs of slowing as many of the most important indicators have continued to demonstrate strong and steady growth in the wake of the Great Recession. In fact, many indicators are in the midst of extended positive trends that have continued for three years or more. Among them is employment, a key measure of the overall health of Nevada’s economy. Total employment climbed to 1.25 million in April 2015 (latest data available), which marked 52 consecutive months of year-to-year job growth. The sustained trend added 143,100 jobs in the Silver State, a 13.2-percent gain from the post-recession low-water mark of 1.10 million jobs reported in January 2010.

As a result of those job gains, the state’s year-over-year unemployment rate has fallen for 50 straight months, and the 7.1 percent mark in April 2015 is nearly half of the peak rate of 13.7 percent reported in November 2010. The number of private businesses in Nevada has grown along with employment. Since dipping to 69,812 in the third quarter of 2010, businesses have rebounded to 75,817 in the fourth quarter of 2014. That 8.6-percent growth included 14 straight quarters, or 42 months, of year-over-year improvement. Those trends were attributable to strong business growth in Clark County, which grew by 12.0 percent over the same time period. The 52,144 private businesses reported in the fourth quarter of 2014 were a record for Clark County. Washoe County has not experienced similar levels of business growth. It has added 502 businesses since the low point in the first quarter of 2012, but the 13,843 businesses reported at the end of 2014 fell short of the 14,484 peak posted six years earlier.

Taxable retail sales in Nevada have shown consistent growth during the recovery since the 12-month total reached a low of $37.8 billion in June 2010. Since then the trailing 12-month total increased by 31.7 percent to an all-time high of $49.8 billion in March 2015 (latest reporting period). That stretch has included 52 straight months of year-to-year improvement. Clark and Washoe counties each reported similar trends in both overall retail sales growth and the number of consecutive months of year-over-year growth.

Nevada’s housing industry has experienced several streaks of its own along with the statewide economic revival. Home prices, as measured by the housing price index, have climbed for 13 straight quarters, and the latest home price index of 183.56 in the first quarter of 2015 is the highest mark since 2008. Since 2012, the Silver State has consistently led the nation in year-to-year home price appreciation. The newest figure put Nevada second behind Colorado and continued a 10-quarter streak with either a first- or second-place ranking. Since hitting the low point of 111.38 in the fourth quarter of 2011, Nevada’s home price index has grown by a nation-leading 64.8 percent, well above California’s 48.1-percent mark.

The sustained growth of these and other key indicators has been a welcome sign of Nevada’s steady recovery following the Great Recession, and their continued improvement will go hand in hand with the ongoing betterment of the state’s economic well-being.

May 2015

Like many economic indicators, business growth in Nevada has shown mixed signs as the Silver State’s economy has transitioned from recession to recovery. Statewide, the number of private businesses fell fast during the Great Recession, dropping by 6,422 businesses between the high point in the fourth quarter of 2008 and the bottom in the third quarter of 2010. Since losing 8.4 percent of its businesses in less than two years, Nevada has gradually regained most of those numbers over the ensuing four years. According to the latest figures, Nevada reported 74,931 private businesses in the third quarter of 2014, the highest number since mid-2007. That represents a gain of 5,119 businesses (+7.3 percent) since the 2010 low point.

The vast majority of Nevada’s business growth has come in Clark County, which accounted for 94.5 percent of net business growth statewide. Southern Nevada added 4,838 businesses (+10.4 percent) since bottoming out in July 2010. That improvement pushed the business count in Clark County to an all-time high of 51,402 in Q3 2014 (latest data available). That figure was 1.5 percent higher than the 2008 peak of 50,633 businesses.

Although Clark County set a record, Nevada’s overall figures remained below the peak levels reached early in the Great Recession. The 74,931 private businesses recorded statewide in the third quarter of 2014 were 1,303 (-1.7 percent) below the 76,234 establishments in the third quarter of 2008. More than half of that gap comes from Washoe County, which has not seen southern Nevada’s level of business growth during the recovery. Since the 2010 low point, the number of Washoe County businesses has grown 2.4 percent, which is four times slower than the growth in Clark County. That modest growth pushed the number of Washoe County businesses up to 13,723 in last year’s third quarter, but that figure was still down 761 (-5.3 percent) from the peak of 14,484 set in the third quarter of 2008.

Statewide, businesses with fewer than 50 employees comprise nearly 96 percent of all businesses, so it is little surprise that small businesses have accounted for the majority of the growth. Between the first quarters of 2010 and 2014, small business counts grew by 1,499 establishments, or 82.0 percent of the overall business gains. Companies with more than 50 workers grew by 327 establishments. (Note: These figures vary from the total quarterly business counts because of limited data on businesses by size.) Small business growth during that timeframe measured 2.2 percent compared to 12.0 percent for larger companies.

That difference in growth rate was mirrored in employment by small companies versus their larger counterparts. Small business employment climbed 2.9 percent between 2010 and 2014 compared to 11.9 percent for companies with 50 employees or more. That growth pushed employment in larger companies to 58.9 percent of Nevada’s private workforce, up from a low of 56.1 percent in 2012, according the U.S. Bureau of Labor Statistics. Conversely, the share of Nevada employees working in small businesses fell from 43.9 percent to 41.1 percent during that period. At the county level, small business employment levels varied significantly. In Clark County, small businesses employed 38.1 percent of the workforce in the first quarter of 2014, while in Washoe County, they employed 49.8 percent of workers.

The professional and business services sector added 2,044 establishments in Nevada between 2010 and 2014, the largest gain of any sector. The majority of those establishments (2,000), employed fewer than 50 workers. Other sectors that showed strong business growth, including education and health services; trade, transportation and utilities; leisure and hospitality; and information, also reported the largest gains among businesses with fewer than 50 workers.

Small businesses will continue to play a significant role in generating jobs and economic activity as Nevada continues its economic recovery.

April 2015

Nevada’s all-important housing industry had enjoyed a significant rebound following the Great Recession. Though, for many industry indicators the only way to go was up after bottoming out. On one key metric, the housing price index, Nevada saw some of the best performances in the nation since the economic downturn. In the latest data released for the fourth quarter of 2014, Nevada’s housing price index was up 9.0 percent over the previous year, ranking first among the states. The Silver State’s five-year growth rate of 31.1 percent ranked second, behind only fracking boom state North Dakota. However, after a long period of strong growth, some housing market metrics are cooling down. These do not appear to be signs of a market collapse, but rather stabilization. They are likely also being influenced by other wider economic factors, such as Nevada’s still high unemployment rate and tighter credit markets that make it more difficult for some to buy a home.

In southern Nevada, investors fueled much of the existing home sales in the post-recession years as they snapped up bargain-priced houses stuck in foreclosure or as short sales. Cash buyers accounted for more than half of existing home sales for all 2012 and into mid-2013. But once median resale home prices topped $150,000, cash buyers started pulling out of the market and now account for just a third of existing home sales in the Las Vegas area.

The lack of investor activity has had a noticeable effect on the resale home market. Trailing 12-month totals for existing home sales have tumbled for 30 straight months, and in each of the past six months the drops have been by double-digit percentages. Resale home closings for the 12 months ending in January (41,947) were the lowest since May 2009 and down 29.4 percent from the most-recent peak of 59,400 closings in March 2012.

The sales slowdown is evident in southern Nevada’s median sales prices of existing homes. The monthly median existing home price in January fell to $170,000, down slightly from $172,580 in December 2014. The 12-month average median price was up 7.3 percent from January 2014, but that represents the lowest year-over-year price increase since mid-2012. The drop in existing home sales has helped increase the available homes on the market to a little more than a four-month supply. This is up about from the three-month supply of a year ago but still well below the six-month supply that is considered normal.

In southern Nevada’s new home market, sales were down 13.0 percent for the 12 months ending in January (6,063). That marked the eighth consecutive month of double-digit drops in the growth rate. The recent downward trend was in stark contrast to the growth seen during 2013, when trailing 12-month growth rates remained between 40 and 70 percent for most of the year. Despite the sales slowdown, the monthly home median sales price climbed to a seven-year high of $316,616 in January. That figure was up 3.8 percent from a year earlier. The average 12-month price ($292,862) also reached highs not seen since the Great Recession. However, January’s 12-month year-over-year growth rate of 9.7 percent was the first single-digit rate since May 2013.

Northern Nevada’s housing market experienced a similar slowdown in existing home sales, with the monthly figure in December 2014 (434) falling 19.0 percent from a year earlier. Washoe County’s existing home market hadn’t seen a double-digit drop, let alone one approaching 20 percent, in six years. The trailing 12-month total in December (6,329) was more stable but still down 5.5 percent from 2013. Despite the sales slowdown, median resale home value in Washoe County saw strong gains, reaching a monthly level of $250,000 in December 2014. That was up 13.6 percent from a year earlier and the highest monthly level since July 2008. The average 12-month median resale price for the period was $234,654, up 13.6 percent over 2013, but it was the lowest 12-month price increase since February 2013 and well below the more than 20-percent growth seen between mid-2013 and mid-2014.

New home prices in northern Nevada have shown steady growth since early 2013, with 21 straight months of double-digit growth in the year-to-year trailing 12-month median sales price. In December 2014, the trailing 12-month average new home sales price reached $328,967, down a fraction from a month earlier but up 12.0 percent from the year before. That mark was the lowest since June 2013 and well below the 18-percent growth rates seen through most of 2014. As Nevada’s improving economy brings new jobs and new residents, the housing market should stabilize and establish a steady, if at times uneven, growth trend into the future.

March 2015

Nevada’s ongoing economic recovery was again evident in the year-end employment picture, which followed up a good 2013 with an even stronger 2014. The state saw across-the-board job gains in nearly every sector, including double-digit growth in the key construction industry.

Overall, the state added 41,000 jobs last year, a 3.5-percent climb that brought total employment to 1.2 million jobs. Those numbers were up slightly from previous estimates, which were recently adjusted by the U.S. Labor Department using unemployment insurance reports submitted quarterly by employers. While the adjustment added 600 jobs for Nevada in 2014, the revised numbers bumped the annual average unemployment rate from 7.7 percent to 7.8 percent. Even with the slight raise, the unemployment rate was 1.7 percentage points lower than the 9.5 percent set in 2013.

Job growth in southern Nevada last year was even better than the statewide figures, with total jobs in the Las Vegas area growing 3.9 percent to 883,300. The additional 33,500 jobs accounted for eight of every 10 new positions in the Silver State. Job growth in the Reno area came in below the state’s rate, rising 3.2 percent. The additional 6,300 jobs pushed total employment for the region to 202,200.

Statewide, the vast majority of new jobs (39,700) were in the private sector, while the government sector accounted for 1,300 additional positions. Private-sector job growth was reported in all but a few industries. The state’s leading employment sector, leisure and hospitality, led the way with a gain of 12,800, a 4.0-percent year-to-year improvement that brought total sector employment to 336,700. Most of that growth came from the 11,800 new positions within accommodation and food services, which is a good sign for Nevada’s all-important tourism industry. Another key state industry, construction, set the pace in job growth rate with a significant 10.6-percent improvement in employment numbers. The additional 6,000 positions raised construction employment to 62,800, the highest level since 2010.

The professional and business services industry saw the largest downward adjustment as a result of the employment benchmark revisions but still added 5,700 jobs in 2014. The 3.8-percent growth raised the sector’s total employment to 155,700, making it the third-largest employment sector in Nevada. The trade, transportation and utilities sector, the state’s second-largest employment sector, grew 3.6 percent with the addition of 8,100 jobs. The retail trade subsector accounted for 4,000 of those jobs with a 3.0-percent growth rate, while the transportation, warehousing and utilities subsector grew 5.6 percent, a gain of 3,000 positions.

Employment growth was also strong in the education and health services sector, which climbed 4.1 percent with the addition of 4,600 positions. The health care and social assistance subsector grew 3.8 percent by adding 3,800 jobs, bringing the subsector’s total employment to 103,200, while the educational services subsector enjoyed a strong 6.6-percent job growth rate with 800 new positions. Meanwhile, the manufacturing industry added 1,100 jobs, a 2.7-percent improvement over 2013, and financial activities employment grew a modest 0.7 percent with 400 new jobs. Within the sector, the finance and insurance industry lost 300 positions, which was countered by the addition of 700 jobs in the real estate and rental and leasing subsector. Mining was the only sector to lose jobs in 2014, dropping by 900 positions (-5.9 percent).

Growing statewide employment was reflected in the rising number of employers in Nevada. The number of employers reached a record high in the fourth quarter of last year, climbing to 61,200. That topped the previous record of 60,600 employers set in the second quarter of 2008. The late-year surge brought the annual average to 60,200, an improvement of about 7 percent from the 2011 post-recession low point, according to the Nevada Department of Employment, Training and Rehabilitation. Before the Great Recession, the number of employers had risen every year for at least a decade.

February 2015

In the years since the Great Recession, Nevada’s year-end economic prognosis was usually a mixed bag. As the state gradually rebuilt from the economic rubble, any positive signs of improvement tended to get overshadowed by negative overall trends. That changed in 2014 as the state economy finally showed across-the-board gains and transitioned from a period of recovery to one of stability and growth. That transition was evident in the many economic vital signs that not only grew in 2014 but actually reached or approached pre-recession levels.

Historically, the hallmark of Nevada’s economic strength was evident in its population growth. Year after year, the Silver State sat atop the list of fastest-growing states as people voted with their feet in search of economic opportunity. In the wake of the recession, population growth slowed and even reversed as the state lost residents. Yet in 2014, Nevada was back in familiar territory near the top of nationwide population growth rankings. Its 1.7-percent growth rate was second only to North Dakota, which has topped the list three years running thanks to its oil fracking boom.

Many of those new Nevada residents were drawn to the state’s improving job market, which has experienced several years of steady growth and falling unemployment. The statewide monthly joblessness rate closed 2014 at 6.8 percent, the lowest since June 2008. The improving unemployment rate could taper off as the long-term unemployed reenter the workforce amid improving job prospects, but more people looking for work would be another sign of a healthier economy, even if that temporarily moves the unemployment rate in the wrong direction.

Even with the improving job market, however, overall hours worked in non-government sectors remained flat, closing the year at 33.4 hours a week, well below the pre-recession peak of 37.6 hours. In contrast, weekly wages for private industry workers grew 3.5 percent throughout the year, reaching an average of nearly $712 in December, the highest level since early 2009.

Nevadans closed 2014 with more good news for their wallets as the average price of a gallon of regular gasoline tumbled about a $1.00 from a year earlier. Analysts expect prices to rise steadily this year but still remain cheaper than in 2014, saving the typical American household $750 over the year. The combination of more workers earning more money and spending less on gasoline appears to have primed consumer spending, especially in Clark County. Taxable retail sales in southern Nevada for the 12 months through November 2014 climbed to $36.2 billion, up 8.1 percent over the previous year and closing in on the 12-month high set in early 2007.

Nevada’s housing market also showed strong post-recession signs in 2014, topping the nation with a 10.35-percent one-year home price appreciation through September 2014, the latest date available. That number was more than 2 percentage points higher than in the second-ranked state, Hawaii. The price surge has helped bring underwater homes to the surface, dropping the statewide percentage from 32.2 percent to 25.4 percent. Foreclosures also showed improvement, with default notices in Clark County closing the year down 89.3 percent from their December 2009 peak and nearing pre-recession levels. Home building continued to rebound in 2014, with new home permits in Clark County rising 9.6 percent year over year. The 9,506 permits issued in the 12 months through November was the highest number since May 2009.

Despite the overall improvement in 2014, some economic indicators still lagged. Statewide gaming revenue has been stagnant, ending the year down 1.1 percent, and Las Vegas convention attendance grew a modest 0.9 percent. The 5.2 million conventioneers in 2014 remains more than a million people short of the pre-recession peak. Those sluggish figures are countered, however, by strong growth in visitor volume, including the record 41.1 million people who visited Las Vegas in 2014.

With the foundation of recovery set in 2014, 2015 is positioned to see continued economic growth and stability as the Great Recession becomes a more-distant memory.

January 2015

Las Vegas tourism officials expected 2014 to be a record-breaking year, but it turns out the Las Vegas Convention and Visitors Authority’s projection for an all-time high of 40 million visitors was not high enough. The agency revealed this month that the final number is expected to be 41.1 million visitors for 2014, a big jump from 2013. The strong visitor numbers are another sign of the post-recession recovery for Las Vegas and Nevada, which are starting to feel the ripple effect of the improving economy across the United States. The rising tide of visitors is apparent in the money flowing to resort properties throughout the state, especially those in southern Nevada.

According to the recently released Nevada Gaming Abstract, total revenue for the state’s casinos grew 3.6 percent to $23.9 billion in the fiscal year that ended June 30, 2014. Much of that growth was fueled by hotel room revenue climbing $357.5 million statewide, a 7.5 percent improvement thanks in part to an uptick in occupancy rate. Gaming revenue rose by $245.5 million, or 2.4 percent, but lost ground in its share of overall revenue compared to non-gaming revenue, dropping slightly from 45.1 percent to 44.5 percent.

The statewide trends were greatly influenced by Clark County, which accounts for about 90 percent of all casino revenue in Nevada. Overall revenue for the county’s casinos climbed $813.8 million, or 4.0 percent. A significant share of that growth came from an 8.0 percent climb in room revenue.

Casinos on the Las Vegas Strip saw even more growth, with overall revenue rising $769.2 million, a 5.0 percent increase. Like the rest of the state, a significant portion of that growth was driven by rising room revenue, which went up by $322.4 million (+8.2 percent) as the occupancy rate inched up to 90.4 percent. Gaming revenue for Strip casinos was up 4.2 percent but dipped slightly as the share of overall revenue (37.0 percent to 36.8 percent). Room revenue remained the second-largest category at 26.1 percent of all revenue.

Casinos in downtown Las Vegas rely more heavily on gaming revenue, which accounted for 52.0 percent of the $977.0 million in overall revenue. However, the 3.8-percent growth in revenue was barely helped by gaming, which went up a mere 0.5 percent. Downtown Las Vegas’ revenue growth was spurred by a 12.3-percent growth in room revenue and an 11.1-percent bump in beverage revenue. Together, they enjoyed $27.9 million in additional revenue, which accounted for the majority of overall revenue growth. Downtown casinos enjoyed a significant boost in occupancy rate, which climbed from 81.4 percent to 85.0 percent. That improvement was four times better than the occupancy rates statewide and in Clark County.

Casinos in Washoe County did not see the same success as their southern counterparts, with overall revenue climbing only 2.5 percent. The highest growth category was food revenue, at 5.2 percent.

The positive tourism trends are also evident at McCarran International Airport. Through November, passenger counts were up 2.5 percent in 2014. Most of that growth was through a steady rise in domestic flights, but international passengers saw a significant gain of nearly 13 percent.

As strong as 2014 was for the state’s gaming and tourism metrics, officials are predicting an even better year for 2015 thanks to the healthier national economy and increased flight capacity at McCarran. In fact, the Las Vegas Convention and Visitors Authority is already projecting 41.6 million visitors for 2015, which would make it another record year for Las Vegas tourism.

December 2014

Nevada’s economy beat expectations in 2014 and appears primed for continued growth in the coming year. Improved metrics in productivity, employment and income suggest the state has moved well beyond post-recession recovery and is settling into a pattern of sustained growth. Record visitor volume in the south, the recent announcement that Tesla will build its highly anticipated giga-factory in the north and nation-leading housing price appreciation statewide provide further evidence that the economy’s growth trend should extend well into 2015.

Nevada’s economy expanded at roughly 2.4 percent during 2013 (latest data available). While this pace of expansion was not as high as some observers had hoped, it is accompanied by a 2.4-percent increase in employment through October 2014 – 10th highest rate in the nation – as well the nation’s fastest decline in unemployment. Additionally, between the first and second quarters of 2014, Nevada’s aggregate personal income grew by 1.5 percent. This pace of income growth is nearly double the rate reported in the second quarter of 2013 and was the second-fastest rate reported in the far west states during Q2 2014 (Oregon was number one with a growth rate of 1.7 percent). Also worth noting, nearly every sector of the state’s economy contributed to the expansion, with strong gains in the business and professional services sector.

Significant developments in the southern and northern portions of the state suggest these trends will continue in 2015. In the south, Las Vegas visitor volume appears poised to break the 41 million trip mark for the first time in history by year’s end. Additionally, the convention calendar is particularly strong in 2015, Genting’s $4.0-billion plus Resorts World casino-hotel project is scheduled to commence construction in Q1 2015, the MGM/AEG arena development is now well underway and the Electric Daisy Carnival reported selling out its 2015 event in record time. In the north, the Tesla announcement has provided renewed optimism as the regional economy gears up for a $6 billion, 50 gigawatt-hour factory powered primarily with its own solar and wind power plants. In a class of its own, Tesla’s giga-factory could add as much as 7 percent to the region’s gross metropolitan product in 2015.

Importantly, improved economic metrics are also translating into higher property values. In its Q3 2014 report, the Federal Housing Finance Agency noted, “The seasonally adjusted, purchase-only [Housing Price Index] rose in 40 states during the third quarter of 2014. The top five states in annual appreciation: 1) Nevada 2) Hawaii 3) California 4) North Dakota 5) Florida.” [emphasis added] Going from worst to first in this key metric has helped bolster consumer spending activity. Nevada’s taxable retail sales volumes are up more than 8.0 percent in both Clark and Washoe counties. Combined with lower prices for gasoline, which some economists believe could save a typical household $750 per year, consumer confidence and consumer spending should be strong entering the New Year.

It was not that long ago that Nevada was held up as the state most affected by the Great Recession. Today, the tone and tenor of the economic discourse has clearly changed. More important than positive economic metrics, both consumers and businesses appear to have a renewed confidence relative to where the state is heading and are making plans for stability, growth and new opportunities in 2015.

November 2014

While Nevada's residents and visitors have faced rising household expenses in any number of areas, many find themselves with some positive factors impacting their financial situation. Declining fuel prices and rising wages have helped offset some of the broader increases in the cost of living. Nevada’s visitors find themselves in a better financial position as national wages are beginning to improve with the reduced slack in the labor market. Some of the slack is even beginning to pick up in Nevada, where wage growth has managed to outpace the rest of the country. Overall, consumer wallets across the state are positioned for improvement and potentially ready to boost the Nevada economy.

Gasoline prices in Nevada have fallen $0.316 per gallon to an average of $3.093 over the past month, and across the country, gasoline prices have experienced a $0.285 per gallon decline during the same timeframe. The drop in gasoline prices comes as supply from Saudi Arabia, Iraq, and Libya increased. The underlying supply boosts from these countries are not likely to end quickly, which could allow oil prices to remain low for the foreseeable future.

In Nevada, this means that the 1.1 billion gallons of fuel purchased last year will leave residents and visitors with an additional $347.5 million to spend over the coming year, assuming $0.316 per gallon savings continue. Assuming gains are realized, this money will remain in Nevada's economy; further stimulating consumer demand in the area. The amount of money added to the local economy would be the equivalent of cutting federal taxes leaving the state by 3.4 percent. Furthermore, transportation costs that may have proven too burdensome for potential visitors will be eased with the lower fuel prices, potentially leading to higher visitor counts as well.

Across the country, wages are beginning to increase as slack in the labor market is starting to clear up. The national rate of unemployment dipped to 5.9 percent in October. In some sectors, recruiting workers is becoming more difficult, leading to higher wages being offered. In Nevada, even though employment growth has been robust, there is still slack in selected labor sectors. Unemployment remains elevated at 7.3 percent in the state, far higher than what would be considered the natural rate, but the market posted a 2.3-percentage point decrease over the past year. In spite of the excess supply of labor in the state, private employers found the need to raise average hourly wages 2.8 percent during the past year--higher than both the national increase in wages (2.0 percent) and the increase in the consumer price index (1.7 percent) during the same time. As slack in the labor market continues to clear, wages could rise faster in the state as a result.

Consumers across the country are enjoying improvements in their wallets -- albeit modest -- from lower gas prices and larger paychecks. The gains may further support growth in overall consumer spending, and Nevada’s economy is expected to benefit from recent market dynamics.

October 2014

In a speech to business leaders from Las Vegas as well as across the Western region, the president of the San Francisco Branch of the Federal Reserve, John C. Williams, outlined his vision for the near future in terms of monetary policy. He reiterated that the Federal Reserve’s massive asset purchase program, known as quantitative easing (QE), is likely to soon come to an end. QE was an extraordinary and untested monetary policy, meant to inject funds into the economy after more traditional monetary policy options had been exhausted. As the nation’s economy continues to recover from the worst economic recession since the Great Depression, the Federal Reserve is now scaling back the extraordinary policies put in place to keep the nation’s economy afloat. Rising interest rates, providing the economy continues to grow, seem a likely next step in 2015. That said, as Mr. Williams put it, these actions should be “data-driven”, not “date-driven”, so the timing remains far from certain.

The discussion over higher interest rates comes in response to stronger economic growth and falling rates of unemployment. Gross domestic product at the end of the second quarter of 2014 grew 4.3 percent over the previous year; in real or inflation-adjusted terms, it increased 2.6 percent. Perhaps the most significant, although statistically imperfect, signal of recovery is the unemployment rate, which reached 5.7 percent in September, 1.3 percentage points below a year ago and the lowest rate reported since June 2008. Meanwhile, the inflation rate has remained at or below the targeted 2.0 percent annual rate since 2012.

There is some concern that the tide is changing. As the supply of labor tightens, employers may decide to raise wages to attract in-demand employees. Such wage inflation may in turn drive prices higher. Tighter monetary policy from the Federal Reserve would be expected to counter this trend; the problem is the timing has to be fairly exact. Too soon, and the central bank risks creating an economic downturn as companies just getting back on their feet have a more difficult time funding expansion plans and hire fewer workers; too late, and rising prices could lead to another asset bubble.

If the nation looked like Nevada, it is likely that the Federal Reserve might delay actions for a longer period. Though the state’s recovery in the past year has been significant, Nevada’s unemployment rate remains at 7.6 percent, a 2.2 percentage point improvement from a year ago, housing prices remain 38.8 percent below the peak and the state’s largest hotel casinos reported a net loss of $1.3 billion in 2013. Unfortunately, decisions at the Federal Reserve tend to be made for the national average, which means that the tighter monetary policy may have some negative ramifications due to coming too soon for Nevada, if our economy continues to lag. That said, Nevada’s economy is highly dependent on national and international visitation, particularly from California, which seems ripe for expected tapering of QE and subsequent increases in interest rates.

Notably, low cost of capital is driving many of the projects currently planned, proposed or underway in the state and higher interest rates run the risk of negatively impacting some. Large projects already in the beginning stages, including Tesla in Storey County, Genting Resorts World in Las Vegas, Union Village in Henderson, the Global Business District, and a host of others already far along in the development process, will likely continue to move forward. We anticipate that the low interest rate environment produced by the Federal Reserve’s actions will remain long enough for these projects to benefit. However, those coming up behind them will almost certainly face higher capital costs.

The future is, of course, uncertain. Mr. Williams and his colleagues have taken extraordinary measures to ensure the US economy regains stable footing. The main risk of such actions – inflation – remains very much in check. Rising interest rates will be viewed as a negative by some, but they will be in response to sustained higher rates of economic growth and lower rates of employment. Respecting that the Fed does not have a crystal ball, the data-driven approach noted by Mr. Williams appears appropriate, responsible, and most likely in Nevada’s best interest.

September 2014

Tesla recently chose Nevada as the site for its 5-million-square-foot battery factory. According to initial estimates, the factory will potentially have a $100-billion economic impact over 20 years, with direct and indirect job creation totaling upwards of 22,000 positions. In a recent special session, the Nevada State Legislature approved four bills that will provide Tesla with the largest incentive package in Nevada’s history, totaling roughly $1.3 billion over 20 years. In addition, the company has agreed to make contributions to education in the state as well as make the hiring of Nevadans and veterans a priority.

Tesla’s battery manufacturing facility, or “Gigafactory”, will be located in Storey County, and at more than 5 million square feet, the facility is expected to be one of the largest buildings in the world. The company plans on investing $5 billion in the project within the first 3 to 5 years, with $1 billion sourced to constructing the building and another $4 billion sourced to equipment purchases. An additional $5 billion is planned for future equipment replacements, for a total investment of $10 billion. More than 3,000 construction workers are estimated to be employed to build the facility and install equipment over a three-year period.
In exchange for building its facility in Nevada, Tesla will receive a large incentive package that will include the following:

• Up to 100 percent of Tesla’s sales tax will be abated until June 30, 2034, and 100 percent of its real property tax, personal property tax and modified business tax will be abated until June 30, 2024.
  
• Tesla will receive a transferable tax credit of $12,500 per permanent, full-time job
  for up to 6,000 jobs. In addition, a transferable tax credit of 5 percent will be received for the first $1 billion investment as well as a credit of 2.8 percent for an additional $2.5 billion investment. The total value of these tax credits is estimated at $195 million Funding for the credits is sourced to repurposing of existing tax credits and exemptions.
  
• Reduced electric rates for ten years are included in the package.
  
• Tesla will be allowed to sell its cars in Nevada without a franchise agreement.
  

August 2014

Nevada has been presented with a series of opportunities not seen since the onset of the Great Recession. New projects on the north end of the Strip in Las Vegas, industrial projects in Reno and tech startups and relocations statewide have shown Nevada’s economy is more resilient and adaptable than some observers thought.

Signs of recovery and expansion abound in the tourism sector. SLS Hotel & Casino, an overhaul of the former Sahara Hotel & Casino, will open on August 23rd, bringing more than 3,000 jobs, 1,600 hotel rooms and a renewed energy to the north end of the Las Vegas Strip. Not far from the SLS, Genting Resorts World will soon begin construction on the site of the former Stardust Resort & Casino, a $4-billion undertaking. Other positive news came in the form of Crown Resort’s (headed by James Packer, an Australian billionaire) purchase of the former New Frontier property, with reported plans to eventually open up a new casino resort on the site. Further projects include MGM’s City of Rock festival grounds, the MGM/AEG Arena, New York New York’s Park retail project, renovation and rebranding of the Delano and Linq Hotels, the Bally’s Bazaar, the Mandalay Bay Convention Center expansion and the recent opening of the Cromwell and Linq. All of this comes at a time when total visitation to Clark County is still 1.0 percent below its pre-recession peak and gaming revenue is 11.1 percent below its highest twelve month total. These additional investments are expected to generate increased interest (i.e., visitor trips); however, many industry experts remain concerned about whether the market can truly sustain supply additions or whether these projects will simply cannibalize existing market share.

In the north, recent announcements include the largest corporate expansion in Nevada’s history. Tesla announced site work for their gigafactory has been completed. In just three and a half weeks, construction workers cleared a massive pad for the $5-billion project in a large-scale demonstration of Nevadans getting back to work. The Tesla project is far from a certainty, with talk of a special session of the Nevada State Legislature and speculation that land clearing in Reno could simply be used as leverage in negotiations with other states. That being said, the work is certainly welcome. Unemployment in the Reno area is at 7.2 percent, lower than the state average of 7.7 percent, but still considerably higher than the national rate (6.2 percent in July). Average total employment during the past twelve months has grown 2.3 percent in Washoe County; and, in particular, the construction sector has grown 14.3 percent during the same period. Though Tesla is continuing to pursue negotiations and potentially site work in other states for its coveted factory, Nevada will benefit either way as other companies will take a closer look at the amenities offered in the Tahoe-Reno Industrial Center. Other success stories in the area include the geothermal industry, which continues to take advantage of Northern Nevada’s unique geology, and a recently opened nightclub in the Grand Sierra Resort, which reported having to hire additional employees to meet demand.

Tech, including globally competitive datacenters, has proven to be a catalyst for incremental investment in both the north and the south. Projects, including Apple’s datacenter, have acted as bellwethers for tech companies looking to invest in Nevada. The company has planned an additional two new data buildings, bringing the total to 10 datacenters. Though it is early, and difficult to tell whether Apple has caused companies to relocate/collocate, the Economic Development Authority of Western Nevada (EDAWN) has reported a marked increase in inquiries from technology companies. In Las Vegas, Switch has started construction on SuperNAP 9, its largest data center yet at 575,000 square feet. Switch, while somewhat less recognizable than Apple or other tech giants, may very well be more vital to the State’s economy. Not only is Switch the state’s largest startup in a generation, but its collocation strategy and innovative technologies have prompted, at least in part, companies such as Wirelessor, Zumasys, and Tracky to locate their operations in Nevada. Switch plans for 10 SuperNAPs in its current Las Vegas campus, and wants to export the design and knowledge gained in Nevada across the globe for construction of further SuperNAP facilities. Tech communities made up of smaller startups also continue to coalesce around Downtown Reno in Startup Row and Las Vegas around Downtown Project’s various enterprises as they prove to be centers for collaboration and innovation.

Renewed interest in Nevada, both from existing businesses and those seeking out new markets, is an encouraging sign the state’s elongated economic recovery has transitioned into economic resurgence. There is little doubt that Nevada has residual challenges, not only from the recession but also from the state’s narrow economic base and underperforming education system. These challenges notwithstanding, economic growth tends to follow investment and population growth. Nevada currently has both and seems to be picking up steam.

July 2014

The Federal Reserve is considering an end to its extraordinary treasury and mortgage-backed security purchasing program, known as quantitative easing, this October. This measure has injected large amounts of currency into the economy, lowering interest rates and increasing investments. In particular, mortgage rates, which currently average 4.12 percent for a thirty-year loan, are still near their historical low of 3.31 percent set in November 2012. Relatively low rates helped spur the housing recovery, reduced interest costs and increased consumer spending in Nevada and throughout the nation.

The impact of the slow end of quantitative easing was largely felt in June of 2013, when interest rates increased 65 basis points (0.65 percentage points) from the previous month. The program's actual end is expected to have modest impacts on interest rates in the near term; rates have adjusted for much of it already. It does, however, potentially mark a turning point in the recovery, one where the national economy no longer needs extraordinary measures to move forward.

Cheap credit has allowed the economy to expand considerably. As of the first quarter, mortgage payments made up 4.8 percent of personal disposable income, the lowest share since 1981. The total value of mortgages in the economy is still 10.4 percent below the Q2 2008 peak value, and has risen only 0.4 percent since bottoming out in Q1 2013. The low rate of new mortgage debt, combined with historically low rates, has allowed households across the country to lower their debt payments, freeing money for other areas of spending.

One thing consumers are buying in droves are new automobiles. In the second quarter, 16.5 million cars were sold, more than any quarter since 2006. In the U.S., the trailing twelve months of auto sales through June 2014 are up 54.1 percent since bottoming out in the 12 months ending October 2009. As cars and other durable goods were forced to last longer during the downturn, it is perhaps not surprising that consumers are finally starting to replace aging equipment. As of April, taxable auto sales in Nevada were up 62.3 percent since the low point reached during the recession.

Other durable goods in Nevada, including furniture sales (+32.9 percent since trough) and building and gardening supplies (+24.6 percent), have increased faster than taxable retail sales as a whole (+24.3 percent). Across the country, durable personal consumption expenditures in the twelve months ending June 2014 were $15.3 trillion dollars, an increase of 25.4 percent from the trough of the recession. By comparison, non-durable expenditures have increased by 23.0 percent since bottoming out. Consumers in Nevada and in the U.S. as a whole are taking advantage of low interest rates by replacing aging items that had their lives extended during the Great Recession.

The end of quantitative easing does not mean this trend will stop. The Federal Reserve expects to maintain a low interest rate policy, while much of the injected capital remains in the market. The velocity of money, a ratio of GDP to the amount of currency and highly liquid money (money market, savings, and small CDs) available to investors, was at an all-time low during the first quarter. GDP was only 1.53 times the liquid money stock, well below any historical value since the figure began to be tracked in 1959. As money available from the Fed begins to tighten, this figure is anticipated to gradually rise back to more normalized levels. Money stock is not expected to remain idle as reserves for corporations, banks, and individuals; rather, funds may be put to more productive uses – with the expectation of continuing to expand the economy.

July 2014

The Federal Reserve is considering an end to its extraordinary treasury and mortgage-backed security purchasing program, known as quantitative easing, this October. This measure has injected large amounts of currency into the economy, lowering interest rates and increasing investments. In particular, mortgage rates, which currently average 4.12 percent for a thirty-year loan, are still near their historical low of 3.31 percent set in November 2012. Relatively low rates helped spur the housing recovery, reduced interest costs and increased consumer spending in Nevada and throughout the nation.

The impact of the slow end of quantitative easing was largely felt in June of 2013, when interest rates increased 65 basis points (0.65 percentage points) from the previous month. The program’s actual end is expected to have modest impacts on interest rates in the near term; rates have adjusted for much of it already. It does, however, potentially mark a turning point in the recovery, one where the national economy no longer needs extraordinary measures to move forward.

Cheap credit has allowed the economy to expand considerably. As of the first quarter, mortgage payments made up 4.8 percent of personal disposable income, the lowest share since 1981. The total value of mortgages in the economy is still 10.4 percent below the Q2 2008 peak value, and has risen only 0.4 percent since bottoming out in Q1 2013. The low rate of new mortgage debt, combined with historically low rates, has allowed households across the country to lower their debt payments, freeing money for other areas of spending.

One thing consumers are buying in droves are new automobiles. In the second quarter, 16.5 million cars were sold, more than any quarter since 2006. In the U.S., the trailing twelve months of auto sales through June 2014 are up 54.1 percent since bottoming out in the 12 months ending October 2009. As cars and other durable goods were forced to last longer during the downturn, it is perhaps not surprising that consumers are finally starting to replace aging equipment. As of April, taxable auto sales in Nevada were up 62.3 percent since the low point reached during the recession.

Other durable goods in Nevada, including furniture sales (+32.9 percent since trough) and building and gardening supplies (+24.6 percent), have increased faster than taxable retail sales as a whole (+24.3 percent). Across the country, durable personal consumption expenditures in the twelve months ending June 2014 were $15.3 trillion dollars, an increase of 25.4 percent from the trough of the recession. By comparison, non-durable expenditures have increased by 23.0 percent since bottoming out. Consumers in Nevada and in the U.S. as a whole are taking advantage of low interest rates by replacing aging items that had their lives extended during the Great Recession.

The end of quantitative easing does not mean this trend will stop. The Federal Reserve expects to maintain a low interest rate policy, while much of the injected capital remains in the market. The velocity of money, a ratio of GDP to the amount of currency and highly liquid money (money market, savings, and small CDs) available to investors, was at an all-time low during the first quarter. GDP was only 1.53 times the liquid money stock, well below any historical value since the figure began to be tracked in 1959. As money available from the Fed begins to tighten, this figure is anticipated to gradually rise back to more normalized levels. Money stock is not expected to remain idle as reserves for corporations, banks, and individuals; rather, funds may be put to more productive uses – with the expectation of continuing to expand the economy.

June 2014

Nevada’s post-recession economic recovery slowed somewhat during 2013, according to the annual gross state product (GSP) figures released by the Bureau of Economic Analysis in June 2014. Overall, the state’s economy grew 2.4 percent during 2013, generating a total of $132.0 billion in economic activity. This rate of growth was considerably slower than that seen in 2012, when the economy expanded by 4.5 percent over the previous year. With shifts in selected industries (e.g., mining) contributing to the overall slowdown, the latest data suggests Nevada’s overall rate of growth is underperforming compared to the nation as a whole, which grew by 3.4 percent during the same timeframe.

Comparisons to the 2012 rate of expansion should consider contributions of the mining sector, which grew considerably faster than the rest of the economy in 2012 due to relatively high gold prices. Holding mining constant at 2011 levels, the Nevada economy grew 3.4 percent on an adjusted basis in 2012. Excluding the impacts of gold prices, the Nevada economy expanded by 4.1 percent during 2013. As such, disregarding gold prices and their impacts on the mining sector, Nevada’s economy is continuing to press forward in its recovery at a relatively accelerated pace.

Finance, insurance, real estate, rental and leasing was the fastest growing industry with over $1.7 billion in output added in 2013, accounting for 54.5 percent of the $3.1-billion growth in GSP in Nevada last year. Fast-growing components of this sector included not only a strengthening real estate market, which grew 6.3 percent during the year, but finance and insurance which grew at a 9.3-percent pace, faster than the national average of 3.7 percent. The recovering economy and low interest rates are allowing Nevadans to borrow for new homes and businesses or perform other financial transactions at a relatively fast pace. Overall, the financial super-sector accounts for 19.5 percent of Nevada’s GSP.

The state’s hard-hit construction sector also grew considerably last year, with $471 million in additional economic output (+8.6 percent) reported in 2013 over the prior year. Overall, the sector has grown 10.6 percent since bottoming out in 2011; however, the construction industry remains 55.2 percent smaller than its pre-recession high in 2007. In 2007, construction represented 10.0 percent of Nevada’s output ($13.2 billion), while today it accounts for just 4.5 percent ($5.9 billion). In residential construction, home values continued to escalate in 2013, with the housing price index increasing 24.9 percent during the year. Furthermore, homebuilders obtained permits for 11,215 new housing units in the state, an increase of 24.3 percent over the prior year’s construction total. Perhaps the biggest turnaround came from commercial construction, which essentially doubled in the past year in Washoe and Clark counties, with $618.6 million permitted in 2013.

The only industry that shrank during the year was the mining industry, losing $2.1 billion in output value in 2013 (-20.4 percent). The falling price of gold, which represents the majority of Nevada’s mining revenue, fell considerably, beginning the year at $1,657 per troy ounce, and falling 27.3 percent to $1,204 per troy ounce by the close of the year. According to Major Mines of Nevada 2012, $9.3 billion of the $10.4 billion mined in the state came from gold mines (88.6 percent). Mining in Nevada currently accounts for 6.1 percent of the state’s economic activity, or $8.1 billion.

Finally, the state’s arts, entertainment, recreation, accommodation and food services sector grew 3.2 percent during the year. Nevada's second-largest super-sector in terms of GSP is responsible for 16.6 percent of the state’s economy. Though the state’s tourism industry remains critical to Nevada’s economy, its share of output is down considerably from 2000 when it was responsible for 20.4 percent of GSP, largely due to continued economic diversification efforts throughout the state.

Nevada continued to gain ground in 2013 in terms of economic recovery. Every super sector outside of mining made considerable gains in economic output over the prior year. The portions of the economy that grew the fastest included those previously hardest hit and those associated with selected professional service areas. From an economic perspective, the Silver State turned in a respectable performance in 2013. Signals in the first half of this year suggest a similar performance may be achievable in 2014.

May 2014

Nevada’s recovery continues to press forward, though the underlying dynamics continue to pose significant questions regarding the sustainability of economic growth. Home prices have started to stabilize, but new inventory continues to come online. New jobs continue to be created, yet personal income has failed to act in kind. Taxable retail sales are growing at a slower pace; however, much of the gains are coming from narrow segments of the economy. The uncertainty arising from these trends continues to plague an economy that has shown a remarkable recovery since the Great Recession but which remains well below peak levels in nearly every major economic performance indicator.

Home prices compared to the previous year were still up as of the fourth quarter of 2013 (latest available data), with the housing price index up 24.3 percent from a year ago; however, price increases have slowed considerably. Since August 2013, median existing home prices in Nevada increased by only 0.9 percent to $175,000. Sales volume of existing homes stalled, with 3,761 closings reported during the month (down 21.9 percent from February 2013). Approximately 1 in 5 existing home sales were distressed in February, one of the lowest rates since the onset of the housing crisis.

A lack of existing supply, from both distressed and traditional sales, is a concern homebuilders are hoping to mitigate in the near future. During the past twelve months (April 2013 through March 2014), 10,553 new homes have been permitted, an increase of 23.5 percent when compared to the same period last year. The new inventory has resulted in 9,119 new home sales (+1.8 percent) in the twelve months ending February 2014 (latest available data) while keeping median prices stable at $272,665.

Nevada employment continued to expand in April, with 1.2 million nonfarm jobs in the state, representing an increase of 3,000 jobs (+0.2 percent) compared to March. The unemployment rate fell to 8.0 percent, helped not only by job creation, but also by a 0.3-percent decrease in the labor force (including people actively looking for work) in April. A large portion of the new jobs are sourced to gains in the construction sector, which grew 9.4 percent in the past year to 62,600 seasonally adjusted jobs in April. The recent growth reported by the construction sector was more than double the average rate of growth for the overall economy during the same period (3.5 percent). Construction, led partially by a thirst for new housing and renewed interest in large commercial projects, is expected to outpace the remainder of the economy during the next few years, but is unlikely to reach pre-recession levels in the near future.

Increased employment has allowed personal incomes to grow to $110.2 billion per year, up 2.0 percent over last year. Though the increase sounds substantial, in reality, the 1.5-percent price inflation over the same period diminishes much of those gains. Over the past year, the net earnings by place of residence, which only considers employee and proprietor income minus pension and social insurance contributions, has risen only 2.8 percent. When adjusted for inflation, this rate of growth falls to 1.3 percent, which compares unfavorably with the 3.3 percent employment growth reported during the same period. A relatively modest amount of money has entered the economy as a result of the economic recovery during the past year, leading to mixed results in other sectors.

February’s taxable retail sales reflect the modest personal income growth. Sales during the month were $3.5 billion, an increase of 4.6 percent over last year. During the month, restaurant sales increased by roughly $76.2 million (+10.2 percent), while auto sales increased by $24.8 million (+6.2 percent) compared to the prior year. These two categories represented 35.6 percent of total taxable retail sales during the month of February and 65.3 percent of overall growth in taxable sales. Though promising, these categories largely represent visitor spending and the need to replace automobiles that were forced to last longer during the Great Recession. The average age of cars in the country was a record 11.4 years as of 2012 (the latest available data), reflecting car owners’ need to stretch their budget further during the recession and recovery, as well as a potential pent-up demand for vehicles.

Though the housing sector and overall employment figures remain strong, growth in other portions of the economy remains questionable. Higher employment has not led to similar increases in personal incomes, and growth in taxable retail sales seems to be dependent on a few key sectors rather than a broad-based growth. Overall, the recovery still looks promising, but beneath the surface lie a number of concerns.

April 2014

Nevada’s economic recovery from the Great Recession has been filled with mixed signals. Core statistics like the population in-migration, housing starts and visitor volume have reported strong growth and consistent gains, while others, such as gross gaming revenue, commercial vacancies and personal incomes, have reported slow and staggered progress. The varying performance of various indicators notwithstanding, there is one factor that stands above the rest in defining Nevada’s progress – employment.

Nevada’s unemployment rate currently stands at 8.5 percent, down 1.8 percentage points during the past 12 months and 5.4 points from the high point of 13.9 percent reported in October 2010. While seasonally adjusted unemployment continues to fall, the mathematics underlying the unemployment calculation have shifted materially. The unemployment rate is comprised of two population groups, those who are actively seeking employment (i.e., the unemployed) and those who are in the labor force (i.e., defined as currently working or actively seeking work). The sharp reduction in Nevada’s unemployment rate between 2012 and 2013 is attributable not only to more people finding a job, but also a significant reduction in the number of people actively looking for work.

After nearly three years of a stagnant economy, many discouraged job-seekers stopped searching for work. In fact, between December 2010 and December 2013, Nevada’s labor force fell from 1,394,404 to 1,364,678, or by 2.1 percent. The decline during this period ranked the state 12th nationally. Recently, however, this key trend has witnessed an important shift. In February 2014, for the first time since April 2011, Nevada’s labor force grew. Though there was only a net increase of 709 people added to the labor force (i.e., net new people looking for a job or working in a job) during the past year, the shift signals that the labor market is beginning to recover in a more meaningful way, including attracting previously discouraged job-seekers back into the fold.

Notably, the average number of hours worked per worker per week remained at 33.3 in February 2014, the same rate as reported one year ago. From 2010 to 2013, the recovery had been marked by more people working fewer hours on average. In fact, the number of hours worked per private sector employee decreased from 35.6 to 33.5 between February 2010 and February 2014. Stated otherwise, even though the number of employees in the private sector increased from 964,300 to 1,052,500 (+9.1 percent), the aggregate number of weekly hours worked by private workers increased by a more modest 2.7 percent, or from 34.3 million to 35.2 million.

The resulting underemployment masks the residual challenges existing throughout the economy. In 2013, Nevada’s U-6 unemployment rate, which includes frustrated job-seekers and those who are underemployed, stood at 18.1 percent (the highest in the nation by more than a percentage point). This challenge continues to affect personal income growth and spending metrics.

Certain sectors have also been heavily impacted by underemployment, though they are not necessarily the same ones that have had the hardest time since the recession. From 2010 through 2013, in spite of the construction sector losing 2,300 jobs (-3.9 percent), average weekly hours worked in the sector rose to 36.4 (+6.7 percent). In contrast, the leisure and hospitality sector gained 15,700 jobs (+5.1 percent) during the same time frame, and average weekly hours fell from 32.1 to 29.8 (-7.2 percent). Other sectors heavily impacted by underemployment include retail, which fell from 32.7 to 30.0 hours(-8.3 percent) and trade, transportation, and utilities, which dropped from 35.9 to 33.9 (-5.6 percent). The stabilization of the hours worked per week reported in February, combined with rising employment levels, is an important step in the recovery.

Recent labor force trends may very well be the most important indicator that Nevada’s economic recovery is truly taking hold. Newfound optimism, more people working and a stabilizing amount of work per employee have allowed personal incomes to increase, further improving other sectors of the economy. This virtuous cycle may lead to accelerating employment gains in the future as Nevadans move beyond the pains of the Great Recession and begin to look forward to the future.

March 2014

Is Nevada's economy experiencing a new normal?

In her February 27, 2014 statement to the United States Senate Banking Committee, recently confirmed Federal Reserve chairwoman Janet Yellen stated that the nation is "a lot closer to a normal economy than we've been in a long time." This prompted a discussion item from Nevada Senator Dean Heller who asked if a persistently high unemployment rate of nine percent could be a new normal for Nevada. In response, Chairwoman Yellen surmised that "Nevada is one of the states that has been most badly affected" by the downturn, and that the state is still "some years" away from what might be considered a normal economy.

This has prompted a renewed debate over the question of exactly what constitutes a "normal" Nevada economy. Most observers agree that it does not resemble any of the rapid growth from 1986 to 2006 when Nevada was leading the nation in population, employment and income growth and the state's unemployment rate reached a remarkably low 4.2 percent. Similarly, there is general agreement that there is nothing normal about the last 8 years when unemployment rose to a nation-leading 13.9 percent, 1 in 6 private sector jobs were lost and housing prices declined by 60.2 percent. For the past decade, Nevada's economy has been on a rollercoaster ride, dominated by periods of nation-leading growth and nation-leading decline. While reasonable minds may differ when it comes to the definition of "normal," for Nevada there are three principal conditions that are needed for the economy to be stable: (1) a modest growth rate; (2) a healthy tourism sector; and (3) the presence of economic diversification.

Whether we like it or not, Nevada's economy has been predicated on growth and expansion during the vast majority of the past century. The state's economic and fiscal systems are highly dependent on population growth and new business investment. The economy has been growing steadily since bottoming out after the Great Recession. According to the US Census, Nevada's population growth, at 1.3 percent in 2013, ranks the Silver State the 5th fastest growing state in the nation. Personal income has also increased 11.7 percent since hitting bottom in the first quarter of 2010. Housing prices in particular have had a robust recovery, with Nevada's home prices gaining 48.2 percent during the past two years of the recovery phase. Housing prices in the state remain 41.0 percent below their peak in Q1 2006. Employment growth has also been robust, as 42,600 new jobs (+3.7 percent) were created during 2013 for a total of 1,203,100 jobs. The state has continued to grow its employment base at an increasing rate in the aftermath of the recession.

Nevada's economy is also remarkably tourism dependent. The tourism economy accounts for 27.9 percent of jobs, 25.1 percent of wages, and 16.2 percent of the state's economic output. During the low point of the Great Recession, visitor volume decreased by 10.7 percent to 44.1 million visitors. Since then, visitor volume has increased by 8.0 percent, currently standing at 47.6 million (3.5 percent below the peak level reported in January 2006). The landscape has changed dramatically for the tourism industry in the state as well, as major sources of revenues for hotel-casino operators have shifted in recent years. During the past year, gaming revenues accounted for 37.0 percent of total revenues reported by Las Vegas Strip gaming operators, down from 43.0 percent 10 years ago and 57.0 percent two decades ago. While expansions of gaming around the globe are contributing to the shift, investments continue to be made in Nevada, particularly along the Las Vegas Strip.

Nevada's economy remains too narrow, which is to say that it is too highly dependent on a single industry: tourism. There is little argument that diversity is needed; however, Nevada's ability to compete for new and expanding businesses is at best uncertain. Though the recession harmed a wide swath of Nevada's businesses, the state's economy does continue to diversify. Nevada's Hachman Index, which measures economic diversity, ended the year at 72.9, the highest index value in state history. In 2000, the value of this index was just 61.9. During the past couple of years, investment interest has increased in the state, with unmanned aerial vehicle development, Tesla's immense battery factory, and numerous other industries considering expansion in the state. Nevada's growth since the recession has been led by professional services, trade, transportation, education, and healthcare firms, and not exclusively new tourism jobs.

Nevada is rarely described as being normal; our economy has been no different. While there is no argument to be made with Chairwoman Yellen's assertion that Nevada was disparately impacted by the Great Recession, the idea that our state's recovery is going to be a "long slog" seems at least somewhat pessimistic for a state that is at or near the nation's highest in terms of population growth, new job creation and housing price appreciation.

February 2014

Nevada economic indicators show improvement in 2013

The numbers have been tallied. This latest economic briefing provides the first opportunity to evaluate the annual performance measures for Nevada in 2013 and how they compare to the prior year. While a select few performance indicators have yet to be compiled for the month of December 2013, the majority of data points include year-end final figures, and the majority of those suggest 2013 ended the year in a better position than where it started.

From an employment perspective, the year-end report suggests that there were more people working within Nevada businesses in December 2013 than in the same month in 2012 (+21,500 jobs). The annual growth rate of 1.8 percent for the year was primarily driven by stronger hiring activity in the retail sector, the education and health services sector and the government sector. These three areas accounted for 15,800 incremental jobs, or nearly 3 out of 4 new positions in the past year.

The push in these service sector positions helped to drive down the overall unemployment rate to a seasonally adjusted level of 8.8 percent. One year ago, the Nevada unemployment rate stood at 9.8 percent. The unemployment rate is a labor force concept which is survey-based, while the previously mentioned job growth figure reflects the count of employees working in Nevada business establishments. The unemployment rate's decline was driven by a shrinking pool of potential workers - the labor force - and rising employment. By the end of 2013, there were 8,400 fewer individuals in the labor pool (-0.6 percent). Additionally, the number of people actively looking for work who were unable to secure a position declined by 13,900 potential workers (-10.4 percent). Regardless of how the job market's performance is measured, the absolute number of employees expanded in 2013, and the number of active jobseekers declined.

While the leisure and hospitality sector posted a stable overall performance in 2013, broader economic growth was largely sourced to non-tourism industries. Directly accounting for nearly 3 out of 10 jobs statewide, job growth within the tourism sector was positive (+0.4 percent), visitor volumes for the Las Vegas Area and Washoe County reached a combined all-time high, and gaming revenues statewide were up 2.6 percent.

Two areas of notable expansion in 2013 included consumer spending and the housing market, with the former likely impacted by the latter. As home prices expanded by impressive levels in 2013 (with some areas up as much as 30 percent), the share of homes that were underwater shrank to 32.2 percent from 56.9 percent during the past year, providing residents with improving personal balance sheets - even if only on paper. The new home sector also posted healthy price gains, supporting an increase in new home construction, something not witnessed in the prior year.

Overall spending levels responded to the improving economic climate and indicated that consumers are continuing to feel more stable in their personal financial situation. Statewide taxable retail sales, a key measure of spending, reached $46.2 billion during the past 12 months ending November 2013, which was up 5.2 percent on the year. The latest spending data is also up from the cycle-low of $37.8 billion in March 2010 (+22.3 percent).

While challenges sourced to mortgage delinquencies, a lagging construction sector and potential legislative headwinds remain on the horizon, the Nevada economy appears to have made measured progress in 2013. From an economic perspective, the positives are expected to outweigh the negatives moving through the first half of 2014.

January 2014

Monetary policies benefiting states like Nevada

The U.S. Senate's recent confirmation of Janet Yellen as the new Chair of the Federal Reserve System has removed one of the uncertainties regarding the future of our nation's economy. It is believed that Ms. Yellen, previously the Vice Chair at the Federal Reserve, shares similar beliefs as her soon-to-be predecessor, Benjamin Bernanke, in terms of monetary policy. Most market observers suggest that Yellen's appointment signals continued supportive monetary policies by the Federal Reserve, bolstering economic growth and benefiting states like Nevada where the unemployment rate remains stubbornly high. Others remain concerned, however, that a continuation of the current course leaves the nation at increased risk for higher interest rates.

The Federal Reserve continues to employ historically extraordinary measures in an effort to stimulate the economy. Rates charged to banks for borrowing funds overnight are virtually zero and are expected to remain at or near that level through 2015. Interest rate adjustments are a measure commonly taken to counteract the effects of economic downturns, essentially decreasing the cost of borrowing and increasing investment. Quantitative Easing (QE), on the other hand, is a more recent tactic whereby the Federal Reserve buys trillions of dollars in bonds. This program was put in place by Chairman Bernanke to assist the economy during the unprecedented crisis the Great Recession presented, when interest rate reductions alone were simply insufficient to catalyze the nation's ailing economy. Currently, this bond-buying program is being tapered off and is likely to wrap up sometime in the coming year. Near zero interest rates are expected to continue until the national unemployment rate drops (at 6.7 percent as of December) or, more importantly, the nation's economy demonstrates a consistent ability to create new jobs (job growth was a lower-than-expected 74,000 in December). The other consideration, of course, is signs of higher inflation. As of November, the Consumer Price Index was up a manageable 1.2 percent.

Nevada continues to lag behind the rest of the country in some aspects of its economic recovery, reporting an unemployment rate of 9.0 percent in November. However, it is worth noting that the latest figure represents a significant improvement over the 10.0 percent reported just one year ago. Taxable sales in the state increased 5.6 percent during the 12 months ending October 2013, though they remain far below their pre-recession peak. Nevada is clearly benefitting from the Federal Reserve's aggressive monetary policies, as banks are lending more and businesses are investing in new facilities and new equipment. The state's nation-leading rate of unemployment is largely tied to a higher-than-average share of the state's workforce with limited education or transferable skill sets, as businesses in growing health care and technology industries are actually reporting difficulty filling open positions.

Should a slowdown emerge in the amount of money the Federal Reserve puts into the economy through future quantitative easing, the Nevada economy could be impacted in a number of ways. Higher interest rates could negatively affect demand among potential buyers in Nevada's housing market, where prices increased 25.2 percent in the four quarters ending Q3 2013. Future commercial ventures are also at risk, as required rates of return for projects increase along with the interest rate. Notably, commercial building permits in Washoe and Clark counties are up 75.4 percent in October over one year ago (a total of $553.8 million in commercial permits during the past twelve months), but still 34.8 percent below the 2000-2003 average, before the speculative property bubble. The $133.8 billion in deposits at Nevada banks would also pay more in interest, increasing incentive to save rather than spend or invest in new ventures.

There are plenty of reasons to believe that Nevada has benefited significantly from the Federal Reserve's policies during the past several years and may be impacted disproportionally as they wind down. Although the Fed has already started to rein in on the most controversial aspects of its stimulus programs, there is little doubt that the tenure of Ms. Yellen as chair will continue to use the Fed's monetary muscle to bolster economic growth so long as inflation remains in check and the nation's economy struggles to create jobs for unemployed job seekers. This will benefit Nevada and the balance of the nation; however, the longer-term implications remain somewhat uncertain. The M2 Money Stock, which is generally defined as the combined amount of monetary assets in the economy at a specific point in time, has increased from $8.0 trillion in November 2008 to $11 trillion in November 2013. A 37-percent increase in the amount of money in circulation certainly helped bolster the economy in a time of need; it also increases the risk of inflation as the economy recovers.