Southern Nevada:

Stellar Economic Growth to Slow Down in 2020 but Still Outpace the Nation’s

Southern Nevada’s recent stellar economic growth will slow down between now and late 2020 as the broader U.S. economy’s expansion continues cooling off. Gaming, tourism, and construction remain hot industry sectors even as the region’s local fundamentals are increasingly tied to the entire nation.

That’s according to the most recent forecast published by the Center for Business and Economic Research at the University of Nevada—Las Vegas (UNLV) during its “2019 Economic Update” conference in June. The keynote speaker’s opinions spotlight intriguing viewpoints, trends and projections so your credit union can plan appropriately.

Southern Nevada
Southern Nevada's economy will continue growing faster than the United States’ economy in 2019 and 2020 as the broader environment continues slowing down — although Southern Nevada is also poised to downshift. “Since Southern Nevada comprises such a large share of the Nevada economy, we generally see continued improvement in the local economy in 2019 and 2020,” the forecast report states. “We project annual population growth to remain in the 2-percent range in 2019 and 2020. Employment growth will somewhat decline, but we also forecast further declines in the local unemployment rate. After growing at just over 12 percent in 2018, the Case-Shiller housing price index for Southern Nevada will slow to 4.5 percent growth in 2019 and 4 percent growth in 2020. Visitor volume, gross gaming revenue, and hotel/motel occupancy rates will exhibit mixed to negative trends. We will see continued softness in the leisure/hospitality sector. Total personal income will experience steady and consistent growth — and slightly higher growth than Nevada as a whole."

Southern Nevada’s leading business activity index may be signaling either an economic slowdown or recession within the next 12 – 24 months based on historical patterns. Although local business activity is 9 percent higher than its last record peak in 2008, it is currently "pausing" before flatlining or rising higher by the end of 2019. The local business coincident index (historical measurement of business spending, orders, job hires and more) hit a record "275" in June 2019 (the last peak was 250). Payroll employment in the region (not including freelancers and independent contractors) hit a record 1.03 million jobs by April 2019, making the area one of the fastest-growing metropolises in jobs and new residents.

Southern Nevada’s business confidence index, which measures five different components, started flatlining in early 2019. This seasonally volatile measurement hit a record peak of “148” in 2015 and remains at 141 currently (measuring local business leaders’ expectations of sales, profits, hiring, capital investment, and overall economic conditions). Any reading increasingly above 100 shows more business leaders than not are more optimistic about future conditions for growth (and vice versa). For context, it hit a low of 40 in 2009.

Southern Nevada’s quarterly business confidence survey shows the following major challenges are on the minds of local business leaders (in order of first-to-last importance): finding qualified workers (37 percent); "other issues" (30 percent); economic uncertainty (17 percent); rising interest rates (11 percent); and higher operating/production costs, rising inflation, and decreasing sales making up the remaining 5 percent. "Because Southern Nevada's economy depends heavily on tourism, its outlook is tied to the growth of the U.S. and international economies,” the forecast report states. “Southern Nevada continues to get help from real estate and construction while a wide range of other industries are also growing."

The Las Vegas non-farm job market has increasingly grown faster than any other metropolitan region in the Western half of the nation during the past 25 years (1994 - 2019) — and especially from 2013 - 2019. The local area has noticeably outpaced Phoenix and Salt Lake City while also blowing past many other large cities (Los Angeles, Denver, Albuquerque, Portland, and Seattle). Comparatively and most recently, U.S. and Southern Nevada year-over-year job growth rates averaged 1.7 and 3.1 percent, respectively, from 2011 – 2018 (much higher locally). Las Vegas currently reigns over the nation — but within the entire State of Nevada, the Reno-Sparks area experienced year-over-year job growth in June 2019 of 6 percent (the Carson City and Las Vegas regions grew 4 and 1.8 percent, respectively). All three local metro regions had faster employment growth rates than the national rate of 1.5 percent from June 2018 - June 2019.

To purchase the entire forecast report: email Megan Neri at megan.neri@unlv.edu.

Prior Southern Nevada Forecast (June 2019)
A handful of recent local economic forecast events from March – May 2019 were reported on by the Nevada Credit Union League in June. Click here to view facts, figures and local projections.

These events included the Las Vegas Global Economic Alliance’s (LVGEA) “Perspective” conference; the Annual Interface Conference Group’s “Las Vegas Multifamily” conference; and The Economic Club of Las Vegas’s “Las Vegas in the 2020s” conference.

Nevada Forecast 
The Nevada Economic Forum — a yearly public-private partnership mandated by the state government — released its economic forecast and snapshot in its "Report to the Governor and the Legislature on Future State Revenues" as of December 2018. This report provides guidance for the state’s biennial budget cycle. Updates from early to mid-2019 can be found here.

Besides commentary and data from experts on Nevada’s general fund, breakdown of revenue, and a review of local and state taxes, the report also covers the following areas: economic overview, growth projections, future indicators, and trends in the statewide and national labor force, wages, household income, housing, population, interest rates, inflation, jobs, consumer spending and more.

So. NV’s Economic Mobility Via College
A new report published through a partnership between the University of Nevada (Las Vegas) and The Brookings Institution shows that the Las Vegas region’s middle-class economic mobility through means of college education is much higher compared to other Mountain West region states.

“Middle class workers were hit hardest by the recession (in Las Vegas),” the report states. “Most (Mountain West) colleges help middle class students move up the economic ladder, or at least protect them against downward mobility. But there are differences by institution in terms of both access rates for middle class students and their average outcomes. The Nevada universities are among the cluster of institutions within the Mountain West with higher mobility rates, with UNLV enrolling more students from the middle class.”

For the full published academic report, click here.

Demographic Profile and Projections: Clark County 

  • Total population: 2.22 million (and will hit 2.5 million by 2025). 
  • Working-age individuals (15 - 64 years old): 66 percent of total population in 2015 (and will fall to 63 percent by 2025). 
  • Labor force (at least 16 years old who are working/looking for a job): 1.12 million out of 1.78 million adult population. 
  • Labor force participation rate (adults who “want” to work): 63 percent (or 1.12 million individuals). 
  • Unemployment rate: 4.8 percent (versus 4 in NV and 3.7 in U.S.)  
  • Unemployed workers: 54,000
  • Median household income: $57,200 as of 2018 (compared to $58,000 for NV and $60,300 for U.S.) 
  • Poverty rate: 14.6 percent (versus 14.2 in NV and 13.4 in U.S.) 
  • Education of population (age 25 years or older): 20 percent have a college degree; 29 percent some college; 25 percent high school diploma; and 26 percent no high school diploma. 
  • Data as of January 2019 from the Nevada Department of Taxation; Nevada Demographer’s Office; Nevada Department of Employment, Training and Rehabilitation; Center for Business and Economic Research at the University of Nevada Las Vegas; Federal Reserve Bank of St. Louis; U.S. Bureau of Economic Analysis; and U.S. Census Bureau

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