Southern Nevada:

Leaders Can Leverage Tech and Health Care as Economy Continues Growing

Although Southern Nevada’s economic growth should continue in 2020 and 2021, the expansion will continue slowing down due to a tightening labor market and plateauing leisure/hospitality sector. Experts say local leaders should increasingly leverage their economy toward the technology and health care sectors going forward.

That’s according to the most recent forecasts published by Applied Analysis, the Center for Business and Economic Research (CBER) at the University of Nevada—Las Vegas, and Beacon Economics in December. The keynote speakers’ opinions spotlight intriguing viewpoints, trends and projections so your credit union can plan appropriately.

Applied Analysis, UNLV, and Beacon Economics
Presented at the Las Vegas Global Economic Alliance’s “Outlook 2020” conference on Dec. 3 by Applied Analysis research firm, the Center for Business and Economic Research (CBER) at the University of Nevada—Las Vegas, and Beacon Economic consulting firm:

Although no recession is expected to rock Southern Nevada’s economy in 2020 or 2021, economic growth will continue slowing down. Like every metropolitan region, the Las Vegas area is heavily connected to the entire nation. U.S. Gross Domestic Product (GDP) — the traditional measurement of economic growth — will post within an average range of 1.5 – 1.75 percent in 2020 and 2021 (compared to the approximate 2 percent average annual growth experienced over the past several years). Essentially, the current economic “recovery” from the Great Recession of 2007 – 2009 (and now in its 11th year) will most likely continue.

The State of Nevada’s economic growth over the past several years has been a tale of two cities: the Las Vegas region versus the Reno-Sparks area. The latter has seen much more success in diversifying its local economy away from the gaming and leisure/hospitality sectors — whereas in Las Vegas, leisure and hospitality still accounts for about 30 percent of total company payroll employment. Meanwhile, the leading economic indicators for Nevada as a whole are positive, signaling continued business and consumer growth over the next 12 months at the very least (if not 24 months). Employment in the state is still growing faster than nearly any other state in the West, as well as the Las Vegas region compared to any other metropolis in the West. This is to be expected so late in the current economic cycle because the local region has been the “slowest and lowest” to come out of the Great Recession of 2007 – 2009. Total employment, household income, and population all continue to grow at “healthy” rates.

Although Southern Nevada’s leading economic indicators remain positive, the leisure/hospitality and gaming sectors are going through a “soft patch” and aren’t expected to rise higher — if at all. The question is: What, if anything, could pull them higher? No one knows. A small bright spot remains in the local Clark County Tourism Index, which is still on an upward trend and displays the ongoing economic power of tourism in the region (in general). Additionally, the Clark County Construction Index is forging ahead, with another 12,000 hotel rooms scheduled to come online over the next few years and add to the already 150,000-room base across the local region. The forecast expects local visitor volume, gaming revenue, and hotel occupancy to “stay soft” going forward — but that is perhaps the best that can be expected currently.

About 37 percent of Southern Nevada business leaders say the most important challenge their organizations face today is “finding qualified employees.” According to the latest local Quarterly Business Survey, 28 percent say it is “economic uncertainty;” 19 percent say “higher operating and/or production costs;” 7 percent say “other;” 6 percent say “decreasing sales;” 2 percent say “rising interest rates;” and 1 percent say “rising inflation.”

Southern Nevada has come a long way in somewhat diversifying its economy into non-gaming and non-leisure/hospitality areas, but there’s a lot more to accomplish. Local politicians, businesses, and educational institutions would do well to “leverage and double down” on the region’s strengths if they want to continue diversifying into the next 20 years, especially in the technology sector.

Southern Nevada has about 47,400 “true” technology jobs being filled by tech workers right now (also known as “core tech”). The broader workforce (ancillary) is about 58,100. In 2019 the local technology sector had a positive spillover impact on the local economy of a total of 88,800 jobs, $5.5 billion in salaries/wages, and $15.1 billion in economic output. For now, the local tech sector remains about 8 percent of the total local workforce and 10 percent of total local economic output.

However, Southern Nevada has a lot of catching up to do when it comes to its technology industries. It would behoove local leaders to “close the gap” when it comes to areas within the technology sector that are falling behind compared to other Western metropolitan regions (especially number of jobs, quality of wages/salaries, and industry share of the local business sector). It’s going to be increasingly difficult to attract and retain technology-related industries and workers going forward since Las Vegas is already at the bottom of the “tech hub” list compared to other places such as Reno, Phoenix, Salt Lake City and Denver. However, that doesn’t mean it shouldn’t try. The good news is, the local region’s pace of growth from 2015 – 2019 in technology business share and employment exploded, but that’s because it is coming off such a low base comparatively to other metro areas. And from 2019 – 2026, the region is expected to go from No. 4 in annual tech job growth nationwide to No. 2 (other areas exploding in the pace of tech growth are Nashville, TN and Charlotte, NC).

“We need to figure out who we want to be and where we have the best opportunities to specialize in,” one forecast conference presenter said. The region should establish a technology association like other metropolitan areas in the West already have, as well as encourage more local start-up funding enterprises and opportunities, he said. “We aren’t going to be everything to everybody, but we’ve got to be the best at what we can be.” Besides technology, health care is probably the single-most important area where the region can implement technology (tele-medicine and other innovations) since the State of Nevada ranks low, or the very least, on many lists regarding the number of physicians per population and other socio-medical population measurements.

View the Center for Business and Economic Research (CBER) Director Stephen Miller’s full presentation: click here to watch the video from between the 0:44:00 – 1:08:00 minute/hour mark. You can also view his slideshow here.

View Applied Analysis Principal Analyst Jeremy Aguero’s full presentation: click here to watch the video from between the 1:09:00 – 1:36:00 minute/hour mark. You can also view his slideshow here.

View Beacon Economics Founding Partner Chris Thornberg’s full presentation: click here to watch the video from between the 0:00:00 – 0:44:00 minute/hour mark. You can also view his slideshow here.

View the “Southern Nevada Technology Industry Report.” Click here to read a comprehensive analysis of local technology industry opportunities, a breakdown of current issues, local impact, future growth prospects, future considerations, trends, economic effect, emerging technologies, the "next tech" generation, and other comparative analysis as it relates to the Las Vegas region.

Southern Nevada’s Current State of Homeownership
A report published by the Brookings Institution tells readers that the Great Recession of 2007 to 2009 brought a painful reminder that homes are not guaranteed to increase in value — and in no place was this more apparent than Las Vegas, a region particularly hard hit by the foreclosure crisis. The report highlights the current state of housing affordability and homeownership in 2019 within the local region and discusses what these trends imply for financial security and wealth-building going forward.

Southern Nevada’s College and Economic Mobility
A 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.”

Southern Nevada Occupational and Industry Trends
Additionally, download Chmura Economics and Analytics’ latest Southern Nevada Economic Overview to see 10-year future trends in worker occupations, employment, wages, cost of living, and industries.

Your Local Region’s GDP: 2001 - 2018
The U.S. Bureau of Economic Analysis has released an overview and history on "Local Area Gross Domestic Product from 2001 - 2018" for individual counties in Nevada and the entire nation. It includes highlights and trend breakdowns for large, medium and small-population size counties, as well as the U.S. dollar size of economies for each county. Tables and files are included for download and review.

County Income and Poverty Estimates
The U.S. Census Bureau has released its "Small Area Income and Poverty Estimates (SAIPE) Program", which gives single-year estimates of income and poverty for all counties in Nevada and the entire nation — as well as estimates of school-age children in poverty for all 13,000-plus school districts.

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 percent (versus 4.1 in NV and 3.5 in U.S.)
  • Unemployed workers: 45,000.
  • 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 November 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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