Southern Nevada Economic Forecast

Your Economy—Your Credit Union—2019 Forecast: Southern Nevada

Southern Nevada’s economy is basking in the spotlight due to its job expansion, population growth, and business innovations—a trend expected to continue in 2019. However, making sure a greater share of lower and middle class residents are included in this growth wave remains a top concern.

That’s according to the “State of Economic Development” conference recently hosted by the Las Vegas Global Economic Alliance (LVGEA). The keynote speakers’ opinions spotlight intriguing viewpoints, trends and projections so your credit union can plan appropriately:

Southern Nevada Forecast

  • Southern Nevada is helping fuel the state’s No. 1 nationwide ranking in job growth for 2018. The next-in-line states on this top-10 list are Arizona, Wyoming, Washington, Texas, Utah, Florida, Colorado, Oregon, and South Dakota (in that order). “If you look back seven or eight years ago, we were dead last,” said LVGEA CEO Jonas Peterson during the conference. “Our recovery since the Great Recession has been nothing short of an economic miracle. However, are we including enough Southern Nevadans in the benefits of growth? Is the model working?”
  • Employment in Southern Nevada stands at an all-time high and continues growing. Total Las Vegas regional company payroll jobs hit a record 1.03 million by late 2018 (not including independent contractor/consultant workers). This is a 10 percent increase over the last record peak reached in 2007 of 937,000 jobs—about 93,000 more positions today than back then (the low was 805,000 in 2010). Top company payroll job-sector growth from the 2007 “peak” to late 2018 has been experienced in education and health services (39,800 positions), professional and business services (27,200 positions), and trade/transportation/utilities (24,100 positions). Other moderate-to-strong local sectors include leisure and hospitality (20,300), government (13,100), “other” services (8,000), and financial activities (600). However, declines have been experienced in construction (38,000 less jobs), manufacturing (2,200 less jobs), information (500 less jobs), and mining/logging (100 less jobs).
  • Going forward, some of the most in-demand occupations in Southern Nevada are captured in five types of employment sectors. They include business and commercial managers, general and operations managers, application software developers, business operations specialists, and registered nurses.
  • Southern Nevada’s job growth is also driving the state’s No. 1 ranking in population growth over the past year. Annual population growth (supported by natural births and migration of out-of-state residents) was 2.1 percent in in 2018, with Idaho, Utah, Arizona, Florida, Washington, Colorado, Texas, South Carolina, and North Carolina coming in 2nd – 10th place (in that order).
  • While the Southern Nevada region’s economy is still heavily supported by the leisure/hospitality sector, major gains in “high wage” job additions have been made within the professional and business services sector. Companies like 3PEA International, American Barbell, Cascade, Pictographics Total Visual Solutions, Google, Xtreme Manufacturing, Bigelow Aerospace, Allegiant, Owned Outcomes, and many others have ushered in thousands of jobs paying workers an average $28 per hour.
  • The Southern Nevada region’s top 10 commercial/business projects were collectively worth $14 billion to the local economy as of late 2018. They are: Resorts World Las Vegas ($4 billion resort); The Drew ($3 billion resort); Las Vegas Stadium ($1.8 billion Raiders football facility); Las Vegas Convention Center ($1.4 billion facility); Union Village ($1.2 billion retail-space project); Project Neon ($1 billion road infrastructure and public works project); The Edge ($800 million extreme sports park); Google ($600 million facility); Palms Renovation ($375 million resort renovation); and the University of Nevada—Las Vegas’s School of Medicine ($230 million college facility).
  • Despite the Las Vegas metropolitan region’s good news (as well as becoming the 32nd largest metropolitan area in the nation), it ranks low in economic “prosperity” and “inclusivity.” The metro region recently ranked No. 99 out of 100 areas with respect to prosperity as local productivity declined 8 percent, the standard of living declined 20 percent, and average annual wages changed by 0 percent from 2006 – 2016 (essentially stagnated). Also, the region’s economic inclusivity was ranked No. 100 out of 100 during the same period as its median wage level dropped 15 percent, employment fell 4 percent, and relative poverty increased 10 percent.
  • Clark County’s median household income is not keeping pace with home-price growth. Local home affordability (the percentage of the median home price that can be purchased with the median household income in that market) has been shrinking since 2011. This gap between median household income and “existing” single-family median home prices was $74,000 in 2011 but has since widened to an astounding $210,000 (rising 19 percent). Meanwhile, the median home price has shot up 118 percent from 2011 – 2017 (rising from $122,000 to $267,000).
  • Nevada as a state currently holds the “highest economic momentum” (No. 1) and “highest economic growth potential” (No. 1) in the United States. The “economic momentum index” ranks states based on their most recent performance in personal income growth, employment growth, and population growth—with Idaho, Utah, Washington, Arizona, Colorado, Texas, Florida, Oregon, and New Hampshire coming in 2nd – 10th place (in that order). The “economic growth potential” index ranks states based on their ability to grow in key business/consumer categories, displaying vitality and a robust climate—with North Carolina, Texas, Alabama, Colorado, Utah, Virginia, Mississippi, Louisiana, and New Mexico coming in 2nd – 10th place (in that order).
  • To increase Southern Nevada’s middle class population, business leaders are focusing on three strategies: 1) supporting pro-jobs policies through innovative incentives, enhancing workforce/job training programs, and securing stable funding for economic development programs; 2) building globally competitive transportation systems through connecting core economic centers, enhancing multi-modal transit, developing Interstate 11, and embracing autonomous systems; and 3) strengthening local workforce and education initiatives.
  • For more information: download the Las Vegas Global Economic Alliance 2018 Annual Report. The report gives a comprehensive breakdown of LVGEA’s mission, team, 2018 snapshot, regional economic development initiatives, policy, planning, research, communications, operations, and local investors.

Las Vegas Real Estate Trends and Projections

Based on surveys and other analysis, the latest comprehensive report published by the Urban Land Institute and consulting firm PWC (“Emerging Trends in Real Estate”) reveals the following Las Vegas real estate characteristics:

  • Las Vegas experienced one of the largest declines in retail real-estate space across the nation from 2007 – 2018 as the Great Recession transitioned into a new “e-commerce” era. Out of the top 19 metropolitan areas, the city ranked No. 3—going through a 2.6 per-capita decrease in retail square feet during that period (versus Denver, CO at No. 1 and Jacksonville, Fl at No. 2). While several other metropolitan areas are in the top 19 list, the U.S. average was 0.8 per-capita decrease in retail square feet. “A new equilibrium… is being established as the amount of space devoted to malls, shopping centers and retail districts declines, with unneeded retail space being repurposed or replaced,” the report states.
  • The Las Vegas region’s “homebuilding prospects” recently rated No. 24 out of the top 79 U.S. real estate markets. The top metropolitan areas ranked as follows: Nashville, TN (No. 1); Tamp/St. Petersburg, FL (No. 2); Austin (No. 3)—and the list goes on. “As the economy and real estate expansion prepare to stretch into another year, the real estate market does not feel the need to get overly defensive and move into markets that are often perceived as safe havens in a down market,” the report states. “In fact, the opposite is true to a certain extent.”
  • The Las Vegas region’s five-year projected annual median home-price growth for “existing” housing (2019 – 2023) is 1.9 percent. Assuming some potential economic fluctuations (recession and growth periods), the region’s median housing appreciation is still expected to register growth as more individuals migrate inward from surrounding states—although this figure is a huge slowdown from the latest annual growth over the past few years.
  • From an investor standpoint, the Las Vegas industrial real estate market, space, activity and potential ranks No. 9 on the latest top-20 U.S. industrial markets. About 64 percent of investor survey respondents gave a “buy” rating on local industrial space in the region, versus 21 percent giving a “hold” rating and only 14 percent saying fellow investors should “sell.”
  • Las Vegas ranks No. 4 in the entire Mountain West region with respect to the strength of its local economy and other variables affecting commercial and residential real estate markets. These also include real-estate investor demand, capital availability, development and redevelopment opportunities, public/private investments, and local community development. Las Vegas was only beat out by Denver (No. 1), Salt Lake City (No. 2), and Phoenix (No. 3). “Focus groups for Las Vegas, Boise, Spokane, WA and Coeurd’Alene, ID mention that their metro areas could benefit from increased infrastructure investment, but that they also continue to see rising interest from national and regional investors,” the report states.

Nevada Forecast

The Nevada Economic Forum—a yearly public-private partnership mandated by the state government—recently released its economic forecast and snapshot in its "Report to the Governor and the Legislature on Future State Revenues". This report provides guidance for the state’s biennial budget cycle.

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.

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: 4.5 percent (versus 4.4 in NV and 4 in U.S.)
  • Unemployed workers: 50,400.
  • Median household income: $57,200 as of 2017 (compared to $56,600 for NV and $61,400 for U.S.)
  • Poverty rate: 14.2 percent (versus 13.8 in NV and 14 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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