While many business owners believe a recession is imminent, current economic forecasts show only a slight slowdown in Southern Nevada’s economy over the next 6-12 months. That’s the main takeaway from the fall economic outlook report released today by UNLV’s Center for Business and Economic Research (CBER).
The CBER team says the initial recovery from the pandemic recession resembled a “V-shaped” recovery. Since the start of the recovery, Nevada has experienced two rapid expansions followed by two longer pauses or mild declines in economic activity. This created a “broken-V” recovery.
Data tracking the leisure and hospitality sector has gone in the wrong direction in recent months, according to CBER economists. They argue that the two-quarter decline in real GDP growth in the first two quarters of 2022 was a false negative signal. Now, however, national and local events are calling into question the continued growth of Southern Nevada’s economy.
“We’re not in a recession yet,” said CBER Director Andrew Woods. “But there is an economic slowdown by 2023.”
The local, state and national economic report and accompanying analysis were shared Nov. 17 at CBER’s Fall Outlook conference in the UNLV Thomas & Mack Center’s Strip View Pavilion. The event also featured a discussion on economic diversification and a panel discussion on Southern Nevada’s clean energy sector.
Although personal income and population growth remain positive and the pandemic recession remains unaffected, the main risk to Nevada’s economy right now is that the Federal Open Market Commission will be tightened too much and for too long.
“It’s better for the Federal Reserve to face the devil it doesn’t know, inflation, than the devil it doesn’t know, the collapse or slowdown of the economy over time as higher interest rates catch up with spending,” Woods said. “Inflation is a bigger concern and the Fed remains likely to act as consumer spending and a tight labor market pave the way for them to keep raising interest rates.”
Keys to the Southern Nevada Economy
- Unemployment has remained stable since October 2022 at 4.6 percent.
- According to the Southern Nevada Business Survey conducted in September, 84% of respondents said they believe the Federal Reserve’s actions will cause a recession. Almost half of the respondents (45.9%) indicated that we are already in a recession, and some respondents chose 2023 for the next recession (31.1%).
- Nevada’s economy and its tourism sector may slow or decline in economic activity in 2023 and 2024, although the impact could be softened by a rebound in business travel and big-name events like Formula One or the Super Bowl.
- The Nevada Gaming Control report showed that total gaming revenue was $1.249 billion by September 2022, 7.86% better than this time last year.
- CBER predicts that visitor volume and gross gaming revenue will decline slightly in 2023 (-0.6 and -1.1, respectively) and 2024 (-3.9 and -1.5, respectively), but it is likely unemployment to be stable around 4.9% in 2023 as an employer. may be reluctant to let employees go.
- Nevada’s housing market is also expected to participate in the slowdown in economic activity, with home prices expected to decline 10.7% in 2023 due to higher mortgage rates. Housing permits are expected to decrease significantly in 2022 and 2024.
CBER Outlook Report
CBER’s biennial Outlook report forecasts economic trends in the US and Nevada. Data is collected from state employment, gaming and tourism agencies and analyzed to predict local and national economic trends.