Solid national economic fundamentals continue to serve as tailwinds for the Nevada economy. Low energy prices, low interest rates, stable housing market and growing employment are fuel for Nevada’s continued economic recovery.
*Click on the charts above to see an enlarged view
Regular readers of the Stat Pack will note that a number of our regularly featured indicators are not included this month. Our excuse? No new data was available as of our publishing deadline. A few trends are notable, however. In the Reno-Sparks MSA, we saw a healthy three percent jump in the rate of job growth for the third month in a row, along with a 10 percent jump in average weekly wages (not inflation adjusted) over June of last year. The number of average weekly hours worked was also up slightly to 33.8 hours.
In Las Vegas, the “headline” unemployment rate continues to slowly drop, although the region’s year-over-year job growth rate remains unchanged compared to June 2014. Construction jobs in Southern Nevada are up by nearly 5,300 over June 2014; jobs in that sector have grown for 36 straight months. The low point of this month’s reported metrics is Nevada’s U-6 unemployment rate, which includes discouraged and part-time workers who would prefer to be working full-time. As of Q1 it remained the nation’s highest at 15.3%, and our educated guess is that it won’t be down much when the Q2 number comes out.
A dip in statewide gaming numbers in June made headlines last week due to a significant drop in baccarat win, but June’s 12-month moving average of gaming revenue was up 1.5% compared to June 2014. And, finally, commercial vacancy rates rebounded slightly in Q2, 2015. The caveat? A number of poorly conceived, poorly located Las Vegas Valley properties are still driving up overall vacancy rates.
So what do this month’s data and trends tell us about the continuing recovery of Nevada and its two biggest metro areas? Just this: the state’s economy continues on an upward trajectory, but it’s a long and winding road (thank you, Beatles).
As we’ve said before, our economic rebound looks more like an elongated Nike swoosh than a “V.”
In business news, Nevada’s first medical pot dispensary opened in Sparks last Friday, 15 years after voters legalized medicinal marijuana. The state’s 10,000+ medical marijuana cardholders no doubt hope other locations open soon.
Here in Southern Nevada, a landmark agreement was reached between Switch, NV Energy and state regulators on the condition that Switch be served with 100 percent renewable energy via a new 100-megawatt solar project to be erected north of Las Vegas. The new facility is expected to open in late 2016 and will be named (drum roll, please…) Switch Station. Applications to leave the grid by Wynn, MGM and the Sands are still pending review by the Public Utilities Commission. Vegas bookies have yet to set the odds on the chances of approval; we put them at a snowball’s chance in Dubai.
And, on a historic closing note, the Las Vegas Convention Center District committee last week voted to recommend that the Riviera be demolished sooner rather than later. LVCVA acquired the Riv in February for the bargain price of $182.5 million and is eager to start developing the new Business District. We look forward to seeing it, with a nod to memories of the first high-rise ever built on the Strip. When the Riviera opened in 1955, Life Magazine ran a cover with the headline, “Las Vegas—is Boom Overextended?” and a story about how the Strip had built too many rooms to be profitable. Their concern was overblown, as subsequent years revealed, but the Riviera did finally succumb to bankruptcy in July 2010 and will soon join the ghosts of the Stardust, New Frontier, and Westward Ho. Top of page image of Nevada landscape provided courtesy of roadpickle.com
As summer kicks into triple-digit highs (is it hot enough for you, Nevada?), big news in the Battle Born state has not been lacking.
Under the leadership of Governor Sandoval, lawmakers passed a comprehensive tax bill that is estimated to raise an additional $1.3 billion for state coffers. Much of it is slated for improvements to our challenged public education system. The portfolio of taxes set to sunset at the end of this month were made permanent and will add about $375 million to $400 million over the next two years. The cigarette tax hike will add approximately $190 million over that same period. The new “commerce tax” levied on businesses with gross receipts above $4 million will add about $500 million to $510 million – but about half of that will be used to offset liabilities in Nevada’s payroll tax (aka the modified business tax or “MBT”). The commerce tax goes into effect July 1, but the economic impact will not be known for some time. We’ll be watching.
Last week, presidential hopefuls Hillary Clinton and Bernie Sanders were in Nevada wooing voters, and numerous Republican contenders are coming soon. On the national political stage, some guy named Trump also threw his bad hair into the ring. (Watch your backs, Jeb Bush and Marco Rubio. The Donald is coming for you!) Nevada remains key in the presidential primaries as an early caucus state – and in case you didn’t know, we are also a bit of a national bellwether when it comes to presidential elections. Since 1900, the Silver State has voted with the winner of the Electoral College more than 89% of the time (26/29).
Just down the road in the City of Angels, Kirk Kerkorian, the movie mogul and casino tycoon who founded MGM Resorts International, died last week at age 98. Last month, Forbes magazine estimated Kerkorian’s wealth at $4.2 billion. The son of poor Armenian immigrants had little formal education; he dropped out of school at age 16. (Don’t tell your kids.) Philanthropists like Kerkorian are few and far between. RIP.
And as families across the nation hit the road for their summer vacations, average national gas prices hover at/around $2.80 a gallon. Nevada’s prices are a bit higher, but hopefully not so much as to be prohibitive. Safe travels – and be on the lookout for a new and improved platform for The Stat Pack. Our brand new website will launch soon and will include more frequent updates as we strive to bring you the latest in Nevada’s economic, financial and business news.