Updated Las Vegas Metrics

Below are the latest updates to our tracked Southern Nevada economic metrics. As always, feel free to share our graphs far and wide, and reach out to John Restrepo at jrestrepo@rcg1.com with questions.
stat highlights

positive

emp index
In May 2018 the RCG Employment Index’s 12-month moving average (“12MMA”) ticked up 0.1 points to 98.7, taking a step it had not made for 4 straight months and impelled by May’s impressive Las Vegas MSA job numbers. On a YOY basis the Index is up 0.5 points from April 2017. The Index is now just 1.3 points below the November 2006 peak of 100.
job growth
The 12MMA of Clark County’s headline unemployment rate was 5.1% in May, a drop of 0.1 points after 4 months straight of a stagnant unemployment rate. The unemployment rate is 0.5 points below last May’s 5.6%. It reached its lowest level over 11 years ago in October 2006 when it was just 4%. Southern Nevada is now theoretically at “full employment.” Strong federal job numbers had foreshadowed May’s decline in unemployment for the Las Vegas MSA.
In May the 12MMA rate of job growth in the Las Vegas MSA held at 2.6% for the 3rd consecutive month. The job growth rate has been on a downward trajectory since September 2015. Analysis by the Brookings Institution posits job growth at the regional and national levels has been suffering from the same effect: the slowdown is mainly due to decreasing demand for unskilled labor. However, the economy continues to strengthen, performing better than some analysts had predicted. While President Trump’s economic policy of deregulation and tax cuts, and his willingness to add to the deficit, may be sustaining the strength of national job growth in the short-term, there are consequences looming down the road. Also, it will take some time to see the full impact of the Administration’s threatened tariffs.
yoy construction
Construction in the Las Vegas MSA continues to be boosted by a strong housing market and improving commercial markets. In May 2018 the number of Southern Nevada construction workers rose by 4,917 (12MMA) from May 2017, an 8.7% increase. This was smaller than the previous month’s YOY increase of 9.3%. May’s gains put total construction jobs at 61,508. That makes 71 straight months (nearly 6 years) of construction job growth. Donald Trump’s decision to put tariffs on metals from the E.U., Canada and Mexico and industrial equipment from China, are likely to have an impact on Las Vegas’ construction industry.
In May 2018, construction jobs represented 6.2% of the region’s job-base, a drop of 0.4 points from the previous month and suggesting a construction worker shortage considering how much development is occurring in the region. During the real estate bubble of 2000-2007, construction jobs accounted for as much as an extraordinary 11.4% of all MSA jobs when construction jobs peaked at 108,833 in November 2006.
visitor volume
The Las Vegas MSA’s 12-month visitor count (annualized) in May 2018 was 42.1 million. The number of visitors to Clark County rose in May for the second consecutive month after 10 months of decline. The increase in May from the previous month was 0.8%. On a YOY basis, this was the 10th month in a row visitation has declined. Visitation in May was down -1.8% when compared to May 2017. We believe that the primary reasons for the slowdown are: limited room capacity, the strong dollar making vacationing in the US pricier for foreign visitors and move back to the longer trend rate of growth.
There were 42.2 million visitors to the Las Vegas MSA in 2017, compared to 42.9 million in 2016. So far through May, the visitor total is 17.5 million. That is lower than the same periods in 2016 (17.7 million) and 2017 (17.6 million), though if visitation continues to improve, we may see 2018 approach, or even surpass, the totals for each of the previous two years.
convention attendance
In May, Clark County’s annualized convention attendance saw a -0.39% decrease from the previous month, putting the annualized total at 6.5 million. May marks the 3rd annualized convention attendance decline in 5 months. However, when compared to May of 2017, convention attendance is still up 3.8%. The annualized peak of 6.65 million convention attendees occurred in December 2017.
Convention attendance saw significant gains in 2016 with 10 months above 10% YOY growth. Through all of 2017 the YOY rate of growth had fallen drastically to 3.9%. During the first 5 months of 2018 attendance grew by an average 4.9% YOY. Demand growth is being limited by maxed-out capacities at Las Vegas’ various convention facilities. The good news: In June 2017, the Las Vegas Convention and Visitors Authority’s Board of Directors gave final approval for an expansion and renovation of the Las Vegas Convention Center, which will allow the city to host more conventioneers. The expansion is expected to be completed by 2022.
hotel rev per room
In May 2018, the 12MMA of hotel revenue per available room (RevPAR) in Clark County was $113.94, a gain of $0.53 (0.46%) from the previous month. However, when compared to May 2017, RevPAR is down $0.93 (-0.8%). This is the 3rd straight YOY decline in RevPAR after more than 7 consecutive years of growth. The RevPAR 12MMA peak of $119.43 occurred in December 2007. This a metric to definitely watch.
Note: RevPAR is a performance metric in the gaming and lodging industry. It is computed by dividing a resort’s or hotel’s room revenue by the room count and the number of days in the period being measured.
gaming rev
On a 12MMA basis gaming revenue net of baccarat was up 0.26% to $741.3 million in May. The streak of positive YOY growth was extended to 40 straight months with an increase of 2.7% from May 2017. May’s gaming revenues net of baccarat were nearly 89% of the October 2007 peak of $834.4 million.
The net baccarat revenues are largely comprised of slot revenues, which generally reflect wagering by typical gamblers, especially U.S. gamblers. While changing spending patterns among millennials under 35 have caused a decrease in slot revenues, they are now recovering because US household disposable income is finally rising in real terms.
home sales
Of the 5,030 total home sales in May, 4,197 were resales, while 834 were new home sales. According to Home Builders Research, in May, total (new and resales) Clark County home closings, on a 12MMA basis, were down -0.27% from the previous month.
On a YOY basis, May total home sales were 6.8% higher than May 2017. New home sales saw a YOY growth rate of 15% in May. Existing home sales are growing steadily with a YOY growth rate in May of 5.4%.
median home price
Per Home Builders Research, May’s 12MMA median home price (new and resale) was $259,369, a 1.2% gain over the previous month. Compared to May 2017, the price is up 13.7%, the highest YOY growth in weighted home price since October 2014. The YOY growth rate has been rising steadily for a full year. The current median home price remains well below the peak of $305,333, which was recorded over 11 years ago in February 2007. May’s estimate is now 85% of the peak price.
The median new home price was up 8.1% from the previous year, reaching a new peak in May of $356,040. The previous peak of $327,066 occurred in February 2007.
The median resale home price was $239,950 in May, a 14.5% jump during the last 12 months. The peak of $286,833 occurred more than 11 years ago in April 2007. The resale average has now recovered almost 84% of its pre-recession peak price.
The rate of home appreciation for new and resale homes, combined, continued its rising trend in May. YOY growth had dropped to 6.4% in December 2016 but rose steadily in the 2nd half of 2017, averaging 9.2% YOY growth over the last 6 months of the year. Through the first 5 months of 2018 the YOY growth rate average is 12.4%. The annual peak of 35.8% growth occurred in February 2005.
30 year fixed
The 12MMA 30-year fixed-rate mortgage in the Western Region continues to climb. An increase of 0.06 points in June puts the rate at 4.16% (12MMA). This was the 5th increase in a row after 2 straight dips. The 12-year peak of 6.4% happened in October 2006. While the 30-year fixed rate mortgage should remain relatively low, it will likely go up because of Federal Reserve actions.
case shiller
The 12MMA Case-Shiller home price index for the Las Vegas MSA reached 169 in April 2018, a rise of 9.9% compared to April 2017. The Las Vegas index has risen for 68 straight months while its YOY growth rate has been growing steadily since March 2017. The US index in April was up 1.1 points, an increase of 6.2% compared to the previous year that puts the national index at 204.1. Both indexes have been on the rise since 2012.
The Las Vegas index peaked at 233.2 in December 2006. The latest LV index is 72% of the peak. The greatest positive annual change (44.5%) in the Las Vegas index occurred in March 2005, while the greatest negative change (-31.8%) occurred in August 2009. These trends are similar to those reported by Home Builders Research.
Commercial mtg 3
As we end the first half of 2018, the 10-year U.S. Treasury climbed from 2.45% at the beginning of the year to 2.86% and the 30-day LIBOR moved from 1.56% to 2.10%. The Federal Reserve hiked its benchmark rate for the second time this year and have updated their 2018 forecast to four total increases. There were many potential market-moving events in June, including the continued trade war rhetoric from the President, the North Korean summit, and the renewed fear that Italy may exit the Eurozone. There was a short-lived flight to quality that briefly pushed the 10-year U.S. Treasury yield below the 3% threshold until it bottomed at approximately 2.80%.
Finally, the initial full year forecast for $75 billion of US CMBS issuance is on track with bond investors still favoring shorter duration.
taxable retail
Taxable retail sales continues to rise in Clark County with 0.65% growth in April compared to the previous month. On a YOY basis, growth was 3.6% from April 2017. We believe much of the dollar growth in taxable sales is due to healthy visitor spending numbers and strong construction activity. Another record high was reached in March with over $3.51 billion in sales on a 12MMA.
The consistent growth of taxable sales has given the local and state government more money to work with. The strength of the national economy and its local and regional markets are key to this improvement. Growing regional and national economies have driven Southern Nevada’s growth, benefiting all of its sectors. These larger economies are the primary drivers of visitors and convention attendance to Las Vegas, which is ultimately reflected in tourism spending in the region. We may now be witnessing the long-term trend rate for sales of around 3-4% per year.
taxable sales
The above chart displays Clark County taxable sales generated in a selected sample of what we are calling the “better known” (“BK”) activities. We hope this gives our readers an insight into the level of economic activity in familiar industries/sectors. Some of these sectors are not necessarily large generators of sales taxes, but we think our readers will find them interesting.
In April 2018, Retail made up 56.2% of taxable sales of the BK sectors and 53% of total sales. Compared to April 2017, Retail was up 0.02 percentage-points as a share of BK sectors. Accommodation & Food/Beverage, an important sector for Clark County, was the second largest (28.8% of BK sectors and 27.2% of total sales) in April. The Accommodation & Food/Beverage industry is down 0.5 points from April 2017’s 29.3% share of the BK group. Manufacturing came in at a distant 3rd place with 4.8% of the BK set, with Real Estate not far behind at 3.9%.
weekly earnings
The Las Vegas MSA’s 12MMA average weekly earnings (not inflation-adjusted) was up by $2, reaching $792 in June 2018. This growth trend began more than 3 ½ years ago in September 2014. On a YOY basis, the 12MMA was up $29 (3.9%) from June 2017.
When viewed on an inflation-adjusted basis, earnings grew slightly in June from the month prior, increasing by $1 to $671 (in 2007 dollars). YOY real earnings rose by 1.6% ($11) in June compared to June 2017. Moribund wage growth has received a lot of attention for some time by economists. It is partially a function of the growth of the “gig economy” plus ongoing automation trends.
Las Vegas’ average weekly real wage is now $80 (11%) below the most recent inflation-adjusted peak of $751 that occurred close to 11 years ago in August 2007. The trough occurred in February 2012 at just over $616, so Las Vegas remains closer to the trough than the peak.
weekly hours
The number of average weekly hours worked in Las Vegas (Clark County) on a 12MMA dropped to 33.9 in May 2018, erasing the 0.1 point gain made the previous month. This is the first decline since March 2016. Weekly hours had been plodding upward since June 2016. On a YOY basis, average weekly hours are up 0.4 hours from May 2017.
In Q1, 2018, the U-6 unemployment rate (including discouraged and part-time workers) recorded a 0.4-point drop. While this should suggest that business reliance on part-time workers continues to decrease, it very well might be that many of the new jobs being created are for part-time work.
Implication: Despite a 0.4 point-decrease in the U-6 unemployment rate in Q1, many companies continue to depend heavily on part-time workers and independent contractors. Despite what feels like a thriving economy and better than expected job numbers, employers may still feel reluctant to bring new employees in full-time, instead easing them into the company on a part-time basis. There is also the growth of the “gig economy” and widening automation. As a partial consequence, Nevada’s U-6 rate remains the nation’s 3rd highest at 10.4% as of Q1, 2018.
unleaded fuel
The price of gas in Las Vegas had been rising steadily for months but now appears to be on the decline. As of July 12, the price of regular unleaded gasoline in the Las Vegas MSA was $3.19, which is $0.12 (-3.6%) lower than a month ago. Still, when compared to a year ago, the price of unleaded is up $0.61.
Gas prices in LA-Long Beach are included in the chart because visitors from the region are a major driver of Las Vegas’ lodging and hospitality industry, specifically, and economy, generally. Rising gas prices could have a deleterious effect on tourist spending in Las Vegas this summer.
According to AAA, “Total crude oil stocks fell an astonishing 12.7 million bbl last week. The Energy Information Administration (EIA) has not recorded a decline of that size since October 2016. EIA data measures stocks at 405.2 million bbl, which are roughly 90 million bbl lower than they were at this time last year. This puts a continued spotlight on tightening U.S. supplies, which are likely to continue dropping as domestic demand for gasoline holds strong while crude and gasoline exports from the U.S. remain robust. If these trends continue amid high global crude demand, oil prices may continue riding high and contribute to increased pump prices throughout the summer and possibly into the fall. 
Pump prices in the West Coast region are among the most expensive in the country: Hawaii ($3.73), California ($3.66), Washington ($3.44), Alaska ($3.40), Oregon (3.32), Nevada ($3.24) and Arizona ($3.00). Most prices in the region have declined on the week, with Arizona (-2 cents) leading the group. 
Inventories of gasoline in the region fell for a third consecutive week, according to the Energy Information Administration’s (EIA) petroleum status report for the week ending on June 29. Dropping by nearly 150,000 bbl, total inventories now sit at 30.5 million bbl. However, inventories are approximately 2.2 million bbl higher than they were at this point last summer, which will likely help prices stabilize if there are any major supply disruptions in the region this week.”
emp permit
A well-known housing market indicator is the employment-to-housing permit ratio, or E-P Ratio. It compares monthly job growth to the number of housing permits issued during the same month. After last month’s 0.4 point gain, the E-P Ratio for Clark County fell back down 0.2 points in May. Relative to May 2017, the E-P Ratio is down 0.4 points from 1.7.
The general consensus among real estate analysts is that an E-P Ratio between 1.0 and 2.0 indicates a stable market. Clark County’s E-P Ratio has been in this range for nearly 1 ½ years, since October 2016.
pot
Nevada excise tax revenues generated from marijuana sales through the first 9 months are $55.5 million, with the most recent recorded month, April 2018, seeing a -7.69% decline in revenue from the previous month. April brought in about $6.6 million in combined retail and wholesale taxes, compared to $7.1 million in March. The most readily available report by the Nevada Department of Taxation contains retail and wholesale excise taxes. These taxes do not include sales and use taxes paid at point of sales at the dispensaries or the annual licensing fees paid by the industry. The wholesale excise tax is collected at a 15% rate from growers to dispensaries on medicinal- and recreational-use marijuana, while the 10% retail excise tax is charged to only recreational users purchasing marijuana at a dispensary.
According to the Department, tax revenue from the sale of marijuana is expected to reach $120 million in the first 2 years. Collections over the first 10 months indicate that the Department’s forecast is right on track.

Southern Nevada Economic Metrics Show Continued Positive Trends

From an uptick in construction jobs and new home sales to the growth of taxable sales to a bump in average weekly earnings, the Las Vegas MSA is firing on (nearly) all cylinders. If you missed it last month, please note that our newest economic chart — a breakdown of Clark County’s “better known” (“BK”) taxable sales activity — shows which industries/sectors are generating the most revenue.
v stat highlights

v positive

v emp index
In May 2018 the RCG Employment Index’s 12-month moving average (“12MMA”) ticked up 0.1 points to 98.7, taking a step it had not made for 4 straight months and impelled by May’s impressive Las Vegas MSA job numbers. On a YOY basis the Index is up 0.5 points from April 2017. The Index is now just 1.3 points below the November 2006 peak of 100.
v job growth
The 12MMA of Clark County’s headline unemployment rate was 5.1% in May, a drop of 0.1 points after 4 months straight of a stagnant unemployment rate. The unemployment rate is 0.5 points below last May’s 5.6%. It reached its lowest level over 11 years ago in October 2006 when it was just 4%. Southern Nevada is now theoretically at “full employment.” Strong federal job numbers had foreshadowed May’s decline in unemployment for the Las Vegas MSA.
In May the 12MMA rate of job growth in the Las Vegas MSA held at 2.6% for the 3rd consecutive month. The job growth rate has been on a downward trajectory since September 2015. Analysis by the Brookings Institution posits job growth at the regional and national levels has been suffering from the same effect: the slowdown is mainly due to decreasing demand for unskilled labor. However, the economy continues to strengthen, performing better than some analysts had predicted. While President Trump’s economic policy of deregulation and tax cuts, and his willingness to add to the deficit, may be sustaining the strength of national job growth in the short-term, there are consequences looming down the road. Also, it will take some time to see the full impact of the Administration’s threatened tariffs.
v yoy construction
Construction in the Las Vegas MSA continues to be boosted by a strong housing market and improving commercial markets. In May 2018 the number of Southern Nevada construction workers rose by 4,917 (12MMA) from May 2017, an 8.7% increase. This was smaller than the previous month’s YOY increase of 9.3%. May’s gains put total construction jobs at 61,508. That makes 71 straight months (nearly 6 years) of construction job growth. Donald Trump’s decision to put tariffs on metals from the E.U., Canada and Mexico and industrial equipment from China, are likely to have an impact on Las Vegas’ construction industry.
In May 2018, construction jobs represented 6.2% of the region’s job-base, a drop of 0.4 points from the previous month and suggesting a construction worker shortage considering how much development is occurring in the region. During the real estate bubble of 2000-2007, construction jobs accounted for as much as an extraordinary 11.4% of all MSA jobs when construction jobs peaked at 108,833 in November 2006.
v visitor volume
In April 2018 the Las Vegas MSA’s 12-month visitor count (annualized) was 42 million. The number of visitors to Clark County rose in April for the first time in 11 months, though the increase was a miniscule 0.1%. On a YOY basis, this was the 9th month in a row visitation has declined. Visitation is April 2018 was down -1.9% when compared to April 2017. We believe that the primary reason for the slowdown is limited room capacity.
There were 42.2 million visitors to the Las Vegas MSA in 2017, compared to 42.9 million in 2016. So far through April of 2018 the visitor total is 13.8 million. That is lower than both 2016 (14.1 million) and 2017 (14.0 million) over the same time frame. Visitor growth slowed considerably in 2017 with a YOY visitor growth rate average through December of -0.1%. Over the first 4 months of 2018 the YOY growth rate is a disappointing -1.9%. The average rate of growth over 2016 was much better at 2.7%.
v convention
In April Clark County’s annualized convention attendance saw a 1.1% increase from the previous month, putting the annualized total at nearly 6.6 million. This increase does not quite make up for the previous month’s drop of 1.6%. However, when compared to April of last year, convention attendance is still up 5.7%. The annualized peak of 6.65 million convention attendees was in December 2017.
Convention attendance saw significant gains in 2016 with 10 months of above 10% YOY growth. Through all of 2017 the YOY rate of growth had fallen drastically to 3.9%. During the first 4 months of 2018 attendance grew by an average 5.2% YOY. Demand growth is being limited by maxed-out capacities at Las Vegas’ various convention facilities. The good news: In June 2017, the Las Vegas Convention and Visitors Authority’s Board of Directors gave final approval for an expansion and renovation of the Las Vegas Convention Center, which will allow the city to host more conventioneers. The expansion is expected to be completed by 2022.
v gaming rev
On a 12MMA basis gaming revenue net of baccarat was up 0.88% to 739.3 million in April. The streak of positive YOY growth was extended to 39 months straight with an increase of 2.6% from April 2017. April’s gaming revenues net of baccarat were nearly 89% of the October 2007 peak of $834.4 million.
The net baccarat revenues are largely comprised of slot revenues, which generally reflect wagering by typical gamblers, especially U.S. gamblers. While changing spending patterns among millennials under 35 have caused a decrease in slot revenues, they are now recovering because US household disposable income is finally rising in real terms.
v home sales
Of the 5,044 total home sales in April, 4,224 were resales of existing homes, while 820 were new home sales. According to Home Builders Research, in April, total (new and resales) Clark County home closings on a 12MMA were up 0.96% from the previous month. On a YOY basis total home sales were 7.5% higher than the previous year.
New home sales saw a YOY growth rate of 14.8% in April, up a full percentage-point from March. Existing home sales are growing steadily with a YOY growth rate in April of 6.2%, which is up 0.7 percentage-points from the month prior.
v median home price
Per Home Builders Research, April’s 12MMA median home price (new and resale) was $256,307, a 1.31% gain over the previous month. Compared to April 2017, the price is up 12.7%, the highest YOY growth in weighted home price since October 2014. The current median home price remains well below the peak of $305,333, which was recorded over 11 years ago in February 2007. April’s estimate is now nearly 84% of the peak price.
The median new home price was up 8.0% from the previous year, reaching a new peak in April of $353,822. The previous peak of $327,066 occurred in February 2007.
The median resale home price was $237,117 in April, a 13.3% increase during the last 12 months. The peak of $286,833 occurred 11 years ago in April 2007. This means that the current resale price has now recovered almost 83% of its pre-recession peak. By comparison, the median resale home price in the Reno-Sparks MSA was over $115,000 higher at $354,540 (12MMA) in April 2018. Reno-Sparks MSA’s median home price (12MMA) also grew 13.3% YOY.
The rate of home appreciation for new and resale homes continued its rising trend in April. YOY growth had dropped to 6.4% in December 2016 but rose steadily in the 2nd half of 2017, averaging 9.2% YOY growth over the last 6 months of the year. Through the first four months of 2018 the YOY growth rate average is 12.1%. The annual peak of 35.8% growth occurred in February 2005.
v 30 yr fixed
The 12MMA 30-year fixed rate mortgage in the Western Region continues to climb. Another small increase in May of 0.05 puts the rate at 4.10% (12MMA). This was the 4th increase in a row after 2 straight dips, but the changes have not been drastic with the rate fluctuating between 3.97% and 4.10% over the last 9 months. The 10-year peak of 6.4% happened in October 2006. While the 30-year fixed rate mortgage should remain relatively low, it will likely go up because of Federal Reserve actions.
v case shiller
The 12MMA Case-Shiller home price index for the Las Vegas MSA reached 167.3 in March 2018, a rise of 9.4% compared to March 2017. The Las Vegas index has risen for 67 straight months while its YOY growth rate has been growing steadily since March 2017. The US index in March was again up 1.1 points, an increase of 6.1% compared to the previous year that puts the national index at 203.1. Both indexes have been on the rise since 2012.
The Las Vegas index peaked at 233.2 in December 2006. The latest LV index is 72% of the peak. The greatest positive annual change (44.5%) in the Las Vegas index occurred in March 2005, while the greatest negative change (-31.8%) occurred in August 2009. These trends are similar to those reported by Home Builders Research.
v housing opp
The Housing Opportunity Index (“HOI”) for the Las Vegas MSA fell for the 5th straight quarter, this time by 1.6 points, decreasing to 60.5 points in Q1 of 2018 on a 4-quarter moving average basis. Over 5 quarters the Las Vegas HOI has dropped by a total of 7.2 points. Affordable housing is on the decline in the Las Vegas MSA. The Las Vegas HOI peaked at 86.2 in Q1, 2012. It bottomed out at 15.4 in Q1, 2007 at the height of the housing boom. The 10-year average is 70.1.
The U.S. index experienced a modest increase, growing from 59.4 in Q4, 2017 to 59.7 in Q1, 2018. Housing prices nationally appear to be stabilizing.
The HOI is based on the share of homes sold that are affordable to a family earning the median income in Clark County, assuming standard mortgage underwriting criteria.
v commercial mtg
By the end of May, two of the three of equity indices re-entered positive territory for 2018. The DJIA, NASDAQ and S&P500 year-to-date have returned approximately -0.2%, 9.45%, and 2.35%, respectively. The persisting upward trend in the equity market appears to stem from a combination of earnings momentum paired with a cautious optimism regarding the future of the U.S. economy. Within the fixed income market, the 10-year U.S. Treasury and USD Swap rates accelerated to the 3.0% threshold and quickly fell back to less than 2.80%. The optimistic economic views are tempered by the constant rumble of trade conflict keeping investors on edge. In the final week of May, President Trump imposed steel and aluminum tariffs on Canada, Mexico, and the E.U. The expectation of retaliatory tariffs will potentially have long term effects on trade and the markets.
May was a reminder of the unpredictable nature of interest rates and fueled many commercial real estate investors to take action by quickly locking in rates at the current lower levels.
v taxable retail
Taxable retail sales continue to rise in Clark County; however, March’s YOY growth of 3.1% was the lowest since September 2011. Since reaching 5.0% YOY growth in May 2017, the YOY growth rate has been steadily declining. Taxable retail sales grew 0.22% when compared to last month. We believe much of the absolute growth in taxable sales is due to healthy visitor spending numbers and strong construction activity. Another record high was reached in March with just under $3.49 billion in sales on a 12MMA.
The consistent growth of taxable sales has given the local and state government more money to work with. The strength of the national economy and its local and regional markets are key to this improvement. Growing regional and national economies have driven Southern Nevada’s growth, benefiting all of its sectors. These larger economies are the primary drivers of visitors and convention attendance to Las Vegas, which is ultimately reflected in tourism spending in the region. We may now be witnessing the long-term trend rate for sales of around 3% per year.
v better known
We continue for a 3rd month the introduction of a new chart for Stat Pack and have made it a permanent addition to this report of notable economic indicators. It displays Clark County taxable sales generated in a selected sample of what we are calling the “better known” (“BK”) activities. We hope this will give readers an insight into the level of economic activity in familiar industries/sectors. Some of these sectors are not necessarily large generators of sales taxes, but we think readers will find them interesting.
In March 2018, Retail made up 56.1% of taxable sales of the BK sectors and 52.7% of total sales. Compared to March 2017, Retail was down 1 percentage-point as a share of BK sectors. Accommodation & Food/Beverage, an important sector for Clark County, was the second largest (27.8% of BK sectors and 26.1% of total sales) in March. The Accommodation & Food/Beverage industry is down 1.2 points from March 2017’s 29.0% share of the BK group. Manufacturing came in at a distant 3rd place with 4.6% of the BK set, with Real Estate not far behind at 4.0%.
v weekly earnings
The Las Vegas MSA’s 12MMA of average weekly earnings (not inflation-adjusted) was up by $3 for the 2nd month in a row, reaching $790 in May. This growth trend began over 3 years ago in September 2014. On a YOY basis, the 12MMA was up $30 (3.9%) from May 2017.
When looked at on an inflation-adjusted basis, earnings grew slightly in May from the month prior, increasing by $1 to $670 (in 2007 dollars). YOY real earnings rose by 1.7% ($11) in May 2018 compared to May 2017. Las Vegas’ average weekly real wage is now $81 (11%) below the most recent inflation-adjusted peak of $751 that occurred close to 11 years ago in August 2007. The trough occurred in February 2012 at just over $616, so Las Vegas remains closer to the trough than the peak.
v weekly hours
The number of average weekly hours worked in Las Vegas (Clark County) on a 12MMA dropped to 33.9 in May 2018, erasing the 0.1 point gain made the previous month. This is the first decline since March 2016. Weekly hours had been plodding upward since June 2016. On a YOY basis, average weekly hours are up 0.4 hours from May 2017.
In Q1, 2018, the U-6 unemployment rate (including discouraged and part-time workers) recorded a 0.4-point drop. While this should suggest that business reliance on part-time workers continues to decrease, it very well might be that many of the new jobs being created are for part-time work.
Implication: Despite a 0.4 point-decrease in the U-6 unemployment rate in Q1, many companies continue to depend heavily on part-time workers and independent contractors. Despite what feels like a thriving economy and better than expected job numbers, employers may still feel reluctant to bring new employees in full-time, instead easing them into the company on a part-time basis. There is also the growth of the “gig economy” and widening automation. As a partial consequence, Nevada’s U-6 rate remains the nation’s 3rd highest at 10.4% as of Q1, 2018.
v unleaded
While the price of gas in Las Vegas was again up from a month ago, it appears to have topped out at the end of May and is stabilizing. As of June 8, the price of regular unleaded gasoline in the Las Vegas MSA was $3.32, which is still $0.07 (2.3%) higher than a month ago. Compared to last year, the price of unleaded is up $0.65. In last month’s analysis, the price had jumped by $0.27 (9.2%) in a month.
Gas prices in LA-Long Beach are included in the chart because visitors from the region are a major driver of Las Vegas’ lodging and hospitality industry, specifically, and economy, generally. Rising gas prices could have a deleterious effect on tourist spending in Las Vegas this summer.
According to AAA, “Nationally consumers are spending $69 more a month to fill-up compared to last summer. Gasoline expenses are accounting, on average, for seven percent of an American’s 2018 annual income, a one and half percent increase since summer of 2017. With strong summer consumer gasoline demand expected in the months ahead, AAA says motorists can expect little relief at the pump with the national gas price average ranging between $2.85 – $3.05 through Labor Day. 
Pump prices in the West Coast region are among the highest in the country, all topping out above $3.00 per gallon: California ($3.72); Hawaii ($3.71); Washington ($3.46); Alaska ($3.43); Oregon (3.34); Nevada ($3.33); and Arizona ($3.07). On the week, prices continue to mostly decline in the region by a penny or two. However, Arizona (+1 cent) and Alaska (+2 cents) saw increases, while Oregon (-2 cents) saw the largest decrease in the region. 
According to EIA data for the week ending on June 1, inventories of gasoline fell by 200,000 bbl to reach 31.1 million bbl. When compared to a year ago, levels are still up more than 3 million bbl and could contribute to price stabilization in coming weeks.”
v emp permit
A well-known housing market indicator is the employment-to-housing permit ratio, or E-P Ratio. It compares monthly job growth to the number of housing permits issued during the same month. After last month’s 0.1 point drop, the E-P Ratio for Clark County popped back up 0.4 points in April. Relative to April 2017, the E-P Ratio is up just 0.1 points from 1.4.
The general consensus among real estate analysts is that an E-P Ratio between 1.0 and 2.0 indicates a stable market. Clark County’s E-P Ratio has been in this range for nearly 1 ½ years, since October 2016.
pot
Nevada excise tax revenues generated from marijuana sales through the first 9 months are nearly $49 million, with the most recent recorded month, March 2018, seeing a considerable spike in revenue of more than $1.1 million from the previous month. March brought in about $7.1 million in combined retail and wholesale taxes, compared to $5.9 million in February. The most readily available report by the Nevada Department of Taxation contains retail and wholesale excise taxes. These taxes do not include sales and use taxes paid at point of sales at the dispensaries or the annual licensing fees paid by the industry. The wholesale excise tax is collected at a 15% rate from growers to dispensaries on medicinal- and recreational-use marijuana, while the 10% retail excise tax is charged to only recreational users purchasing marijuana at a dispensary.
According to the Department, tax revenue from the sale of marijuana is expected to reach $120 million during the next 2 years. Collections during that last 9 months indicate that the Department’s forecast is right on track. Another boost for Nevada’s marijuana industry may come if President Trump follows through with his recent suggestion that he is open to legalizing the drug at the federal level.

Latest Las Vegas Economic Metrics

Construction in the Las Vegas MSA continues to see strong numbers, thanks to a vibrant housing market and improving commercial markets. In March 2018 the number of Southern Nevada construction workers rose by 4,942 (12-month moving average/MMA) from March 2017, an 8.9 percent increase. March’s gains put total Southern Nevada construction jobs at 60,650 and ad mark 69 straight months (nearly 6 years) of construction job growth.
Read on for the rest of the numbers.
stat highlights

positive

emp index
In March 2018 the RCG Employment Index’s 12-month moving average (“12MMA”) remained at 98.6 for the 3rd moth in a row. On a YOY basis the Index is up 0.5 points from March 2017. The YOY difference has fallen steadily from a recent high of 1.0 in April 2017. The Index is 1.4 points below the November 2006 peak of 100.
job growth
The 12MMA of Clark County’s headline unemployment rate was 5.2% in March, making this the 3rd month in a row that the rate has remained unchanged. The unemployment rate is 0.5 points below last March’s 5.7%. It reached its lowest level over 11 years ago in October 2006 when it was just 4%. Southern Nevada is now theoretically at “full employment.”
The 12MMA rate of job growth in the Las Vegas MSA fell 0.1 point for the 3rd consecutive month reaching 2.6% in March 2018. This continues the downward trajectory initiated in September 2015. Analysis by the Brookings Institution posits job growth at the regional and national levels has been suffering from the same effect: the slowdown is mainly due to decreasing demand for unskilled labor.
emp to adult
Various sources often report employment-to-total population ratios, but that metric muddles the true ratio of workers to working-age population, because U.S. society is aging and the share of non-retirees is shrinking. Therefore, we present the employment-to-adult-working-age population ratio. This relates jobs to the population cohort that is actually expected to work. It more accurately describes the employment situation in the region.
This chart shows that the region’s employment-to-adult-working-age population ratio for 2017 increased slightly after a stagnant year in 2016. While the most recent ratio is up significantly from the 0.43 seen during the depths (2010) of the Great Recession, it is still well below the pre-recession peak in 2006 of nearly 0.49.
u3 & u6
The U-3 unemployment rate, or headline rate, for Nevada, after dropping 0.2 points in Q4, ticked back up by 0.1 points in Q1 2018. The U-3 rate is now 0.5 points above the average rate for 2007 (4.6%), the year the Great Recession hit. Despite the small rise in the U-3 rate, the U-6 rate, which measures underemployment, had a 0.4-point decline from 10.8 to 10.4.
In terms of the U-3 rate, Nevada fell behind several states and now has the 5th highest headline rate in the nation. While the U-6 rate saw welcome improvement, Nevada still holds the 3rd highest rate in the country, beating only New Mexico and Alaska. Nevada businesses maintain a significant reliance on part-time workers.
yoy construction
Construction in the Las Vegas MSA continues to be boosted by a strong housing market and improving commercial markets. In March 2018 the number of Southern Nevada construction workers rose by 4,942 (12MMA) from March 2017, an 8.9% increase, just 0.1 points lower than the YOY growth rate for the previous month. March’s gains put total construction jobs at 60,650. That makes 69 straight months (nearly 6 years) of construction job growth. While we have not heard much recently on Donald Trump’s idea to put tariffs on steel and aluminum, taxes on these imports could impact Las Vegas’ construction job growth.
Construction jobs represent 6.4% of the region’s job-base. The current construction job count is well below the November 2006 peak of 108,833, when the industry had 11.4% of all MSA jobs. Pre-2008 construction job numbers, which were artificially inflated due to the real estate bubble, are not likely to be seen again for foreseeable future.
visitor volume
In March 2018 the Las Vegas MSA’s 12-month visitor count (annualized) was 42 million. This is down -1.9% from 42.8 million during the 12-month period ending in March 2017. The number of visitors to Clark County fell in March for the 10th month in a row, this time by -0.9%. This is the 8th month in a row YOY visitation has declined. We believe that the primary reason for the slowdown is limited room capacity.
There were 42.2 million visitors to the Las Vegas MSA in 2017, compared to 42.9 million in 2016. So far over the first 3 months of 2018 the visitor total is 10.3 million. That is lower than both 2016 (10.5 million) and 2017 (10.4 million) over the same time frame. Visitor growth slowed considerably in 2017 with a YOY visitor growth rate average through December of -0.1%. Over the first 3 months of 2018 the YOY growth rate is a disappointing -1.9%. The average rate of growth over 2016 was much better at 2.7%.
convention attendance
In March, Clark County’s annualized convention attendance saw a -1.6% decline from the previous month, putting the annualized total at nearly 6.5 million. This decrease wipes out the previous month’s gain of 1.1% and means 2 out of the first 3 recorded months of 2018 have seen negative monthly growth. However, when compared to March 2017, convention attendance is still up 3.2%. The annualized peak of 6.65 million convention attendees was in December 2017.
Convention attendance saw significant gains in 2016 with 10 months of above 10% YOY growth. However, starting in October of 2016 YOY growth began to drop steadily until reaching a low in September 2017 of 1.1% YOY change. The YOY growth rate popped back up the following month and averaged 6.3% over the last 3 months of 2017. During the first 3 months of 2018 attendance grew by 5.0% YOY. Demand growth is being limited by maxed-out capacities at Las Vegas’ various convention facilities. The good news: In June 2017, the Las Vegas Convention and Visitors Authority’s Board of Directors gave final approval for an expansion and renovation of the Las Vegas Convention Center, which will allow the city to host more conventioneers. The expansion is expected to be completed by 2022.
gaming rev
On a 12MMA basis gaming revenue net of baccarat was down -0.32% to 732.9 million in March. However, YOY growth continues in March at 2.2%, a decline of 1.1 points from the year period ending in February 2018. This makes 38 months straight of positive YOY growth. However, the YOY growth rate has declined for 3 straight months. February’s gaming revenues net of baccarat were nearly 88% of the October 2007 peak of $834.4 million.
The net baccarat revenues are largely comprised of slot revenues, which generally reflect wagering by typical gamblers, especially U.S. gamblers. While changing spending patterns among millennials under 35 have caused a decrease in slot revenues, they are now recovering because US household disposable income is finally rising in real terms.
home sales
According to Home Builders Research, in March, total (new and resales) Clark County home closings on a 12MMA were up 0.8% from the previous month. On a YOY basis total home sales are still well above the previous year by 6.7%.
New home sales saw a YOY growth rate of 13.8% in March, down just 0.2 percentage-points from February. Existing home sales are growing steadily with a YOY growth rate in March of 5.5%, which is down 0.6 percentage-points from the month prior.
home price
Per Home Builders Research, March’s 12MMA median home price (new and resale) was $252,997, a 1.19% gain over the previous month. Compared to March 2017, the price is up 12.2%, the highest YOY growth in weighted home price since October 2014. The current median home price remains well below the peak of $305,333, which was recorded over 11 years ago in February 2007. March’s estimate is nearly 83% of the peak price.
The median new home price was up 7.3% from the previous year, reaching a new peak in March of $350,663. The previous peak of $327,066 occurred in February 2007.
The median resale home price was $234,117 in March, a 12.9% increase during the last 12 months. This was the biggest YOY jump since September 2014. The peak of $286,833 occurred over 10½ years ago in April 2007. This means that the current resale price has now recovered almost 82% of its pre-recession peak. By comparison, the median resale home price in the Reno-Sparks MSA was over $115,000 higher at $350,365 (12MMA) in March 2018. Reno-Sparks MSA’s median home price (12MMA) is growing at 12.9% YOY.
The rate of home appreciation for new and resale homes continued its rising trend in March. YOY growth had dropped to 6.4% in December 2016 but rose steadily in the 2nd half of 2017, averaging 9.2% YOY growth over the last 6 months of the year. The 3 month YOY growth rate average for 2018 is 11.9%. The annual peak of 35.8% growth occurred in February 2005.
30 yr
The 12MMA 30-year fixed rate mortgage in the Western Region saw another small increase in April growing 0.05 points to 4.05% (12MMA). This was the 3rd increase in a row after 2 straight dips, but the changes have been miniscule with the rate fluctuating between 3.97% and 4.05% over the last 8 months. The 10-year peak of 6.4% happened in October 2006. While the 30-year fixed rate mortgage should remain relatively low, it will likely go up because of Federal Reserve actions.
case shiller
The 12MMA Case-Shiller home price index for the Las Vegas MSA reached 165.7 in February 2018, a rise of 8.9% compared to February 2017. The Las Vegas index has risen for 66 straight months while its YOY growth rate has been growing steadily since March 2017. The US index in February was up 1.1, reaching 202.0, an increase of 6.1% compared to the previous year. Both indexes have been on the rise since 2012.
The Las Vegas index peaked at 233.2 in December 2006. The latest LV index is 71% of the peak. The greatest positive annual change (44.5%) in the Las Vegas index occurred in March 2005, while the greatest negative change (-31.8%) occurred in August 2009. These trends are similar to those reported by Home Builders Research.
apartment market
The Las Vegas Valley’s 12MMA apartment vacancy rate bumped up to 7.7% in Q1 2018. The general trend since 2011 has been down, though apartment vacancy has fluctuated between 7.5% and 7.7% since Q4 2016. The recovery in apartment vacancy has been slow. Over the last 9 years, the apartment vacancy rate peaked at 10.8% in Q2, 2010. It hit its lowest mark of 5.1% 11 years ago in Q1, 2007.
commercial mtg
The 10-year U.S. Treasury moved slightly lower during March, finishing the month down 3 basis points from February. The 30-Day LIBOR did not track with the Treasury, increasing 21 basis points to 1.88%. The Fed increased the funds rate by 0.25 points on March 21st. This is the first rate hike under the new chair, Jerome Powell, who has been in office since February. At the March meeting, the Fed hinted it would favor a more aggressive pace to keep the economy moving forward in the years to come.  Additionally, a $1.3 trillion spending bill was passed by both the House and Senate, funding the government through September. The omnibus bill includes numerous non-spending policy provisions, as well as those affecting revenue.
Rising interest rates and the rumors of aggressive future Fed rate hikes are among the most common concerns for commercial real estate investors interested in competitive financing.
taxable retail
Local resident and business spending in Nevada and Clark County continues to be reflected in rising taxable retail sales. Since September 2017 the MOM growth rate has been rising steadily, while the YOY growth rate has remained relatively flat over the same period. We believe much of the absolute growth in taxable sales is due to healthy visitor spending numbers and strong construction activity. Another record high was reached in February with just over $3.48 billion in sales on a 12MMA, a 3.8% rise from last year.
February’s taxable sales are the highest ever recorded by the State of Nevada on a nominal basis (not inflation-adjusted). As such, they have boosted local and state government revenues and spending. Steadily improving local, regional and national job markets are key to this improvement. This is especially true regarding the state of the regional and national economies, which have driven Southern Nevada’s growth, benefiting all of its sectors. They are also primary drivers of visitors and convention attendance to Las Vegas, which is ultimately reflected in tourism spending in the region. However, with visitor and convention growth experiencing declines, we may see this impact the growth of taxable retail sales.
better known
We continue for a second month the introduction of a new chart for Stat Pack and are making it a permanent addition to this report of notable economic indicators. It displays Clark County taxable sales generated in a selected sample of what we are calling the “better known” (“BK”) activities. We hope this will give readers an insight into the level of economic activity in familiar industries/sectors. Some of these sectors are not necessarily large generators of sales taxes, but we think readers will find them interesting.
In February 2018, Retail made up 57.4% of taxable sales of the BK sectors and 54.4% of total sales. Compared to February 2017, Retail was up 0.8 percentage-points as a share of BK sectors. Accommodation & Food/Beverage, an important sector for Clark County, was the second largest (27.4% of BK sectors and 26% of total sales) in February. Accommodation & Food/Beverage industry is down 1.3 point from February 2017’s 28.7% share of the BK group. Manufacturing came in at a distant 3rd place with only 4.5% of the BK set, up from 3.9% last year.
weekly earnings
The Las Vegas MSA’s 12MMA of average weekly earnings (not inflation-adjusted) was up by $2 in March to $784. This growth trend, which began 3½ years ago in September 2014, continues. On a YOY basis, the 12MMA was up $28 (3.8%) from March 2017.
When looked at on an inflation-adjusted YOY basis, earnings rose by 1.7% ($11) in March 2018 compared to March 2017, reaching $669 (in 2007 dollars). However, when compared to February 2018, real earnings remained nearly the same, growing by just $0.76. Las Vegas’ average weekly real wage is now $82 (11%) below the most recent inflation-adjusted peak of $751 that occurred more than 10½ years ago in August 2007. The trough occurred in February 2012 at just over $616, so Las Vegas remains much closer to the trough than the peak.
weekly hours
After 3 straight months stuck at 33.9, the number of average weekly hours worked in Las Vegas (Clark County) on a 12MMA basis finally saw an increase, albeit a small one. Weekly hours reached 34 in March 2018. Weekly hours have been climbing slow and steady since June 2016. On a YOY basis, average weekly hours are up 0.6 hours from March 2017.
In Q1-2018, the U-6 unemployment rate (including discouraged and part-time workers) recorded a 0.4 point drop. This suggests business reliance on part-time workers continues to decrease, which is an important factor that contributes to improving average weekly hours. The 7-year peak of 36.9 hours occurred more than 9 years ago in October 2008.
Implication: Despite a decreasing U-6 unemployment rate, many companies continue to depend heavily on part-time workers and independent contractors. For this reason, Nevada’s U-6 rate remains the nation’s 3rd highest at 10.4% as of Q1, 2018. However, a dropping U-6 rate does seem to be benefiting weekly hours worked through 2017 and into 2018 as the chart shows.
unleaded
Gas prices in Las Vegas have been climbing fast over the past 3 months. As of April 30, Las Vegans saw the price of regular unleaded gasoline in the Las Vegas MSA increase by $0.27 (9.2%) from the prior month, resulting in a per gallon price of $3.23. The price of regular unleaded has gone up $0.53, or 20%, from a year ago. This is likely to have a dampening effect on other types of resident and business spending.
Gas prices in LA-Long Beach are included in the chart because visitors from the region are a major driver of Las Vegas’ lodging and hospitality industry, specifically, and economy, generally. Rising gas prices could have a deleterious effect on tourist spending in Las Vegas this summer.
According to AAA, “Pump prices in the West Coast region are among the highest in the nation: Hawaii ($3.61), California ($3.61), Washington ($3.29), Alaska ($3.25), Nevada ($3.23) and Oregon ($3.19). On the week, prices in the region are mostly up; with Nevada (+7 cents) leading the way and Alaska (+2 cents) seeing the smallest gain. 
When looking at year-on-year increases, California (+62 cents) tops the list of all states in the country, followed by Arizona (+55 cents), Hawaii (+54 cents), Nevada (+52 cents), Oregon (+43 cents), Washington (+38 cents) and Alaska (+32 cents). 
For the fifth consecutive week, gasoline stocks in the region have fallen. At 29.6 million bbl for the week ending on April 20, inventories in the region are at their lowest point since November 2017. Although stocks are below the level they were at last year, they are still higher than the five year average for the region.”
electric
Electric meter hookups’ 12MMA in February 2018 reached 812,694. Total hookups were up 1.8% from February 2017. The YOY growth rate has been a consistent 1.8% for 5 months straight. Over the last 29 months the annual growth rate for electric meter hookups has slowly fluctuated between 1.7% and 1.9%. This hints at stable population and business growth, and household formations in the Valley. The annual peak growth rate occurred March 1990 at 10.5%.
emp permit
A well-known housing market indicator is the employment-to-housing permit ratio, or E-P Ratio. It compares monthly job growth to the number of housing permits issued during the same month. After 3 months at 1.3, the E-P Ratio for Clark County experienced a 0.1-point drop to 1.2 in March 2018. Relative to March 2017, the E-P Ratio is down 0.8 points from 2.
The general consensus among real estate analysts is that an E-P Ratio between 1.0 and 2.0 indicates a stable market. Clark County’s E-P Ratio has been in this range for nearly 1 ½ years, since October 2016.
pot
Nevada excise tax revenues generated from marijuana sales through the first 8 months are $41.9 million, with the most recent recorded month, February 2018, generating the most tax revenue since legalization for recreational use in July 2017. The most readily available report by the Nevada Department of Taxation contains retail and wholesale excise taxes. These taxes do not include sales and use taxes paid at point of sales at the dispensaries or the annual licensing fees paid by the industry. The wholesale excise tax is collected at a 15% rate from growers to dispensaries on medicinal- and recreational-use marijuana, while the 10% retail excise tax is charged to only recreational users purchasing marijuana at a dispensary.
According to the Department, tax revenue from the sale of marijuana is expected to reach $120 million during the next 2 years. Collections during that last 8 months indicate that the Department’s forecast is right on track. The major “know/unknown” is if the U.S. Justice Department goes through with its threats of curtailing or putting a halt to the industry’s activities around the country.

Southern Nevada Jobs Hold Steady, Mixed Bag in Other Metrics

The 12-month moving average (MMA) of Clark County’s headline unemployment rate was 5.1 percent in February, the 7th month in a row that the rate has remained unchanged. The unemployment rate is 0.5 points below last February’s 5.6 percent. It reached its lowest level in October 2006 when it was just 4 percent. Southern Nevada, like Reno-Sparks, is now theoretically at “full employment.”
A fun addition to this month’s charts: Nevada excise tax revenues generated from marijuana through the first 7 months of sales are $34.9 million. (These taxes do not include sales and use taxes paid at point of sales at the dispensaries, or the annual licensing fees paid by the industry.) According to the Tax Department, tax revenue from the sale of marijuana is expected to reach $120 million during the next two years.
stat highlights

positive

emp index
In February 2018 the RCG Employment Index’s 12-month moving average (“12MMA”) did not budge, holding at 98.7 for 7 straight months. On a YOY basis, the Index is up 0.5 points from February 2017, with the YOY gains continuing to dwindle as the Index remains unchanged. After reaching 1.3 in June of this year, the YOY difference has fallen steadily as the Index remains stagnant. The Index remains 1.3 points below the November 2006 peak of 100.
job growth
The 12MMA of Clark County’s headline unemployment rate was 5.1% in February, making this the 7th month in a row that the rate has remained unchanged. The unemployment rate is 0.5 points below last February’s 5.6%. It reached its lowest level over 11 years ago in October 2006 when it was just 4%. Southern Nevada is now theoretically at “full employment.” Considering this is the longest steady streak seen since the Great Recession hit approximately 11 years ago, we may be seeing the new normal in terms of unemployment post recovery.
The 12MMA rate of job growth in the Las Vegas MSA fell 0.1 points to 2.7%, continuing a downward trajectory begun in September 2015. Analysis by the Brookings Institution posits job growth at the regional and national levels has been suffering from the same effect: the slowdown is mainly due to decreasing demand for unskilled labor.
yoy construction
Construction in the Las Vegas MSA continues to be boosted by a strong housing market and improving commercial markets. In February 2018 the number of Southern Nevada construction workers rose by 4,958 (12MMA) from February 2017, a 9% increase, putting total construction jobs at 60,225. That makes 68 straight months (nearly 5 years) of construction job growth. However, President Donald Trump’s proposed tariffs on steel and aluminum may put a damper on Las Vegas’ construction job growth.
Construction jobs represent 6.4% of the region’s job-base. The current construction job count is well below the November 2006 peak of 108,833, when the industry had 11.4% of all MSA jobs. Pre-2008 construction job numbers, which were artificially inflated due to the real estate bubble, are not likely to been again for foreseeable future.
visitor volume
In February 2018 the Las Vegas MSA’s 12-month visitor count (annualized) was 42.1 million. This is down from the 42.8 million during the 12-month period ending in February 2017. The number of visitors to Clark County fell in February for the 9th month in a row, but the drop was small, this time by just -0.03%. When compared to February 2017, there was -1.7% YOY growth. This is the 7th month in a row YOY visitation has declined. We believe that the primary reason for the slowdown is a room capacity issue.
There were 42.2 million visitors to the Las Vegas MSA in 2017, compared to 42.9 million in 2016. So far over the first 2 months of 2018 the visitor total is 6.5 million. That is lower than both 2016 (6.8 million) and 2017 (6.7 million) over the same time frame. Visitor growth slowed considerably in 2017 with a YOY visitor growth rate average through December of -0.1%. The average rate of growth over 2016 was much better at 2.7%. We believe we have now entered a sustained period of slower growth. The month of greatest YOY growth since the Great Recession was September 2011, when visitor volume grew by 4.5%.
convention
In February, Clark County’s annualized convention attendance saw a 1.1% gain from the previous month, putting the annualized total at 6.6 million. This increase was unable to make up for the -1.9% drop seen last month, and it puts the 12 month period ending in February 2018 slightly below the new record high of 6.65 million attendees during the 12 month period ending in December 2017. Compared to February 2017, convention attendance is up 6.4%. The previous annualized peak of 6.35 million was in January 2007.
Convention attendance saw significant gains in 2016 with 10 months of above 10% YOY growth. However, starting in October of 2016 YOY growth began to drop steadily until reaching a low in September 2017 of 1.1% YOY change. The YOY growth rate popped back up the following month and averaged 6.3% over the last 3 months of 2017. During the first 2 months of 2018 attendance grew by 5.9%. Demand growth is being limited by maxed-out capacities at Las Vegas’ various convention facilities. The good news: In June 2017, the Las Vegas Convention and Visitors Authority’s Board of Directors gave final approval for an expansion and renovation of the Las Vegas Convention Center, which will allow the city to host more conventioneers. The expansion is expected to be completed by 2022.
hotel rev
In January 2018, the 12MMA of hotel revenue per available room (RevPAR) in Clark County was $115.31, a gain of $0.72 (0.63%) from the previous month. This ends a four-month streak of negative monthly growth. Compared to January 2017, RevPAR is up $2.53 (2.2%), which continues its streak of YOY growth that began just over 7 years ago in December 2010. With January’s improvement in RevPar, the RevPAR 12MMA resumes its approach of the $119.43 peak which occurred in December 2007.
Note: RevPAR is a performance metric in the gaming and lodging industry. It is computed by dividing a resort’s or hotel’s room revenue by the room count and the number of days in the period being measured.
gaming rev
On a 12MMA basis gaming revenue net of baccarat was down -0.19% to 735.2 million in February. However, YOY growth continues in February at 3.3%, a small decline of 0.1 points from the year period ending in January 2018. This makes 37 months straight of positive YOY growth. February’s gaming revenues net of baccarat were 88.1% of the October 2007 peak of $834.4 million.
The net baccarat revenues are largely comprised of slot revenues, which generally reflect wagering by typical gamblers, especially U.S. gamblers. While changing spending patterns among millennials under 35 have caused a decrease in slot revenues, they are now recovering because US household disposable income is finally rising in real terms.
home sales
According to Home Builders Research, in February, total (new and resales) Clark County home closings on a 12MMA were down -0.25% from the previous month, making this the 2nd in 3 months the 12MMA has declined. However, on a YOY basis total home sales are still well above the previous year by 7.3%.
New home sales saw a YOY growth rate of 14% in February. While this rate is high, it is down 3 percentage-points from the previous month, continuing a downward trend in the YOY growth rate that began in August 2017. Existing home sales are growing steadily with a YOY growth rate of 6.1%. However, February’s YOY growth rate for existing home sales was the lowest seen since May 2015.
home price
Per Home Builders Research, February’s 12MMA median home price (new and resale) was $250,016, a 1.09% gain over the previous month. Compared to February 2017, the price is up 12%, the highest YOY growth in weighted home price since October 2014. The current median home price remains well below the peak of $305,333, which was recorded 11 years ago in February 2007. February’s estimate is nearly 82% of the peak price.
The median new home price was up 7.1% from the previous year, reaching a new peak in February of $348,388. The previous peak of $327,066 occurred in February 2007.
The median resale home price was $231,283 in February, a 12.7% increase during the last 12 months. This was the biggest YOY increase since September 2014. The peak of $286,833 occurred over 10½ years ago in April 2007. This means that the current resale price has now recovered over 80% of its pre-recession peak. By comparison, the median resale home price in the Reno-Sparks MSA was over $110,000 higher at $341,485 (12MMA) in February 2018. Reno-Sparks MSA’s median home price (12MMA) is growing at 11.6% YOY.
The rate of home appreciation for new and resale homes continued its rising trend in February. YOY growth had dropped to 6.4% in December 2016 but rose steadily in the 2nd half of 2017, averaging 9.2% YOY growth over the last 6 months of the year. The 2 month YOY growth rate average for 2018 is 11.8%. The annual peak of 35.8% growth occurred in February 2005.
mortgage
The 12MMA 30-year fixed rate mortgage in the Western Region was nearly unchanged, rising by just 0.02 points to 4% (12MMA) in March. This was the 2nd increase in a row after 2 straight dips, but the changes have been miniscule with the rate fluctuating between 3.97% and 4.02% over the last 7 months. The 10-year peak of 6.4% occurred in October 2006. While the 30-year fixed rate mortgage should remain relatively low, it will likely go up because of Federal Reserve actions.
case shiller
The 12MMA Case-Shiller home price index for the Las Vegas MSA reached 164.2 in January 2018, a rise of 8.5% compared to January 2017. The YOY growth rate has been picking up steadily since March 2017. This past January, the trend continued with the rate rising by 0.4 points from December. The US index in January was up 1.0 again, reaching 200.9, an increase of 6% compared to the previous year. The Las Vegas index peaked at 233.2 in December 2006. The latest LV index is 70% of the peak. Both indexes have been on the rise since 2012. The greatest positive annual change (44.5%) in the Las Vegas index occurred in March 2005, while the greatest negative change (-31.8%) occurred in August 2009. These trends are similar to those reported by Home Builders Research.
housing opp
The Housing Opportunity Index (“HOI”) for the Las Vegas MSA has now dropped 4 straight quarters after 7 quarters of increases, falling to 62.1 points in Q4 of 2017 on a 4-quarter moving average basis, or 72% of its peak. It dropped 0.6 points from 67.7 in Q1, another 0.8 points in Q2, 2.5 points in Q3 and 1.7 points in Q4. Affordable housing is on the decline in the Las Vegas MSA. The Las Vegas HOI peaked at 86.2 in Q1, 2012. It bottomed out at 15.4 in Q1, 2007 at the height of the housing boom. The 10-year average is 70.1.
The U.S. index experienced a more modest decline, falling from 59.5 in Q3, 2017 to 59.4 in Q4, 2017. Housing prices nationally appear to be stabilizing.
The HOI is based on the share of homes sold that are affordable to a family earning the median income in Clark County, assuming standard mortgage underwriting criteria.
commercial mtg
The 10-year U.S. Treasury rose an additional 7 basis points in February and the 30-Day LIBOR followed suit, increasing 10 basis points to 1.67%. The FOMC will pay close attention to the impact of fiscal stimulus, an increasingly tight labor market, and core personal consumption as it plans to increase the Fed Funds rate three times this year. Many are planning for rates to be at or just under 3% by the end of 2018 and will likely rise to 3.5% by the end of 2019. The outlook appears solid for the economy and earnings, helping to support a continued appetite for risky assets even as worries about political tensions remain.
Assuming there are no geopolitical or macroeconomic crises, lending should not inhibit growth. With rising interest rates, the most pressing matter is between buyers and sellers; who will blink first?
taxable retail
Increased local resident and business spending in Nevada and Clark County continues to fuel rising taxable retail sales even though the rate of growth has been relatively flat since January 2016. We believe much of absolute growth in taxable sales is due to relatively healthy visitor spending numbers and strong construction activity. Another record high was reached in January when just under $3.47 billion in sales on a 12MMA occurred, a 3.4% rise from last year. This said, the YOY growth rate has trended down steadily from a recent high of 5% in May 2017. During the last 6 months, it has averaged 3.8%; the increase from the previous month was 0.33%.
January’s taxable sales are the highest ever recorded by the State of Nevada on a nominal basis (not inflation-adjusted). As such, they have boosted local and state government revenues and spending. Steadily improving local, regional and national job markets are key to this improvement. This is especially true regarding the health of regional and national economies, which have driven Southern Nevada’s growth, benefiting all of its sectors. They are also primary drivers of visitors and convention attendance to Las Vegas, which is ultimately reflected in tourism spending in the region.
cc taxable sales
This month, we introduce a new chart into Stat Pack. It displays Clark County taxable sales generated in a selected sample of what we are calling the “better known” activities. We hope this will give readers an insight into the level of economic activity in familiar industries. Some of these industries are not necessarily large generators of sales taxes, but we think readers will find them interesting.
In January 2018, Retail made up 56% of taxable sales of the better known (“BK”) sectors and 53% of total sales. Compared to January 2017, Retail was up 2 percentage-points as a share of BK sectors. Accommodation & Food/Beverage was the second largest (29% of BK sectors and 28% of total sales) in January. Accommodation & Food/Beverage is down 1 point from January 2017’s 30% share of the BK sectors. Manufacturing came in at a distant 3rd place with only 4% of the BK set.
weekly earnings
The Las Vegas MSA’s 12MMA of average weekly earnings (not inflation-adjusted) was up by $2 in February. This growth trend, which began almost 3½ years ago in September 2014, continues. On a YOY basis, the 12MMA was up $30 (3.9%) from February 2017.
When looked at on an inflation-adjusted YOY basis, earnings rose by 1.8% in February 2018 compared to February 2017, reaching $668 (in 2007 dollars). However, when compared to January 2018, real earnings remained nearly the same, growing by just $0.26. Las Vegas’ average weekly real wage remains $83 (11%) below the most recent inflation-adjusted peak of $751 that occurred 10½ years ago in August 2007. The trough occurred in February 2012 at just over $616, so Las Vegas remains much closer to the trough than the peak.
weekly hours
The number of average weekly hours worked in Las Vegas (Clark County), on a 12MMA basis, has been stuck at 33.9 over the past 3 months. Weekly hours have been climbing steadily, albeit slowly. This is the longest pause in growth since December 2016, which marked the last of 6 months with weekly hours stuck at 33.2. On a YOY basis, average weekly hours are up 0.6 hours from February 2017.
In Q4-2017, the U-6 unemployment rate (including discouraged and part-time workers) recorded a 0.6 point drop, a bigger decline than in any of the previous 5 quarters. This suggests business reliance on part-time workers continues to decrease. The 7-year peak of 36.9 hours occurred more than nine years ago in October 2008.
Implication: Despite a decreasing U-6 unemployment rate, many companies continue to depend heavily on part-time workers and independent contractors. For this reason, Nevada’s U-6 rate remains the nation’s 3rd highest at 10.8% as of Q4, 2017. However, a dropping U-6 rate does seem to be benefiting weekly hours worked in 2017 as the chart shows. It remains to be seen if weekly hours can maintain their upward trajectory after this extended 3 month pause.
unleaded
Gas prices in Las Vegas have been climbing fast over the past month. As of April 2, Las Vegans saw the price of regular unleaded gasoline in the Las Vegas MSA increase by $0.24 (8.6%) from the prior month, resulting in a per gallon price of $3.01. The price of regular unleaded has gone up $0.38, or 14.3%, from a year ago. This is likely to have a dampening effect on other types of resident and business spending.
Gas prices in LA-Long Beach are included in the chart because visitors from the region are a major driver of Las Vegas’ lodging and hospitality industry, specifically, and economy, generally. Rising gas price could put a crimp on tourist spending in Las Vegas this summer.
According to AAA, “Drivers in West Coast states are paying the highest pump prices in the nation: Hawaii ($3.52), California ($3.51), Washington ($3.17), Alaska ($3.13), Oregon ($3.09) and Nevada ($3.01). On the week, all drivers in these states saw an increase in prices at the pump. Arizona (+9 cents) saw the largest leap, while Hawaii (+1 cent) saw the smallest. 
At 1.59 million b/d, last week’s total gasoline production rate is nearly 60,000 b/d less than the rate last year at this time. According to the EIA’s latest weekly report, total gasoline inventories in the region declined by 36,000 b/d last week to sit at 32.7 million bbl. However, inventories may decline further with this week’s scheduled planned maintenance at the Phillips 66 Los Angeles Refinery, which can produce up to 147,000 b/d of gasoline.”
emp permit
A well-known housing market indicator is the employment-to-housing permit ratio, or E-P Ratio. It compares monthly job growth to the number of housing permits issued during the same month. At 1.3 in February 2018, the E-P Ratio for Clark County has not changed over 3 months. Relative to February 2017, the E-P Ratio is down 0.5 points from 1.8.
The general consensus among real estate analysts is that an E-P Ratio between 1.0 and 2.0 indicates a stable market. Clark County’s E-P Ratio has been in this range for more than a year now, since October 2016.
pot
Nevada excise tax revenues generated from marijuana sales through the first 7 months are $34.9 million. The most readily available report by the Nevada Department of Taxation contains retail and wholesale excise taxes. These taxes do not include sales and use taxes paid at point of sales at the dispensaries or the annual licensing fees paid by the industry. The wholesale excise tax is collected at a 15% rate from growers to dispensaries on medicinal- and recreational-use marijuana, while the 10% retail excise tax is charged to only recreational users purchasing marijuana at a dispensary.
According to the Department, tax revenue from the sale of marijuana is expected to reach $120 million during the next 2 years. Collections during that last 7 months indicate that the Department’s forecast is right on track. The major “know/unknown” is if the U.S. Justice Department goes through with its threats of curtailing or putting a halt to the industry’s activities around the country.

Las Vegas Construction Jobs Still on the Rise

Presenting all the latest economic trends and metrics from Southern Nevada.
Of special note: Construction in the Las Vegas MSA continues to be boosted by a strong housing market and a recovering commercial market. In December 2017 the number of Southern Nevada construction workers rose by 8,358 (12-month moving average) from December 2016, a 15.1 percent increase that puts total construction jobs at 63,675. That makes 65 straight months (more than five years) of construction job growth.
Stat Pack co-publisher and RCG Economics Principal John Restrepo is happy to answer questions at jrestrepo@rcg1.com. 
stat highlights

positive

emp index
The RCG Employment Index’s 12-month moving average (“12MMA”) has now remained unchanged for 5 straight months, again holding at 98.7 through December. On a YOY basis, the Index is up 0.7 points from December 2016. After reaching 1.3 in June of this year, the YOY difference has fallen steadily as the Index remains stagnant. The Index is still 1.3 points below the November 2006 peak of 100.
job growth
The 12MMA of Clark County’s headline unemployment rate was 5.1% in December, making this the 5th month in a row that the rate remained unchanged. This is the longest streak seen since April 2011. The unemployment rate is 0.7 points below last December’s 5.8%. It reached its lowest level over 11 years ago in October 2006 when it was just 4%. Southern Nevada is now theoretically at “full employment.” We may be seeing the new normal in terms of unemployment post recovery.
The 12MMA rate of job growth in the Las Vegas MSA was also unchanged, holding at 3%. Job growth at the regional and national levels has been suffering from the same effect: According to the Brookings Institution, the slowdown is mainly due to decreasing demand for unskilled labor.
u3
The U-3 unemployment rate, or headline rate, for Nevada, after rising 0.2 points in Q3, fell back down by the same amount in Q4. The U-3 rate is now back to an even 5%, or 0.4 points above the average rate for 2007, the year the Great Recession hit. The U-6 rate had its biggest decline since Q3 2016, dropping 0.6 points from 11.4 to 10.8.
In terms of the U-3 rate, Nevada moved up a single place in Q4 and is now sharing the 8th highest headline rate in the nation with Ohio. In Q2 it was beating 13 other states. As for the U-6 rate, which measures underemployment, Nevada holds the 3rd highest rate in the country, beating only New Mexico and Alaska. Nevada businesses maintain a significant reliance on part-time workers.
yoy construction
Construction in the Las Vegas MSA continues to be boosted by a strong housing market AND a recovering commercial market. In December 2017 the number of Southern Nevada construction workers rose by 8,358 (12MMA) from December 2016, a 15.1% increase that puts total construction jobs at 63,675. That makes 65 straight months (over 5 years) and counting of construction job growth.
Construction jobs represent 7% of the region’s job-base, up 0.1 from last month. The number of construction jobs today is well below the November 2006 peak of 108,833, when they accounted for 11.4% of all MSA jobs. Pre-recession construction job numbers, which were artificially inflated due to the real estate bubble, are not likely to return in the foreseeable future. That said, the region’s construction industry is much more stable today than it was then.
visitor volume
In December 2017 the Las Vegas MSA’s 12-month visitor count, on an annualized basis, was 42.2 million. This is down from the 42.3 million over the 12-month period ending in November 2017. The number of visitors to Clark County fell in December for the 7th month in a row, this time by -0.2%. When compared to December 2016, there was -1.7% YOY growth. This is the 5th month in a row YOY visitation has declined.
After leading since the start of year and all the way through November, in December the final visitor count for 2017 fell behind that of 2016. There were 42.2 million visitors to the Las Vegas MSA in 2017, compared to 42.9 million in 2016. Visitor growth slowed considerably in 2017 with a YOY visitor growth rate average through December of -0.1%. The average rate of growth over 2016 was much better at 2.7%. We believe we have now entered a sustained period of slower growth. The month of greatest YOY growth since the recession was September 2011, when visitor volume grew by 4.5%. We believe that the primary reason for the slowdown is a room capacity issue.
convention
In December, Clark County’s annualized convention attendance saw a small gain from the previous month of 0.61%, reaching a new record high of 6.65 million attendees for the Las Vegas MSA over a 12-month period. Compared to December 2016, convention attendance is up 6.9%. The previous annualized peak attendance of 6.35 million was in January 2007.
Convention attendance saw significant gains in 2016 with 10 months of greater than 10% YOY growth; however, starting in October of 2016 YOY growth began to drop steadily until reaching a low in September 2017 of 1.1% YOY growth. The YOY growth rate popped back up the following month and has averaged 6.3% over the last 3 months of the year. Demand growth is being limited by maxed-out capacities at Las Vegas’ various convention facilities. The good news: In June 2017, the Las Vegas Convention and Visitors Authority’s Board of Directors gave final approval for an expansion and renovation of the Las Vegas Convention Center, which will allow the city to host more conventioneers.
hotel rev
In December 2017, the 12MMA of hotel revenue per available room (RevPAR) in Clark County was $114.59, a drop of $0.12 (-0.11%) from the previous month. Compared to December 2016, RevPAR is up $2.31 (2.1%), which continues its streak of YOY growth that began 7 years ago in December 2010. The RevPAR 12MMA had been nearing the peak of $119.43, which occurred in December 2007, but over the past 4 months it has been headed in the opposite direction.
Note: RevPAR is a performance metric in the gaming and lodging industry. It is computed by dividing a resort’s or hotel’s room revenue by the room count and the number of days in the period being measured.
gaming rev
On a 12MMA basis gaming revenue net of baccarat was up 0.51% to 735.7 million in December, a small pickup that more than made up for the tiny dips of the previous two months. YOY growth in December of 4% was up (1.0 point) from the 12-month period ending in November. This makes 35 months straight of positive YOY growth. December’s gaming revenues net of baccarat were nearly 88% of the October 2007 peak of $834.4 million.
The net baccarat revenues are largely comprised of slot revenues, which generally reflect wagering of typical gamblers, especially U.S. gamblers. While changing spending patterns among millennials under 35 have caused a decrease in slot revenues, they are now recovering because there has finally been some improvement with the issue of constrained disposable income.
home sales
According to Home Builders Research, in December, total (new and resales) Clark County home closings on a 12MMA were down -0.02% from the previous month, ending an 11 month streak of positive growth. Total sales fell below last month’s peak of 4,933 by 1. However, on a YOY basis total home sales are still well above the previous year by 8.6%, an improvement over the year period ending in November of 0.7 points. New home sales had a YOY growth rate of 16.9% in December. Existing home sales also continue growing steadily with a YOY growth rate of 7.1%; not as rapidly as new homes but healthy growth, nonetheless.
home price
Per Home Builders Research, December’s 12MMA median home price (new and resale) was $244,453, a 1.31% gain over the previous month. This was the biggest monthly increase of the year. Compared to December 2016, the price is up 11%. The current median home price remains well below the peak of $305,333, which was recorded close to 11 years ago in February 2007. December’s estimate is 80% of the peak price.
The median new home price was again up 6.3% from the previous year, reaching a new peak in December of $343,588. The previous peak of $327,066 occurred in February 2007.
The median resale home price was $225,900 in December, an 11.4% increase during the last 12 months. This was the biggest YOY increase since October 2014. The peak of $286,833 occurred over 10 ½ years ago in April 2007. This means that the current resale price has now recovered approximately 79% of its pre-recession peak. For comparison, the median resale home price in the Reno-Sparks MSA was over $100,000 higher at $336,901 (12MMA).
The rate of home appreciation for new and resale homes continued its rising trend in December. YOY growth had dropped to 6.4% in December 2016 but has risen steadily in the 2nd half of 2017, averaging 9.2% YOY growth over the last 6 months. The annual peak of 35.8% growth occurred in February 2005.
30 yr fixed
The 12MMA 30-year fixed rate mortgage in the Western Region was nearly unchanged, falling by just 0.01 points to 3.98% (12MMA) in January. This was the 2nd dip in a row after 12 straight months of increases. The 10-year peak of 6.4% occurred in October 2006. The 30-year fixed rate mortgage should remain relatively low, but will likely go up because of Federal Reserve actions.
case shiller
The 12MMA Case-Shiller home price index for the Las Vegas MSA reached 161.3 in November 2017, a rise of 7.6% compared to November 2016. The YOY growth rate has been picking up steadily since March of this year and in November the trend continues with the rate rising by 0.3 points from the previous month. The US index in November was up 1.0 again, reaching 198.9, an increase of 5.9% for it compared to the previous year. The Las Vegas index peaked at 233.2 in December 2006. The latest LV index is 69% of the peak. Both indexes have been on the rise since 2012. The greatest positive annual change (44.5%) in the Las Vegas index occurred in March 2005, while the greatest negative change (-31.8%) occurred in August 2009. These trends are similar to those reported by Home Builders Research.
commercial mtg
The 30-Day LIBOR remained relatively unchanged in January while the 10-year U.S. Treasury rose a whopping 32 basis points during the same period. Yields are believed to be rising due in part to an improving labor market, rising corporate profits, and an overall expansion in economic activity. In Janet Yellen’s final meeting as chair, a unanimous vote by the Federal Open Market Committee (FOMC) left its benchmark interest rate unchanged at a current range of 1.25% to 1.50%. The FOMC is expected to raise rates during the next meeting in March.
While interest rates continue to adjust upward, long-term fixed-rate loans have remained relatively low in the 3.75-4.85% range. Markets for the major loan segments remain quite liquid, creating flexible terms for borrowers.
taxable retail
Increased local resident and business spending in Nevada and Clark County continues to fuel rising taxable retail sales despite a declining visitor growth rate. We believe much of this growth is due to the volume of construction activity combined with vigorous visitor spending. Another record high was reached in November with over $3.45 billion in sales, a 3.8% increase from last year. The increase from the previous month was 0.27%. The YOY growth rate for taxable retail sales averages 4.2% through November.
November’s taxable sales are the highest ever recorded by the State of Nevada on a nominal basis (not inflation-adjusted). As such, they have boosted local and state government revenues and spending. Steadily improving local, regional and national job markets are key to this improvement. This is especially true regarding the health of regional and national economies, which have driven Southern Nevada’s growth, benefiting all of its sectors. They are also primary drivers of visitors and convention attendance to Las Vegas, which is ultimately reflected in tourism spending in the region.
Note: The Nevada Department of Taxation has recently made public its marijuana tax revenue data. We have added a new chart to the Stat Pack tracking the monthly contribution of this new revenue source, to the extent it is reported by the Department
weekly earnings

The Las Vegas MSA’s 12MMA of average weekly earnings (not inflation-adjusted) was up by just $1 in December after 4 straight months of $3 increases. The streak of growth started just over 3 years ago in September 2014 continues, nonetheless. On a YOY basis, the 12MMA was up $35 (4.6%) from December 2016.
When considered on an inflation-adjusted, YOY basis, earnings rose by 2.5% in December 2017 compared to December 2016, reaching $668 (in 2007 dollars). However, when compared to the previous month real earnings remained nearly the same, falling by just $0.13. Las Vegas’ average weekly real wage remains $83 (11%) below the most recent inflation-adjusted peak of $751 that occurred over 10 years ago in August 2007. The trough occurred in February 2012 at just over $616, so Las Vegas remains much closer to the trough than the peak.
weekly hours

The number of average weekly hours worked in Las Vegas (Clark County), on a 12MMA basis, picked up another 0.1 points in December, reaching 33.9. Weekly hours have been climbing steadily, albeit slowly. On a YOY basis, average weekly hours are up 0.7 hours from December 2016, a good sign considering they were either down or unchanged YOY through all of 2016. In Q4-2017, the U-6 unemployment rate recorded a 0.6 point drop, a bigger decline than in any of the previous 5 quarters. This suggests business reliance on part-time workers continues to decrease. The 7-year peak of 36.9 hours occurred more than nine years ago in October 2008.
Implication: Despite a decreasing U-6 unemployment rate, many companies continue to depend heavily on part-time workers and independent contractors. For this reason, Nevada’s U-6 unemployment rate (including discouraged and part-time workers) remains the nation’s 3rd highest at 10.8% as of Q4, 2017. However, the decreasing U-6 rate does seem to be having a salutary effect on weekly hours. In 2016, the net gain in weekly hours was 0. Already in 2017 weekly hours have increased 0.7 hours.
unleaded
As of February 2, Las Vegans saw the price of regular unleaded gasoline in the Las Vegas MSA increase by $0.11 (3.9%) from the month prior, resulting in a per gallon price of $2.72. The price of regular unleaded has gone up $0.29, or 11.8%, from a year ago.
According to AAA, “Six of the most expensive gas prices in the country are in the West Coast region: Hawaii ($3.39), California ($3.34), Alaska ($3.05), Washington ($2.99), Oregon ($2.89) and Nevada ($2.75). On the week, California (+7 cents) saw the region’s largest increase, while Washington, Oregon and Nevada each saw a 4 cent increase, Alaska jumped 2 cents and Hawaii increased by a penny. 
According to the EIA, gasoline stocks in the region dropped by the largest amount seen in the last 12 weeks – nearly 700,000 bbl. Inventories of gasoline sit at 33.9 million bbl, which is still 3.3 million bbl higher than last year’s level at the same time.”
emp permit
A well-known housing market indicator is the employment-to-housing permit ratio, or E-P Ratio. It compares monthly job growth to the number of housing permits issued during the same month. At 1.6 in December, the E-P Ratio for Clark County was unchanged from the previous month. Relative to December 2016, the E-P Ratio is up 0.2 points from 1.4. The general consensus among real estate analysts is that an E-P Ratio between 1.0 and 2.0 indicates a stable market. Clark County’s E-P Ratio has been in this range for more than a year now, since October 2016.
pot
Excise tax revenues generated from marijuana sales through the first five months are $24.6 million. The most readily available data report by the Nevada Department of Taxation contains retail and wholesale excise taxes. These taxes do not include sales and use taxes paid at point of sales at the dispensaries or the annual licensing fees paid by the industry. The wholesale excise tax is collected at a 15% rate from growers to dispensaries on medicinal- and recreational-use marijuana, while the 10% retail excise tax is charged to dispensaries’ recreational users.
According to the Department, tax revenue from the sale of marijuana is expected to reach $120 million over 2 years. With tax revenue only expected to rise in the coming months, the state appears to be well on track to reach this goal. The major “know unknown” is if the U.S. Justice Department will go through with its threats of curtailing or putting a halt to the industry’s activities.

Preview 2018

Last Friday, Team Stat Pack presented 66 riveting slides to attendees at the Las Vegas Metro Chamber’s Preview event. They provided an economic snapshot for Southern Nevada, the U.S. and the planet at large. We have received many requests for the slide show, so here it is in all its glory: the 2018 Preview slides.
Screen Shot 2018-02-02 at 11.18.07 AM
 

Update: Southern NV economic trends

Here are all the latest stats and graphs for the Las Vegas MSA. As always, don’t hesitate to contact RCG Economics chief John Restrepo at jrestrepo@rcg1.com with questions or comments.
stat highlights

positive

employ index
The RCG Employment Index’s 12-month moving average (“12MMA”) has now remained unchanged for 4 straight months, again holding at 98.7 through November. On a YOY basis, the Index is up 0.8 points from November 2016. After reaching 1.3 in June of this year, the YOY difference has fallen steadily as the Index remains stagnant. The Index is still 1.3 points below the November 2006 peak of 100.
job growth
The 12MMA of Clark County’s headline unemployment rate held at 5.1% in November 2017, making this the 4th month in a row that the rate remained unchanged. This is the longest streak seen since April 2011. The unemployment rate is 0.9 points below last October’s 6.0%. It reached its lowest level 11 years ago in October 2006 when it was just 4%. Southern Nevada is now hypothetically at “full employment.” We may be seeing the new normal in terms of unemployment post recovery.
The 12MMA rate of job growth in the Las Vegas MSA was also unchanged, holding at 3.0%. Job growth at the regional and national levels has been suffering from the same effect: According to the Brookings Institution, the slowdown is mainly due to decreasing demand for unskilled labor.
yoy construction
Construction in the Las Vegas MSA continues to be boosted by a strong housing market AND a recovering commercial market. In November 2017 the number of Southern Nevada construction workers rose by 7,817 (12MMA) from November 2016, a 14.2% increase that puts total construction jobs at 62,775. That makes 65 straight months (over 5 years) and counting of construction job growth.
Construction jobs represent 6.9% of the region’s job-base. The number of construction jobs today is well below the November 2006 peak of 108,833, when they accounted for 11.4% of all MSA jobs. Pre-recession construction job numbers, which were artificially inflated due to the real estate bubble, are not likely to return in the foreseeable future. That said, the region’s construction industry is much more stable today than it was then.
visitor volume
In November 2017 the Las Vegas MSA’s 12-month visitor count, on an annualized basis, was 42.3 million. This is down from the 42.4 million over the 12-month period ending in October 2017. The number of visitors to Clark County fell in November for the 6th month in a row, this time by -0.3%. When compared to November 2016, there was -1.4% YOY growth. This is the 4th month in a row YOY visitation has declined.
After leading since the start of year, with November the visitor total for 2017 is now nearly even with that of 2016. The total visitor count through 11 months for both years is approximately 39.1 million. Visitor growth has slowed considerably in 2017 with a YOY visitor growth rate average through November of 0%. The average rate of growth over the same period in 2016 was much better at 2.8%. We believe we have now entered a sustained period of slower growth. The month of greatest YOY growth since the recession was September 2011, when visitor volume grew by 4.5%. We believe that the primary reason for the slowdown is a room capacity issue.
convention attendance
In November, Clark County’s annualized convention attendance saw a small gain from the previous month of 0.2%, reaching a new record high of 6.61 million attendees for the Las Vegas MSA over a 12-month period. Compared to November 2016, convention attendance is up 6.5%. The previous annualized peak attendance of 6.35 million was in January 2007.
Convention attendance saw significant gains in 2016 with 10 months of greater than 10% YOY growth. However, YOY growth had been steadily slowing since the recent high in July 2016 of 20.2%. November 2017’s 6.5% YOY increase is the biggest of the year, but still smaller than every month of 2016. Demand growth is being limited by maxed-out capacities at Las Vegas’ various convention facilities. The good news: In June 2017, the Las Vegas Convention and Visitors Authority’s Board of Directors gave final approval for an expansion and renovation of the Las Vegas Convention Center, which will allow the city to host more conventioneers.
hotel rev
In November 2017, the 12MMA of hotel revenue per available room (RevPAR) in Clark County was $114.71, a drop of $0.57 (-0.49%) from the previous month. Compared to November 2016, RevPAR is up $3.03 (2.7%), which continues its streak of YOY growth that began in December 2010. The RevPAR 12MMA had been nearing the peak of $119.43, which occurred in December 2007, but over the past three months it has been headed in the opposite direction.
Note: RevPAR is a performance metric in the gaming and lodging industry. It is computed by dividing a resort’s or hotel’s room revenue by the room count and the number of days in the period being measured.
gaming rev
On a 12MMA basis gaming revenue net of baccarat was down -0.07% to 731.9 million in November, the second decrease after 8 straight months of growth. YOY growth in November of 3.0% was down (0.2 points) from the 12-month period ending in October. This makes 34 months straight of positive YOY growth. November’s gaming revenues net of baccarat were nearly 88% of the October 2007 peak of $834.4 million.
The net baccarat revenues are largely comprised of slot revenues, which generally reflect wagering of typical gamblers, especially U.S. gamblers. While changing spending patterns among millennials under 35 have caused a decrease in slot revenues, they are now recovering because there has finally been some improvement with the issue of constrained disposable income.
home sales
According to Home Builders Research, in November, total (new and resales) Clark County home closings were up 0.39% from the previous month, reaching 11 straight months of positive growth on a 12MMA. Total sales surpassed last month’s peak of 4,914 and reached a new high of 4,933 sales. On a YOY basis total home sales were up 7.9%, the lowest YOY growth rate of 2017. New home sales had a YOY growth rate of 17.9% in November. Existing home sales also continue growing steadily with a YOY growth rate of 6.3%; not as rapidly as new homes but healthy growth, nonetheless.
home price
Per Home Builders Research, November’s 12MMA median home price (new and resale) was $241,284, a 0.94% gain over the previous month and a 9.7% gain over November 2016. The current median home price remains well below the peak of $305,333, which was recorded over 10 years ago in February 2007. November’s estimate is 79% of the peak price.
The median new home price was again up 6.1% from the previous year, reaching a new peak in November of $340,694. The previous peak of $327,066 occurred in February 2007.
The median resale home price was $222,992 in November, a 9.7% increase during the last 12 months. This was the biggest YOY increase since May of 2016. The peak of $286,833 occurred over 10 years ago in April 2007. This means that the current resale price has now recovered approximately 78% of its pre-recession peak. For comparison, the median resale home price in the Reno-Sparks MSA was over $100,000 higher at $333,151 (12MMA).
The rate of home appreciation for new and resale homes most recently peaked in March 2016 at 10.2% YOY growth, but was down to 6.4% in December of that year. Since then it has risen steadily and is now back up over 9%, averaging 7.9% for the year through November. The annual peak of 35.8% growth occurred in February 2005.
30 yr fixed
The 12MMA 30-year fixed rate mortgage in the Western Region was nearly unchanged, falling by just 0.02 points to 3.99% (12MMA) in December. This was the first dip in 14 months. The 10-year peak of 6.4% occurred in October 2006. The 30-year fixed rate mortgage should remain relatively low, but will likely go up because of Federal Reserve actions.
case shiller
The 12MMA Case-Shiller home price index for the Las Vegas MSA reached 159.9 in October 2017, a rise of 7.3% compared to October 2016. The YOY growth rate has been picking up steadily since March of this year. The US index in October was again up 1.0, reaching 197.9, an increase of 5.8% for it compared to the previous year. The Las Vegas index peaked at 233.2 in December 2006. The latest LV index is 69% of the peak. Both indexes have been on the rise since 2012. The greatest positive annual change (44.5%) in the Las Vegas index occurred in March 2005, while the greatest negative change (-31.8%) occurred in August 2009. These trends are similar to those reported by Home Builders Research.
commercial mortgage
The 10-year U.S. Treasury rose 10 basis points from the end of November to 2.47%. The 30-Day LIBOR continues to increase as it rose nearly 20 basis points in December. The current rate of 1.56% is the highest level since the midst of the global financial crisis in 2008-2009. Approximately $350 trillion of financial products and loans are linked to LIBOR. As expected, the Federal Reserve increased its prime lending rate from 4.25% to 4.50%. The highly anticipated tax bill passed before the President’s Christmas deadline and will have broad effects on the economy and individual taxpayers. The stock market finished 2017 with significant gains; the DJIA up 25%, S&P 500 up 20%, and the NASDAQ up 29%. For the first time in its 90-year history, the S&P 500 posted positive total returns in every month of the calendar year.
Interest rates remain favorable but continue their ascent, prompting many investors to acquire or refinance properties now.
taxable retail
Despite slowing visitor growth, increased local resident and business spending in Nevada and Clark County continues to steadily fuel rising taxable retail sales. We believe much of this growth is notably due to the volume of construction activity combined with vigorous visitor spending. Another record high was reached in October with over $3.44 billion in sales, a 3.8% increase from last year. The increase from the previous month was 0.20%. The YOY growth rate for taxable retail sales averages 4.3% through October.
October’s taxable sales are the highest ever recorded by the State of Nevada on a nominal basis (not inflation-adjusted). As such, they have boosted local and state government revenues and spending. Steadily improving local, regional and national job markets are key to this improvement. This is especially true regarding the health of regional and national economies, which have driven Southern Nevada’s growth, benefiting all of its sectors. They are also primary drivers of visitors and convention attendance to Las Vegas, which is ultimately reflected in tourism spending in the region.
Note: The Nevada Department of Taxation has just made public its marijuana tax revenue data. We have added a new chart to the Stat Pack tracking the monthly contribution of this new revenue source, to the extent it is reported by the Department
weekly earnings
The Las Vegas MSA’s 12MMA of average weekly earnings (not inflation-adjusted) went up by another $3 in November. This was the 4th month in a row nominal average weekly earnings rose by $3, continuing a steady streak of growth started just over 3 years ago in September 2014. On a YOY basis, the 12MMA was up $37 (5.0%) from November 2016.
When considered on an inflation-adjusted, YOY basis, earnings rose by 2.8% in November 2017 compared to November 2016, reaching $669 (in 2007 dollars). This was an increase of $1 from October. Las Vegas’ average weekly real wage is now $82 (10.9%) below the most recent inflation-adjusted peak of $751 that occurred over 10 years ago in August 2007. The trough occurred in February 2012 at just over $616, so Las Vegas remains much closer to the trough than the peak.
weekly hours
The number of average weekly hours worked in Las Vegas (Clark County), on a 12MMA basis, picked up another 0.1 points in November, reaching 33.9. Weekly hours have been climbing steadily, albeit slowly. On a YOY basis, average weekly hours are up 0.7 hours from November 2016, a good sign considering they were either down or unchanged YOY through all of 2016. In Q3-2017, the U-6 unemployment rate recorded a 0.1 point drop, which suggests that business reliance on part-time workers continues decreasing. The 7-year peak of 36.9 hours occurred nine years ago in October 2008.
Implication: Despite a decreasing U-6 unemployment rate, many companies continue to depend heavily on part-time workers and independent contractors. For this reason, Nevada’s U-6 unemployment rate (including discouraged and part-time workers) remains the nation’s 3rd highest at 11.4% as of Q3, 2017. However, the decreasing U-6 rate does seem to be having a salutary effect on weekly hours. In 2016, the net gain in weekly hours was 0. Already in 2017 weekly hours have increased 0.6 hours.
fuel
As of January 4, Las Vegans saw the price of regular unleaded gasoline in the Las Vegas MSA decrease by $0.05 (-1.8%) from the month prior, resulting in a per gallon price of $2.62. The price of regular unleaded has gone up $0.22, or 9.3%, from a year ago.
According to AAA, “Gas prices in the West Coast region remain among the most expensive in the country… According to EIA’s latest weekly report, the region’s refinery crude utilization rate hit a new record high at 96.3 percent, which is the highest level since the mid-2010s and well above the 80 percent rate seen at this time last year. In addition, gasoline inventories continue to measure above 30 million bbl. for a third week, positioning the region with a comfortable supply level as the year begins.” 
pot tax
Tax revenues generated from marijuana sales through the first four months are $19.1 million. The most readily available data report by the Nevada Department of Taxation contains retail and wholesale excise taxes. These taxes do not include sales and use taxes paid at point of sales at the dispensaries or the annual licensing fees paid by the industry. The wholesale excise tax is collected at a 15% rate from growers to dispensaries on medicinal- and recreational-use marijuana, while the 10% retail excise tax is charged to dispensaries’ recreational users. According to the Department, tax revenue from the sale of marijuana is expected to reach $120 million over 2 years. With tax revenue only expected to rise in the coming months, the state appears to be well on track to reach this goal. The major “know unknown” is if the U.S. Justice Department will go through with its threats of curtailing or putting a halt to the industry’s activities.

Southern Nevada Economic Metrics

Following is all the latest data for the Las Vegas Metro Statistical Area. Don’t hesitate to email Stat Pack co-publisher and RCG Economics Principal John Restrepo with questions at jrestrep0@rcg1.com.

stat highlights

positive

emp index
The RCG Employment Index’s 12-month moving average (“12MMA”) remained unchanged through September, making this the 2nd time in 4 months the Index did not change. On a YOY basis, the Index is up 1.1 points from September 2016. It continues 1.3 points below the November 2006 peak of 100.
job growth
The 12MMA of Clark County’s headline unemployment rate held at 5.1% in September 2017, making this the 2nd out 4 months that the rate remained unchanged. The last time this happened was over a year ago in April 2016. The unemployment rate is 1 point below last September’s 6.2%. It reached its lowest level in October 2006 when it was just 4%. Southern Nevada is now hypothetically at “full employment”.
After 2 straight months at 3.2%, the 12MMA rate of job growth in the Las Vegas MSA fell 0.1 points to 3.1%. Job growth at the regional and national levels has been suffering from the same effect: According to the Brookings Institution, the slowdown is mainly due to decreasing demand for unskilled labor.
u3
The U-3 unemployment rate, or headline rate, for Nevada saw its first uptick since Q2, 2016, rising by the same amount it did then: 0.2 points. The U-3 rate now sits at 5.2%, or 0.6 points above the average rate for 2007, the year the Great Recession hit. The U-6 rate fell just 0.1 points from 11.5% in Q2 to 11.4% in Q3, the smallest improvement in the U-6 rate since Q2 of 2015. Nevada’s U-6 rate is still the third highest in the nation, beating only New Mexico and Alaska. As shown in the chart, the spread between the two rates is generally tightening, indicating that wage increases will continue to solidify.
In terms of the U-3 rate, Nevada slipped several places in Q3 and now has the 7th highest headline rate in the nation. In Q2 it was beating 13 other states.
yoy construction
A strong housing market AND a recovering commercial market continue to bolster development in Las Vegas, leading to more construction jobs. In September 2017 the number of Southern Nevada construction workers rose by 6,842 (12MMA) from September 2016, a 12.6% increase that puts total construction jobs at 61,133. That makes 63 straight months (just over 5 years) and counting of construction job growth.
Construction jobs now represent 6.7% of the region’s job-base. September’s jobs are still well below the November 2006 peak of 108,833, when they accounted for 11.4% of all MSA jobs. However, the number of construction jobs was pushed to an artificial high during the real estate bubble. We are not likely to see those pre-recession construction job numbers in the foreseeable future. That said, the region’s construction industry that is much more stable today than it was then.
visitor volume
On a 12MMA basis, the number of visitors to Clark County in September fell -0.21% from the previous month. When compared to September 2016, there was -0.8% YOY growth. This is the second month in a row of a drop YOY visitation. 2017’s nine-month visitor total of approximately 32.1 million remains a bit higher than the same period in 2016 of 32 million, with the differential continuing to shrink. Visitor growth has slowed considerably in 2017 with a YOY visitor growth rate average through September of only 0.3%.
The average rate of growth over the same period in 2016 was much better at 3%. We believe we have now entered a sustained period of slower growth. The month of greatest YOY growth since October 2005 was September 2011, when visitor volume grew by 4.5%.
convention attendance
In September, Clark County’s convention attendance (on a 12MMA basis) saw a -1.01% monthly decrease, dropping from last month’s record high of 540,568 attendees for the Las Vegas MSA to 535,111. Compared to September 2016, convention attendance is still up 1.1%. The previous 12MMA monthly peak attendance of 529,185 was in January 2007.
Convention attendance saw significant gains in 2016 with 10 months of greater than 10% YOY growth. However, YOY growth has been steadily slowing since the recent high in July 2016 of 20.2%. This is primarily due to facility capacity issues controlling the demand growth. The good news: In June 2017, the Las Vegas Convention and Visitors Authority’s Board of Directors gave final approval for an expansion and renovation of the Las Vegas Convention Center.
hotel rev
In September 2017, the 12MMA of hotel revenue per available room (RevPAR) in Clark County was $115.55, a drop of just $0.02 (-0.02%) from the previous month. Compared to September 2016, RevPAR is up $4.35 (3.9%), which continues its streak of YOY growth that began in December 2010. RevPAR is nearing a new high, now representing 97% of the RevPAR 12MMA peak of $119.43, which occurred in December 2007.
Note: RevPAR is a performance metric in the gaming and lodging industry. It is computed by dividing a resort’s or hotel’s room revenue by the room count and the number of days in the period being measured.
gaming rev
On a 12MMA basis gaming revenue net of baccarat was up for the 7th month in a row with an increase of 0.21% to $732.7 million in September. YOY growth in September of 4.4% was down (0.2 points) from the 12-month period ending in August. This makes 32 months straight of positive YOY growth. September’s gaming revenues net of baccarat were nearly 88% of the October 2007 peak of $834.4 million.
The net baccarat revenues are largely comprised of slot revenues, which generally reflect wagering of typical gamblers, especially U.S. gamblers. While changing spending patterns among millennials under 35 have caused a decrease in slot revenues, they are now recovering because there has finally been some improvement with the issue of constrained disposable income.
home sales
According to Home Builders Research, in September, total (new and resales) Clark County home closings were up 0.22% from the previous month, surpassing last month’s peak of 4,848 sales and reaching a new high of 4,858 sales (12MMA). On a YOY basis total home sales were up 9.2%. While new home sales are still doing remarkably well with YOY growth of 18.1%, this was the first time in 8 months the growth rate was under 20%. Existing home sales also continue growing steadily with a YOY growth rate of 7.8%; not as rapidly as new homes but healthy growth, nonetheless.
home price
Per Home Builders Research, the 12MMA median home price (new and resale) in September 2017 was $236,604, a 1.04% gain over the previous month and an 8.8% gain over September 2016. The peak of $305,333 was recorded over 10 years ago in February 2007. September’s estimate is just over 77% of the peak price.
The median new home price was up 5.6% from the previous year, reaching a new peak in September of $336,719. The previous peak of $327,066 occurred in February 2007.
The median resale home price was $218,408 in September, an 8.8% increase during the last 12 months. The peak of $286,833 occurred over 10 years ago in April 2007. This means that the current resale price has recovered approximately 76% of its pre-recession peak. By comparison, the median resale home price in the Reno-Sparks MSA was $326,147 (12MMA).
The rate of home appreciation for new and resale homes most recently peaked in March 2016 at 10.2% YOY growth, but was down to 6.4% in December of that year. Since then it has risen steadily and is now back up over 8%, averaging 7.5% for the year through September. The annual peak of 35.8% growth occurred in February 2005.
30 yr mtg
The 12MMA 30-year fixed rate mortgage in the Western Region increased by 0.04 points to 3.88% in October, continuing a general upward trajectory initiated in December of 2016. The 10-year peak of 6.4% occurred in October 2006. The 30-year fixed rate mortgage should remain relatively low, but will likely go up because of Federal Reserve actions.
case shiller
The 12MMA Case-Shiller home price index for the Las Vegas MSA reached 157.5 in August 2017, a rise of 6.6% compared to August 2016. The US index in August was also up, reaching 195.9, an increase of 5.6% for it compared to the previous year. The Las Vegas index peaked at 233.2 in December 2006. The latest index is 67% of the peak. Both indexes have been on the rise since 2012. The greatest positive annual change (44.5%) in the Las Vegas index occurred in March 2005, while the greatest negative change (-31.8%) occurred in August 2009. These trends are similar to those reported by Home Builders Research.
apartment vacancy
The Las Vegas Valley’s 12MMA apartment vacancy rate dropped 0.1 points in Q3 2017, the same amount it gained the previous quarter. The general trend since 2011 has been down. Apartment vacancies are slowly recovering. Over the last 9 years, the apartment vacancy rate peaked at 10.8% in Q2, 2010. It hit its lowest mark of 5.1% in Q1, 2007.
commercial mtg
Markets are currently being driven by the expected changes in European monetary policy, President Trump’s announcement of his nominee for chair of the Fed board, and policy maker’s view on the health of the U.S. and global economy. Treasury yields moved as high as 2.47% in October, the highest since March. At the heart of the move was speculation that President Trump’s pick for Fed chair could be Stanford University economist John Taylor (we now know he has nominated Jerome Powell). Additionally, The European Central Bank is expected to reduce the amount of bonds it is buying in its quantitative easing program. U.S. rates take their cue from Europe and yields on German bonds have also been moving higher. On November 1, Federal Reserve officials voted unanimously to leave interest rates unchanged while signaling they remain on track to hike once more this year.
With rising rate indexes and an impending federal funds rate hike on the horizon, motivated investors continue to search for opportunities to place capital in commercial real estate.
taxable retail
Despite slowing visitor growth, increased local resident and business spending in Nevada and Clark County continues to steadily fuel rising taxable retail sales. We believe much of this growth is due to the volume of construction activity combined with vigorous visitor spending. Another record high was reached in August with over $3.42 billion in sales, a 4.1% increase from last year. The increase from the previous month was 0.29%. The YOY growth rate for taxable retail sales averages 4.4% through August.
August’s taxable sales are the highest ever recorded by the State of Nevada on a nominal basis (not inflation-adjusted). As such, they have boosted local and state government revenues and spending. Steadily improving local, regional and national job markets are key to this improvement. This is especially true regarding the health of regional and national economies, which have driven Southern Nevada’s growth, benefiting all of its sectors. They are also primary drivers of visitors and convention attendance to Las Vegas, which is ultimately reflected in tourism spending in the region.
Note: It will be interesting to see how adult-use marijuana sales will pan out relative to the taxes they will generate. The first of month of reporting occurred this July, but there has been a delay in releasing the data to the public. While still small relative to Nevada’s revenue-base, we will begin tracking the contribution that these sales are making to the base as soon as the data are available, likely next month.
weekly earnings
The Las Vegas MSA’s 12MMA of average weekly earnings (not inflation-adjusted) went up by $3 for the second month in a row, continuing a steady streak of growth started precisely 3 years ago in September 2014.  On a YOY basis, the 12MMA was up $35 (4.8%) from September 2016.
When considered on an inflation-adjusted, YOY basis, earnings rose by 2.6% in September 2017 compared to September 2016, reaching $666 (in 2007 dollars). This was an increase of $1 from August. Las Vegas’ average weekly real wage is now $85 (11.3%) below the most recent inflation-adjusted peak of $751 that occurred 10 years ago in August 2007. The trough occurred in February 2012 at just over $616, so Las Vegas remains much closer to the trough than the peak.

weekly hours

The number of average weekly hours worked in Las Vegas (Clark County), on a 12MMA basis, stalled at 33.7 in September after 2 consecutive months of 0.1 point increases. Weekly hours had been climbing by 0.1-points every 2 months from January to July, so we may see a return to this pattern with an increase next month. On a YOY basis, average weekly hours are up 0.5 hours from September 2016, a good sign considering they were either down or unchanged YOY through all of 2016. In Q3-2017, the U-6 unemployment rate recorded a 0.1 point drop, which suggests that business reliance on part-time workers continues decreasing. The 7-year peak of 36.9 hours occurred in October 2008.
Implication: Despite a decreasing U-6 unemployment rate, many companies continue to depend heavily on part-time workers and independent contractors. For this reason, Nevada’s U-6 unemployment rate (including discouraged and part-time workers) remains the nation’s 3rd highest at 11.4% as of Q3, 2017. However, the decreasing U-6 rate does seem to be having a salutary effect on weekly hours. In 2016, the net gain in weekly hours was 0. Already in 2017 weekly hours have increased 0.5 hours.
fuel
As of November 6, Las Vegans saw the price of regular unleaded gasoline in the Las Vegas MSA decrease by just a penny (-0.6%) from the month prior, resulting in a per gallon price of $2.67. The price of regular unleaded has gone up $0.18, or 7.2%, from a year ago.
According to AAA, “Moving into the week, the West Coast continues to lead the U.S. among most expensive markets. Six of the top ten most expensive markets in the country are found in this region: California ($3.21), Hawaii ($3.17), Alaska ($3.09), Washington ($2.94), Oregon ($2.79) and Nevada ($2.73) 
In the EIA’s latest report, total gasoline stocks are below 28 million bbl, reaching a seven-week low at 27.6 million bbl. Additionally, EIA’s report showed that the refinery utilization rate of crude fell to 81.4 percent from 81.9 percent last week, which means less gasoline is being produced. With demand remaining high and supplies tightening in the region, prices are also being pushed up by these supply and demand factors.”
emp permit
A well-known housing market indicator is the employment-to-housing permit ratio, or E-P Ratio. It compares monthly job growth to the number of housing permits issued during the same month. The E-P Ratio for Clark County is down 0.4 points from last month, the biggest drop since November 2016, from 1.6 in August to 1.2 in September on a 12MMA basis. Relative to September 2016 the E-P Ratio is down 0.9 points from 2.1. The general consensus among real estate analysts is that an E-P Ratio between 1.0 and 2.0 indicates a stable market. Clark County’s E-P Ratio has been in this range since October 2016.

Clark, Washoe Counties in Top 170 for Incoming Investments

Positive economic growth for the state’s Big Two!
Both business and GDP growth are relatively strong for Clark and Washoe Counties when compared to counties in the rest of the country, according to a recent report by SmartAsset. The analysis measures and compares five key economic metrics:  incoming investment, business growth, GDP growth, new building permits, and federal funding. The five metrics are then combined to determine an “income investment index.”
Specifically, SmartAsset looked at the change in the number of businesses established in each county over a 3-year period as a measure of whether people are starting new business ventures in a county. They also measured real GDP growth (inflation adjusted) in the local economy, the number of new building permits per 1,000 homes, and federal funding received by each county in the form of contracts awarded to businesses, divided by the population.
Despite its overall U.S. ranking of 131 among U.S. counties, Clark is competitive with many of the Top 10 counties in both business growth (8.0 percent) and GDP growth (shown in millions):
clark1 In fact, Clark outperforms the national averages in the first three SmartAsset categories but its overall ranking is dragged down a bit by its lower than average per capita federal funding.
The following map from USASpending.gov shows that most federal contract money is concentrated in just a handful of states (2017-2018 data):
map1

Despite that concentration, Washoe County actually does quite well in this metric, with per capita federal funding well above the national average and better than almost every county on the Top 10 list.
 
washoe1
Business growth of “just” 4.1 percent is what holds back Washoe’s income investment index rating. While four percent is quite respectable as a general rule, the only county in the Top 10 with growth under 5 percent is Fairfax, VA – but it is buoyed by a disproportionate amount of federal funding, thanks to the fact that “local business” is government.
Clark and Washoe were the only counties in Nevada with index ratings in the high forties, keeping both regions close to the national average. Nevada’s other counties were in the thirties and forties. Here are the metrics for the 10 Silver State counties included in the study:
chart1
It is notable that the respective rankings of 131 and 169 for Clark and Washoe Counties look positively spectacular when compared with the top two counties from two of the nation’s most populous states. The top two counties in New York – Saratoga and Tompkins – are ranked 369 and 386 nationally. Illinois fares even worse, with its top two counties coming in at 387 and 477.
For comparison, here are the Top 10 U.S. counties according to the SmartAsset report, with Wasatch County, UT as the only Mountain West region to make the list. It’s also worth noting that L.A., which many Nevadans love to hate, ranked second nationally:
chart2
Finally, we took it upon ourselves to compare and rank the top two counties in the eight Brookings Instution’s Mountain West states by Incoming Investment Index. Clark ranked 7th out of 16 and Washoe ranked #9: 
Screenshot 2017-11-10 12.22.45
 
Here is how SmartAsset used its included economic metrics to create its index rankings:

We scored every county in our study on these four factors, weighting each factor equally. We then combined those scores to create a final ranking of cities. With that ranking, we created an index where the county with the most incoming investments was assigned a value of 100 and the county with the least investment activity received a zero.

Data sources for the SmartAsset analysis were:  U.S. Census Bureau County Business Patterns Survey, U.S. Bureau Economic Analysis, U.S. Census Bureau Building Permits Survey, USAspending.gov