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September 18, 2014

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Economists: Las Vegas poised for steady, sustainable growth

If Las Vegas and Southern Nevada can limp through the next two years, the region could see long-term economic growth rivaling the days before the Great Recession.

The valley isn’t alone: the entire West could see steady and sustained economic growth after 2015, economists told local business leaders today during a meeting sponsored by UNLV at the M Resort in Henderson.

“We’re still a long ways away from where we were in 2007, but we’re improving,” said Stephen Brown, director of UNLV’s Center for Business and Economic Research. “Our growth is slower than the rest of the nation but, of course, we’re recovering from a lot steeper losses.”

Economists are basing forecasts on analysis of trends regionally and across the nation.

Before the recession, Nevada led an unprecedented era of growth for a quarter century, said Lee McPheters, research professor of economics at the Carey School of Business at Arizona State University.

Prior to 2008, Nevada had the nation’s fastest growing state economy over the previous 25 years. The state also led the U.S. in population growth and job creation.

Those trends reflected across the West, McPheters said. During the same 25-year period, states west of South Dakota saw the biggest economic, population and job booms. But when the economy crashed, the West fell harder.

“We had been the highest of the high flyers then in recession, we were the lowest of the low,” McPheters said.

But as the economy slowly rebounds, western states are benefiting.

This year, McPheters said, Texas and Arizona trailed only North Dakota, Oklahoma and Kentucky in job growth. North Dakota and Oklahoma are leading new jobs through their development of energy.

The cities with the highest job growth, meanwhile, are all in western states: Houston, Seattle, San Francisco and Denver.

Growth everywhere is slow, however. Across the nation, key economic indicators such as consumer spending, jobs, real estate markets and unemployment are improving on an average of only about 2 percent a year.

McPheters used the job market in Arizona as an example. That state lost 2.6 million jobs during the crash. Although it’s been among the fastest to rebound, it has only replaced a little more than 400,000 jobs.

Nevada, meanwhile, went from No. 1 in job creation to the highest unemployment in the nation.

Although Nevada fell furthest, it, too, is seeing slow signs of recovery.

UNLV’s Brown said Las Vegas and Southern Nevada are experiencing an upswing in tourism and with it, a rebound in population, jobs and employment.

“The big properties on the Strip seem to have the market figured out, and the visitors are returning,” Brown said.

Those who are coming to Las Vegas for vacations aren’t gambling as much as they used to, but they’re spending their money elsewhere. “The money has shifted to pools, nightclubs and retail,” Brown said.

Still, those are good signs for continued growth.

“As long as we get visitors, we are going to get employment,” Brown said.

If politicians can find a solution to the so-called fiscal cliff and avoid another recession, economists say, the U.S. could see slow growth and get back to pre-recession levels within the next year.

Without an answer to avoid the fiscal cliff, all bets are off.

“They may yet prove to be the Grinch that stole Christmas in Washington,” Brown said.

Even in a best-case scenario, it will take three to five years, however, for western states to crawl back to where they were in 2007.

With continued growth from the rest of the country, western states could see another economic explosion after 2015, lasting for years to come.

“People will start moving back here, and affordable housing will be a draw,” Brown said. “We may not see the type of growth we had before the recession, but we can expect to see a moderate and sustainable growth through 2050.”

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  1. Here's hoping "growth" means tourism growth, not population growth. We need to get back 22-to-1 ratio of annual visitors to permanent residents, and preferably a metro population of less than 1.5 million.

  2. Oh but then there's the housing market....how many houses are in foreclosure stalemate now and not coming out? We could have affordable housing in foreclosures but it's been stymied by the bill passed a year ago where banks might lose their shirts if they admit to financial wrong doing, and we all know banks never lose, even against the law. Instead they're sitting on upside down properties and our politicians act helpless to this disaster.

    Sorry...until the housing crisis in Vegas gets back to a sense of normalcy no amount of tourism will rework the valley's greater economic problems.

  3. The so-called "housing crisis" has little to do with the overall picture of economic growth and stability in Las Vegas. People do not have to own to live here and work here, and the visitors could care less who owns and who rents.

  4. James, the fault of the economy in 07/08 was that it relied heavily on tourism and housing/development. We're done with building for the most part, and we need to look at other avenues to strengthen the local economy. Sure tourists will always come here, it's Vegas. But, Vegas is promoting business moving here like Zappos and the down town project. We need more diversification to fill those houses with stable job holders.

    The housing market is key. Look at how badly it effected so many other sectors.

  5. Las Vegas has relied on tourism and (re)development as primary economic drivers for most of its history. The magic bullet of diversification will only ever be a minority percentage of our economic engine; seventy cents of every dollar spent here is derived from tourism, much as it always has been. You want diversification? Sure, go ahead and give it a whirl. But absolutely not at the expense of what we sell best here. As for the idea that "we're done with building for the most part" ... Well, I remember an almost 20-year period when no new resorts were built on the Strip. We survived that, too.