Nevada Recovers From Recession, But No Guarantees of Blue Skies Ahead
By Frank X. Mullen
Look at Nevada’s economic indicators for the remainder of this year and glimpse visions of sunshine, lollipops and rainbows.
Unemployment is low, new jobs are being created, our population is growing, housing prices are soaring again, the construction sector is gaining steam and the state’s gross domestic product has shown steady growth over the last five years. Tesla and other new arrivals are boosting northern Nevada’s economy while manufacturing and logistics are booming in the south.
The Great Recession hit the Silver State harder than most other regions of the country, but business interests and state officials are optimistic that the present slow, steady growth will continue to pull the state out of the abyss it tumbled into in 2008.
The numbers bode well for continued recovery. The metrics “show a healthy, stable, and growing economy,” Dan Soderberg, director of the Nevada Department of Employment, Training and Rehabilitation told Nevada Business magazine in January. A report by the Lee Business School and Center for Business and Economic Research at the University of Nevada, Las Vegas notes growth in tourism, gaming revenue, housing permits, population growth and personal income. The Southern Nevada economy is expected to continue to outpace the U.S. economy, the report said.
But other state statistics and realities on the ground are nothing to brag about.
“Have you seen all the vacancies in the storefronts (in Northern Nevada)?” asks Lynn Keller, executive director of the Opportunity Alliance of Nevada, an advocacy and education group aimed at helping people of low to moderate income. “In terms of recovery, we’re not there yet.”
Keller cites data from Prosperity Now, a national group dedicated to helping people on the lower end of the economic scale to achieve financial security, stability and, eventually, prosperity. The group’s 2018 Prosperity Now Scorecard places Nevada 48th on a list of 51 states and the District of Columbia. The scorecard rates states on such areas as home ownership and housing, business and jobs, health care, financial assets and education.
For example, the group gave the Silver State an “F” grade for having the fourth-lowest home ownership rate in the nation and “D” grades in four other categories, including education. On the plus side, income inequality is lower than in all but eight states and Nevada ranks fifth for employers offering health insurance (55 percent).
“Overall, Nevada actually dropped two points from the previous year’s scorecard,” Keller says. Her group educates consumers who may be struggling with expenses about how to manage their finances and “get out of their situation,” she says. Keller says even when people work two jobs, prosperity often remains elusive. She recently met a cocktail server who is also a social worker and talked to a Transportation Security Administration employee who moonlights as a waiter.
She says that for many working Nevadans, the goal of financial security is “getting further and further away” as the cost of living, particularly housing, steadily increases. “It’s way out of line,” Keller says. “Numbers can say anything you want, but you have to look around and see what’s happening to people.”
Elliott Parker, an economics professor and associate dean of undergraduate programs and administration at the University of Nevada, Reno says the economic numbers look good, but you have to drill deeper to see what’s beneath the statistics. “It’s true Nevada had the fastest employment growth (over the last few years), but that employment growth is due to people who were unemployed getting jobs and people moving here getting jobs. But if you look at how much employees produce, it’s stagnant and in some quarters declining. Basically it fell down in 2007 and 2008 and (with the recovery) output per employee has not increased; it’s been flat.
“If you look at gross state product per capita, the numbers aren’t that impressive. So the recovery is that people are still moving to Nevada. Yes, we have employment growth, and yes, our unemployment rate has come down and we’re closer to the national average and that’s good. But it’s not that productivity is improving. Wages have been pretty stagnant in Nevada as is productivity. We’ve got population growth, but a lot of it is people moving to Nevada to retire.”
Home building is recovering, Parker says, but the problem is we’re building upper-end houses for retirees, not for workers. “Then you have the worries about what if something goes wrong?” he says. “Things have improved, things have gotten better. Nevada is no longer a basket case and that’s good. I hope they keep improving.” But he says when things go wrong, such as big firms like Tesla running into production trouble and laying off several hundred workers, the recovery would falter quickly.
“I don’t mean to suggest we’re anywhere near where we were; things are better,” Parker says. “The economy is improving. It’s just not as grand or glorious as a chamber of commerce may like to think it is.”
Some segments are creating wealth, he notes. Those who invest in property are doing well. Reno-Sparks, for example, has had the fastest-growing real estate values out of more than 400 population centers assessed nationwide. “That’s not just a talking point. That’s the data,” he says. “The reason is not that it’s so high, but that it went so low, far below any historical number, adjusting for inflation.”
So don’t break out the champagne just yet, but there is reason for optimism.
“I think there’s a high quality of life in the area,” Parker says, noting that high-profile economic development victories don’t tell the whole story of the state’s economic health. “Those things are positive and they do backfill some of the mess and the deep hole we had, but I just look at the data and the data says not bad, but not all good… I’m not a Cassandra, but I’m not a cheerleader either.”