Low-income Southern Nevada residents facing economic pains, economists say
Southern Nevada’s short and long-term economic prospects may be characterized by efforts to develop existing industries and diversify into new ones, economic leaders forecasted on Wednesday.
Economists and business leaders discussed the immediate and long-term possibilities for Southern Nevada’s economy during the 2024 Economic Outlook, an event hosted by UNLV’s Center for Business and Economic Research. During the Wednesday panel discussion at Fontainebleau, UNLV and other thought leaders said they did not believe there was a recession risk in the immediate future, but noted that low-income and high-income consumers were experiencing the economy differently.
Sandip Bhagat, chief investment officer at Whittier Trust, said macroeconomic trends such as the country’s GDP and future GDP projects suggest the country is achieving a “soft landing,” the economic policy of tamping down the high inflation of the post-COVID period without causing large increases in unemployment. But he noted that some lower-end consumers still face economic pains from high prices in food, energy and rent.
The reason for the better picture overall, he said, was because high-end consumers account for “more than 50 percent of consumer spending, and they have been bolstered with a very significant wealth effect from high home prices and high stock prices,” he said. “So the consumer is bifurcated. Overall, in aggregate, they’re still in good shape, which is why you are seeing economic growth numbers in the mid 2 percent.”
Economists said the health of the housing sector in Southern Nevada will play a large role in the region’s economy in the short and the long term. In the near term, economists will watch how potential interest rate cuts from the Federal Reserve could impact housing development.
But that may take years of permitting and development to see real effects on the ground. Meanwhile, nearly 48 percent of renters are paying more than 35 percent of their income on rent, according to a research report by the Lied Center for Real Estate at UNLV.
“We’re going to see this narrative continue through next year as the demand hasn’t really abated and the supply hasn’t necessarily increased,” CBER Executive Director Andrew Woods said.
CBER Director of Research Stephen Miller said Nevada’s labor market was also going through a notable transition from the pandemic. The center found the accommodation and food services sector has lost about 8,500 jobs since pre-pandemic, but that many have shifted toward arts, entertainment and recreation. That suggests the state is moving toward its goal of diversifying into sports entertainment. But there are still about 10,000 workers missing from the labor force compared to pre-pandemic.
It could be those shifts that explain Nevada’s relatively high unemployment – 5.6 percent in September – compared to the national average of 4.1 percent.
“Once they catch on that things are switching, then (employers) are having to adjust wages and benefits, trying to attract workers,” Miller said. “That restructuring, I think, is explaining our higher unemployment at the moment in Nevada.”
Contact McKenna Ross at mross@reviewjournal.com. Follow @mckenna_ross_ on X.
