Nevada has a strong labor market that has vastly recovered from the economic downturn of the pandemic, but record-high inflation and the struggle to find new workers cause people to worry that a recession is around the corner.
Since the peak of the pandemic, Nevada has made a stellar comeback, recovering all of the jobs that were lost during the pandemic and adding more to the roster. Some industries are now reporting job numbers higher than pre-pandemic levels, i.e. Trade, Transportation & Utilities, Education & Health Services, Construction, Financial Activities, and Manufacturing.
Southern Nevada in particular was affected most by the pandemic and its consequences due to the local economy’s reliance on the Leisure & Hospitality sector, which took a big hit. While the Leisure & Hospitality sector statewide has not returned to pre-pandemic levels, Nevada added 1.46 million new jobs to the economy, a 4.8 percent increase from September 2021.
Statewide unemployment is currently higher than the national average at 4.4 percent (compared to 3.5 nationwide), but over the last year, Nevada experienced a 21 percent decline in its unemployment rate, dropping from 5.4 percent in September 2021 to 4.4 percent in September 2022.
According to Brian Gordon from Applied Analysis, there are two job openings for every person in the unemployment system. The highest rates by county can be found in Nye and Clark Counties at 5.3 percent, with Clark reporting 86,000 people in the unemployment system. The lowest belongs to White Pine County at 2.4 percent.
Between Q1 and Q2 2022, the state’s Gross Domestic Product (GDP) increased by 1 percent, and gaming revenue in September 2022 was charted at $1.24 billion, making September the 19th consecutive billion-dollar revenue month, according to the Nevada Independent.
Despite the economic recovery, Americans are concerned about the possibility of an incoming recession. A September survey released by the Bank of Montreal indicates that 84 percent of Americans fear that a recession will start before the end of this year.
Presently, inflation is at a 40-year high and bleeding Americans of their money. Since September 2021, the price of Las Vegas homes, for instance, increased by 11 percent, averaging at around $450,000 in September 2022. Additionally, the average price of gas in Nevada as of November 4th is about $4.94/gallon. A year ago, the average price was $3.95/gallon.
Despite the growing numbers, Nevada’s labor force participation rate is at an all time low, despite the state recovering 100 percent of the jobs lost in the pandemic. Companies are laying off employees in preparation of a recession, and Nevada’s top industries are struggling to find workers. The US Chamber of Commerce reported that the Leisure & Hospitality industry in Las Vegas had the highest quit rate since July 2021 (5.4 percent).
Many possible factors may be contributing to the labor shortage, such as workers leaving employment to find higher-paying jobs or seeking remote work. According to a recent Gallup survey, 91 percent of US workers hoped they could continue working some hours from home, with 30 percent indicating that they would find new employment if they were called back to the office.
Nevada also has a “brain drain” issue, defined by Nevada graduates in Science, Technology, Engineering, & Math (STEM) fields leaving the state for better work, leaving Nevada with little science and engineering talent, especially women and people from marginalized communities.
Universities have made efforts to curb the state’s “brain drain” problem. University of Nevada, Las Vegas (UNLV) and University of Nevada, Reno (UNR), for example, started a $4 million program to connect graduates with STEM careers in the state.
Economists reassure that a recession is not yet imminent. Emily Mandel, an economist at Moody’s Analytics, says the US economy is experiencing a slowdown in growth but is “clearly not in a recession yet.” and that it is “far from certain” that one is coming.
“That said, however, things are going to feel a bit like a recession even without technically entering that sustained and widespread contraction that we would use to describe a recession,” said Mandel. “That’s really because we’re coming off of these two years of extremely strong growth. Things are going to be slower.”
Mandel anticipates that inflation will end around 8 percent this calendar year before going down to 4 percent in 2023 and in the low 2 percent range in 2024. She adds that if the country were to experience a recession, it would likely hit in the middle or latter half of 2023.
Only time will tell if the Nevada economy will remain stable and address the issues plaguing its workforce and industries.