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The Nevada Economy

This report analyzes the impact of the economic crisis on the Nevada economy, focusing on the mortgage crisis, housing construction crisis, credit crunch, and decrease in tourism. Using the REMI model, the study estimates the loss in jobs, income, and spending in Southern Nevada during 2007 and 2008. The findings suggest that the construction industry had the most significant contribution to the overall economic crisis. The report also discusses the decoupling myth, discretionary spending, unemployment prospects, and housing conditions in Las Vegas.

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The Nevada Economy

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  1. The Nevada Economy Keith Schwer, PhD The Center for Business and Economic Research University of Nevada, Las Vegas September 28, 2009

  2. Modeling the Economic Crisis

  3. The Crisis in Southern Nevada Mortgage crisis • Wealth effect of housing bubble Housing construction crisis • Excess housing displaces new housing that would have been built Credit crisis • Stoppage of major construction on Las Vegas Strip Tourism • Decrease in gaming and hotel revenues

  4. Purpose Not clear how each effect contributed to the overall economic crisis in Southern Nevada What is the relative contribution of these effects? • Las Vegas economy is dominated by construction • We would expect construction effects to dominate other effects. But, by how much?

  5. Modeling Approach REMI model • Base year: 2006 • Impact years: 2007, 2008 Estimate loss in • Jobs • Income • Spending

  6. Data: Housing Construction

  7. Data: Housing Construction

  8. Data: Mortgage Crisis

  9. Data: Credit Crunch

  10. Data: Tourism

  11. Data Summary

  12. Simulation of Total Impact REMI model • Base year: 2006 • Impact years: 2007, 2008 Simulation of total impact • Employment • Spending • Personal income • Impact by sector

  13. Storyline Decoupling Myth Discretionary Spending Unemployment Prospects Ahead Travel Construction

  14. Population Conclusions No Longer a Growth Engine Drivers’ License Count Down

  15. Income Growth: 2007Q4 – 2008Q4 In-migration Slows Drivers’ License Count Down

  16. Housing-Price Index Percentage Change from the Previous Period for Selected Western States: 2008Q1 to 2008Q4

  17. Estimated Excess Supply of Housing Units in Greater Las Vegas by Unit Type: July 2009 1 Excludes mobile homes 2Estimated excess supply = estimated units less estimated normal vacancy inventory 3Includes apartments and multiplex units

  18. Housing Conditions 35,000 “See-Through Units” Slow Adjustments Excess Supply – Further Price Declines Affordability Returning

  19. Percent of Mortgaged Properties with Negative Equity In-migration Slows Source: First American Core Logic

  20. Job Growth: Las Vegas & U.S.

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