The stream of positive economic news continues to be steady, and welcome. In May of 2018, the current U.S. economic expansion became the second-longest on record, and Nevada’s growth is among the best in the nation. The state’s unemployment rate is falling. Its incomes are rising. Its population is booming, and its home prices are surging. In times like these, we are reminded of the powerful economic engine that has been a hallmark of Nevada’s modern history.
During these good economic times, Americans are doing what they usually do – spending more while saving less. Personal consumption per capita in the second quarter climbed 4.1 percent, the third-highest rate reported in the last decade. Meanwhile, the national consumer debt service ratio – debt payments as a percentage of disposable income – is inching closer to 6 percent, a level not reached since 2007. Notably, the current makeup of household debt has shifted from majority mortgage-related to majority consumer debt, such as credit cards and auto loans.
As consumer debt has climbed, personal savings have lagged. The U.S. personal savings rate averaged 6.8 percent during the past year. While that rate is much better than the sub-4 percent levels prior to the last recession, it is well below the 8-percent-plus savings rates that we saw in 2012, much less than the 10 percent rates witnessed in the 1980s or the 12 percent rates reported in the 1970s.
Our memories tend to be short. Years pass, and remembrances of the recession fade. We get comfortable, maybe even complacent. It is always easier to focus on the good times of today instead of saving for tomorrow, yet while we enjoy the economic fruits of the present, we should not be too quick to forget the lessons of our past.
Economies are a series of cycles. They boom and bust. Jobs are gained and lost. Opportunities flourish and fade. I am by no means forecasting economic doom and gloom or suggesting that a recession is looming just around the corner. That said, the realities of economic history tell us that a down cycle will come, and common sense reminds us of a simple truth: it is much easier to spend money you don’t have than it is to pay back money you don’t have.
Alas, common sense is not always common practice, and increasing consumer debt is a risk that will inevitably leave many unprepared for the next downturn. I would submit that a bit of austerity in prosperity may very well extend our current positive economic momentum and better position us to weather unexpected, but inevitable, periods of decline.
Yes, things are good right now. For some, better than they have ever been. But, now is not the time for complacency; now is the time to fortify the conservative economic principles that have underpinned Nevada’s unmatched economic growth for the past century and to make the investments necessary to ensure that the foundation laid for future growth is strong, stable and sufficient. For individuals, this may mean putting more aside for retirement or a college fund. For businesses, this may mean revisiting expense line items like they did when top-line revenues were decreasing; and, for governments, it will mean committing resources to rainy-day funds, investing in infrastructure and holding the line on the cost of entitlements.
Nevada’s economy was stronger coming out of the Great Recession than it was going in because of difficult, often heart-wrenching, decisions made by families, business owners and elected leaders. The decisions we make today, a period that I hope becomes known as the Great Expansion, are equally important to ensuring that the vitality we’ve earned is not short-lived.
School is back in session across Southern Nevada, and students are headed back to campus to greet new teachers, meet new friends and face new academic challenges. Too often, the dialogue around our public schools focuses on the challenges incumbent in educating a diverse population of 324,000 students in the nation’s fifth-largest school district, neglecting the notable successes of the schools, students and teachers that make up the Clark County School District.
Consider, for example, that the 2018 school year concluded with a record 20,030 high school graduates, who finished with the distinction of having the highest graduation rate ever recorded in the district. The 83.2 percent graduation rate by the Class of 2017 was an impressive increase of 8.3 percentage points from a year earlier, and it marked an incredible improvement since the 59.3 percent graduation rate reported in 2011.
A significant number of these students enrolled in rigorous Advanced Placement courses and successfully passed AP exams that typically translate into college credits. More than 14,000 students took nearly 25,000 AP exams last school year, with 49.5 percent earning a passing score of 3 or better, a 2.3 percentage-point improvement from the prior year. The positive results were attributed in part to efforts by the district to encourage students to take the test and commit funds to help students pay exam fees.
The seeds of these successful high school students were sowed in the elementary and middle schools they attended along the way, which makes the improvements among those CCSD campuses all the more encouraging. In the latest state school ratings, the number of CCSD elementary and middle schools earning a 5-Star ranking increased from 41 to 42, while the number of 4-Star schools climbed from 42 to 51. Importantly, about half of the 5-Star schools were elementary schools that serve high proportions of English language learners and low-income households.
Many individual schools earned recognition for their achievements. Sandra Lee Thompson and Bill Wallin elementary schools were named National Blue Ribbon Schools last academic year. The two schools were among just 342 selected by U.S. Department of Education. Two other schools—Walter Bracken STEAM Academy and Gordon McCaw STEAM Academy—were among just 61 schools to be named National Title I Distinguished Schools. Bracken was recognized for excellence in serving special populations of students, such as homeless, migrant and English language learners, while McCaw was recognized for exceptional student performance for two consecutive years.
Both Bracken and McCaw elementary schools are part of CCSD’s renowned magnet school program, which regularly wins national recognition for the breadth and quality of its educational offerings. During the last school year, 23 of CCSD’s magnet schools were recognized by Magnet Schools of America, including earning the association’s top honor. East Career and Technical Academy earned the Distinguished Merit Award as the Magnet School of the Year, and McCaw received the top award for a New and Emerging Magnet School Merit Award of Excellence. Eleven other local campuses were named Schools of Excellence, and 11 more were named Schools of Distinction.
There were also countless individual and group achievements throughout the student body, including three U.S. Presidential Scholars, 62 National Merit Scholarship semifinalists, robotics teams from Cimarron-Memorial High School and the Las Vegas Academy of the Arts competing in the FIRST robotics world championship, and the Centennial High School JROTC Academic Team making it to the U.S. Navy JROTC Academic Bowl Championship.
There are many reasons to take pride in our schools and our students. That said, we should also remember that these achievements don’t happen in a vacuum. The success of our students depends on attentive parents, dedicated teachers and support staff, school administrators, local leaders and state policymakers, all of whom play important roles in cultivating academic success. Together, they are changing the dialogue and the outcomes; and, most importantly, improving the long-term prospects of our children and our community.
A resurgence of the local housing market has led to some mixed emotions for Southern Nevada residents. Higher prices translate into more equity for homeowners. In fact, every one percent increase in housing prices translates into $1.2 billion in new or recovered equity for the valley’s single-family residential homeowners. According to the Federal Housing Finance Agency’s most recent report, the Las Vegas metropolitan statistical area reported the greatest appreciation among the nation’s largest 100 metropolitan areas during the past year: 17.1 percent. And, sustained gains have helped reduce the share of underwater mortgages, i.e., those where the home value is less than the home mortgage, from approximately 75 percent in 2010 to less than 8 percent today.
Recovered home equity notwithstanding, for many, nation-leading price increases are all too familiar. Residential research firm SalesTraq puts the current price of a median existing home at $260,000 and a median new home at a record $377,000. At the same time, the National Association of Home Builders reports that Las Vegas’ housing opportunity index—a measure of relative affordability—has fallen from 88.7 in 2012 to 58.8 in 2018. Translation: housing prices are outstripping incomes.
Current housing trends are unsustainable. That, however, does not mean that Southern Nevada is in the midst of a housing bubble. Consider the fundamentals. Clark County was permitting more than 43,000 housing units in 2006; at present, that number is only 14,000. Between 2006 and 2007, homes listed by REALTORS© more than doubled from 13,400 to 29,000. Between January 2017 and May 2018, listings decreased from 6,600 to a very modest 5,000. Today, effective resale housing inventory stands at 1.3 months, less than half the 10-year average level of 3.1 months; and, for homes priced under $300,000, the effective inventories are measured in weeks, not months.
Combine these supply-side considerations with strong rates of population and employment growth, increasing equity in-migration from states like California, limited land availability and an improving economy where families are resurfacing after epidemic levels of joblessness, bankruptcy and foreclosure, and you have a condition where there are simply too few homes available for those wanting to buy in or buy up. The result: double-digit increases in home prices.
Southern Nevada is not in a housing bubble. We are in a strong sellers’ market that could become a bubble if prices continue to escalate on their current trajectory for an extended period or if the market fails to adapt to an unanticipated shift in economic conditions (e.g., a recession). The bigger risk is not the bottom falling out of the housing market, it is a continued run up in housing prices, decreasing affordability and making housing unattainable for working families.
Ironically, the ability to attract and retain workers will be the single most important factor in Southern Nevada’s ability to reach its economic potential during the next decade, and those workers will need affordable housing. Thus, ensuring housing accessibility and affordability may very well prove a critical factor in sustaining housing prices in a healthy economy.
When tickets for “Hamilton” went on sale in April, hundreds of people lined up around The Smith Center for the Performing Arts for the chance to see the smash-hit Broadway musical. Within hours, most of the 63,000 tickets for the four-week run were sold out. The runaway success of “Hamilton” in Southern Nevada is due to the show’s critical accolades and overwhelming popularity, of course, but it is also a testament to The Smith Center itself.
Since opening in 2012, The Smith Center’s thoughtful design and amenities have attracted many world- renowned performing artists while providing a new home for the Nevada Ballet Theatre and the Las Vegas Philharmonic. Our community has embraced The Smith Center, which Pollstar ranks among top 10 performing arts centers in the world. In just the past few months, productions of “The Color Purple” and “Andrew Lloyd Webber’s Love Never Dies” ranked among Pollstar’s top five weekly rankings for ticket sales in theaters with fewer than 5,000 seats. There is little doubt that “Hamilton” will continue that run of top-grossing Broadway productions at The Smith Center.
The only ticket that might have been harder to get than “Hamilton” in June, was for the Vegas Golden Knights as they extended their improbable postseason run into the Stanley Cup Final. The Golden Knights were THE story of professional sports this season as they shattered every expansion team record for success. Then, they surely outdid even the most optimistic expectations by getting within three wins of a championship. During the season-long stretch of success, Southern Nevada embraced the Golden Knights, selling out T-Mobile Arena game after game, and rocketing team merchandise sales and TV ratings toward the top of the league.
Both The Smith Center and the Golden Knights have been unqualified successes, but it wasn’t always a given that they would even exist to become the cherished community assets that they are today. Without vision and dedication from key community leaders, Southern Nevada might still be the largest city without a performing arts center or a major professional sports franchise.
The idea for a world-class performing arts center first took seed more than 20 years ago when it was proposed by local business and community leaders. The project gained momentum over the next decade as support was gathered and plans were made. In the mid-2000s, major pieces started to fall into place. State legislation created a car rental fee to provide half of the project financing under a private-public partnership. The Clark County Commission approved the fee, and the City of Las Vegas provided additional bond funding and donated the land at Symphony Park.
The private fundraising campaign reached its goal thanks in large part to the Donald W. Reynolds Foundation’s commitment of $150 million, the largest philanthropic gift in state history. The foundation chairman and his wife, Fred and Mary Smith, became The Smith Center namesakes. At the time of the 2009 groundbreaking, the Los Angeles Times called it a “cultural gamble,” both in terms of the economy at the time and the ability of Southern Nevada to support the arts. It would have been easy to put the project on hold and wait for better days ahead. Yet the project pushed forward and opened in 2012 to rave reviews and widespread community support.
The Golden Knights faced their own doubts long before they even had a name. When team owners Bill Foley and the Maloof family began their campaign for an expansion NHL team in Southern Nevada in 2015, many in the hockey world questioned the viability of a franchise in a non-traditional market whose residents were mostly from somewhere else. To prove the market’s commitment to the NHL, the owners began a season ticket deposit campaign with an initial goal of 10,000 deposits. That number was reached within two months, and the new goal of 16,000 was ultimately reached for the inaugural season. That was enough to convince the NHL, and the Golden Knights were born. The early community enthusiasm carried well into the inaugural season, especially as the team quickly exceeded expectations. Most games sold out, and regular season home attendance averaged 18,042 fans per game, 103.9 percent of the arena’s seating capacity, ranking fourth-best in the NHL. During the playoff run, thousands of fans gathered at watch parties outside the arena and at several locations throughout the valley. Although the season ended in disappointment, Southern Nevada and the Golden Knights proved that what many thought impossible, was quite the opposite.
The Smith Center and the Golden Knights are now woven into the fabric of the Southern Nevada community, and it’s difficult to imagine a world without them. They provided shared experiences that have strengthened the bonds among our families, friends and neighbors. They instilled a new level of community pride and unity. They inspired us to imagine what could be. As we celebrate these relatively new community assets, we should remember and thank the people who made it happen; the visionaries who looked over the horizon and dreamed big; the doers who relied on patience and dedication to overcome doubt and obstacles to see their visions become realities. No longer the largest city without a performing arts center or a major professional sports team, we can check those off the list and look again to beyond the horizon at what comes next. Our community has accomplished so much in just the past 10 years, I can’t wait to see what we can dream into reality in the next 10.
I am generally of the belief that there are two groups of people in the world: those who are building robots and those who are being replaced by them. Autonomy, artificial intelligence (AI), and what is commonly referred to as the Internet of Things (IoT) are changing the way we live and the way we do business.
Nevada has done a remarkable job of embracing new technologies and opening new markets. In 2013, Nevada was named by the Federal Aviation Administration as one of six locations authorized to test unmanned aerial vehicles. Shortly thereafter, the state created the Nevada Institute for Autonomous Systems, which is currently teaming with dozens of companies that are actively developing technologies ranging from infrastructure inspection and package delivery to advanced military command and control systems.
In 2017, the Nevada Legislature passed Assembly Bill 69 (AB69), allowing the testing and operation of autonomous vehicles on Nevada roads. Arguably among the most progressive legislation of its kind in the nation, AB69 enables self-driving cars—after guaranteeing certain safety requirements—to operate commercially in Nevada without a human driver in the vehicle. Later this summer, regulations will be adopted pursuant to AB69 that will make Nevada first in the world to establish a formal regulatory regime for the use of self-driving cars to transport persons and property. Moreover, AB69 authorizes the use of driver- assisted platooning technology. To be clear, platooning technology enables two or more trucks to travel on highways at electronically coordinated speeds, following at distances that would be unreasonable without technological assistance, thus significantly increasing operating efficiency.
The only thing more impressive than the magnitude of these changes is the speed at which they are being developed and deployed. Perhaps our greatest achievement is providing the regulatory certainty companies need to reduce the time between innovation and commercialization.
About six months ago, I taught my daughter to drive; I doubt she will ever do the same for her child. Uber drivers may be among the shortest-lived occupations in U.S. history. Within five years, autonomous semitrucks will have the ability to move goods across the country without needing to stop for rest, to eat or for a bathroom break, significantly reducing the costs of goods movement. Within a single generation, people will not own cars, but will share and schedule them. I wonder what people are going to do with all those garages. I wonder how insurance companies and trial lawyers will adapt when there are few, if any, accidents attributable to driver negligence. I wonder how many fewer miles of roads and highways we will need because we are able to use the ones we already have with near perfect efficiency.
There are those who are fearful of these changes because they will displace employees and make some businesses functionally obsolete. These are legitimate concerns, and the rapid transformation of our economy will require that policymakers give increased attention to help working families adapt. What we must not do is slow, inhibit or create any artificial barriers to the development, testing and deployment of new technologies. We also must remember the potential that many of these technologies have to increase our productivity and, most importantly, save thousands of lives. Ninety four percent of motor vehicle fatalities—more than 30,000 deaths last year alone—were caused by human error. News reports will inevitably focus on tragedies that occur when self-driving technology fails, is improperly used or cannot prevent an accident, but few reports will be made about the thousands of times the technology saves a life. Nevada’s willingness to be an early adopter is already paying dividends, and the long-term upside more than outweighs any short-run challenges.
I have no idea what the next big thing will be, but I know I want it in Nevada. To do this, we are going to have to maintain our position as being pro-business and pro-resident and get very comfortable, very quickly, with being pro-robot.
Why is it that Las Vegas attracts so much investment? The answer is simple. Forty- two million visitors will spend more than $34 billion in Las Vegas in 2018. Every one of those dollars is discretionary, and the intense competition to capture them drives innovation and investment.
We rebuild, and we rebrand; we construct the world’s largest hotels and then countless amenities and attractions designed to fill them. This investment, in turn, drives additional visitor spending. Some refer to this as a “virtuous cycle.” Others call it a unique form of American capitalism. In either case, Las Vegas is the only U.S. economy that evolved principally to host people, and adding new and better experiences is an essential element of attracting and retaining visitors.
Those additions result in literally billions of dollars being invested each year and have far-reaching economic benefits. Some we see, but most we don’t.
Not surprisingly, the biggest projects become front page news. Recently, this has included: the $4 billion Resorts World Las Vegas project; the 60-story, 4,000-room The Drew Las Vegas; The Madison Square Garden Company’s ambitious MSG Sphere venue; the $1.8 billion Raiders Stadium; and the $1.4 billion Las Vegas Convention Center renovation and expansion project.
Smaller, lower-profile projects rarely make the papers, but shouldn’t be overlooked. Consider that a typical hotel room needs to be refurbished about every seven years. With 147,000 rooms in the market, this means that as many as 20,000 hotel rooms are being remodeled every year. What about the investments in all of the new restaurants, bars and nightclubs? In 2018 alone, more than 20 notable restaurant openings are planned in major hotel properties, including Los Angeles-based chef Ricardo Zarate’s Once at the Grand Canal Shoppes, the $2 million Cipriani Las Vegas at Wynn, and San Francisco-based Charles Phan’s Slanted Door Vietnamese concept at Caesars’ Forum Shops. Further, there are countless smaller investments that are nearly impossible to see. These include everything from a retail kiosk startup at the Fashion Show Mall; to the routine turnover of taxis, buses, limos and shuttles; to new investments in sustainable water, wastewater and power technologies.
Big or small, these investments are all principally motivated by capturing some share of that same $34 billion of visitor spending. And it is an unsurprising economic reality that the bigger, better and more innovative concept has historically done just that. Stated otherwise, innovation drives spending and spending drives innovation.
Perhaps more important than what has motivated the investment historically is how we maintain it going forward. This community has the same 34 billion reasons to ensure that the region’s tourism-based economy remains strong and those investments continue. The industry employs more people and generates more wage and salary payments than any other by a wide margin, and taxes paid by visitors are a big reason Nevada has no corporate or personal income tax. Community investments in transportation infrastructure, public safety and the promotion of major events pay dividends that do not just add to our quality of life, they sustain our way of life.
Construction and investment will inevitably ebb and flow. But today, southern Nevada has more than $18 billion in projects planned, proposed or currently under construction. These, and countless smaller undertakings that fly under the radar, reflect optimism, innovation and entrepreneurial spirit. In other words, they reflect the very essence of our local economy.
Maybe it’s the sight of a new construction project on a long-dormant desert parcel, or the seemingly busier than usual shopping center, or seeing California license plates everywhere you look. Throughout our day-to-day lives, there are signs that Nevada has returned to a period of economic growth and opportunity.
The state’s new era of growth is evident in the numbers. After dropping to as low as 32nd in annual population growth rankings in 2011, Nevada has placed among the five fastest-growing states for four straight years, including second-place rankings in the past two years. Since 2012, the Silver State’s population has grown by a nation-leading 8.9 percent, outpacing other fast-growing sun belt states such as Utah, Texas and Florida. This recent trend is reminiscent of the early 2000s, when Nevada topped the population growth rankings for seven years in a row.
Although the state is not expanding at quite that pace now, the list of economic and quality-of-life advantages that propelled Nevada’s growth then are the same factors fueling growth today. Employment opportunities remain a top draw, as the state is among the best when it comes to job creation. Year-over-year job growth in Nevada ranked it among the top five states in 44 of the past 55 months, including a streak of 19 straight months through the end of 2017, and since 2012, Nevada employment has grown by a nation-leading 17.3 percent. Nevada’s housing prices have appreciated considerably over the past few years, but they remain well below California levels, while other factors in Nevada’s favor, including the absence of a personal income tax, lower cost of living, a relative lack of highway congestion, and a favorable business environment, remain attractive to new residents.
While these factors help Nevada draw residents from all over the United States and abroad, they are especially attractive when compared to California, where unaffordable home prices, omnipresent traffic jams, and higher taxes are the norm. Notably, the Golden State still holds its appeal for more Americans than any other state, and it continues to grow at a middle-of-the-pack pace. Yet each year tens of thousands of Californians are voting with their feet and making the relatively short drive east on Interstate 15 or Interstate 80 to relocate to Nevada.
In 2016 more than 40,000 Californians moved to Nevada, bringing the total since 2000 to more than 650,000, or a third of all incoming new residents, according to Internal Revenue Service data. In-migration from California slowed slightly during the economic downturn but has since rebounded to approach pre-recession levels. Arizona, Texas, Utah and Florida round out the top five states of origins for new Nevada residents, but they pale in comparison to California, which alone accounts for as many incoming residents as the next 20 states combined.
Recent federal tax law changes make Nevada even more appealing to Californians, as newly enacted caps on deductions for state and local income and property taxes, known as the SALT deduction, and limits on the mortgage interest deduction make California a more expensive state to live in. Given these developments, we may very likely see an uptick of in-migration from our neighbor to the west.
As the influx of new residents to Nevada continues in the years to come, we can take comfort knowing that we’ve been here before. As a point of reference, the nearly 59,000 residents added in 2017 was higher than 39 other states, yet that one-year total is only the eighth-highest for Nevada since the turn of the century. We are a state built on migration and growth, acceptance and diversity, and our governmental policies reflect a mentality of looking ahead and preparing for future growth. That mentality is also ingrained in who we are as Nevadans. Three out of four state residents moved here from somewhere else, so we open our arms to the newcomers who, like many of us once did, left behind a place they knew and now call Nevada home.
For many of us, the mere suggestion of discussing the importance of infrastructure makes us feel like we’re back in high school trigonometry class. I fully admit infrastructure is not the sexiest of topics, but the roadways, bridges, airports, water pipes, flood control basins and other components of our nation’s infrastructure network are critical to our everyday lives. Too often they are taken for granted, a fact at least partially explaining the troublesome state of our nation’s infrastructure, which last year earned a D+ overall grade from the American Society of Civil Engineers. From bridges tumbling into rivers in Minnesota and Washington, to municipal water systems failing to deliver drinkable water in Michigan, infrastructure becomes front page news when it fails to serve its purpose.
Thankfully, here in Nevada so much is going right. The state has remained ahead of the curve in funding and developing the infrastructure necessary to support our growing economy. Could it be that neon lights and showgirls make infrastructure more exciting? Well, showgirls actually did make an appearance at the groundbreaking for the $900 million Project Neon, the state’s largest infrastructure project of all time, so perhaps that helps. The reality, however, is that Nevada’s reliable infrastructure is the product of consistent foresight from local, regional and state planners; dedication from government officials; and support from forward-thinking business leaders.
It may be hard to believe when you’re sitting on Interstate 15 among a sea of red tail lights, but that ongoing commitment and investment is paying off. Over the past eight years, Nevada has added an average of 1,000 miles of new roads and highways each year. That’s more than the entire state of California, and, in fact, only two states (Oregon and South Carolina) added more road miles than the Silver State during that time, according to federal statistics.
The expanded traffic capacity has certainly been welcome as Nevada is again among the fastest- growing states in the country. According to the latest census data, two-thirds of commuting drivers in the Las Vegas metropolitan statistical area get to work in under 30 minutes, the third- best mark among all U.S. metro areas with at least 2 million residents. Another measure, Texas A&M University’s Urban Mobility Scorecard, found southern Nevada’s Commuter Stress Index improved from 19th in 2008 to 31st in 2014 (higher is better). I support reduced commuter stress, as did the voters of Clark County who approved fuel revenue indexing. The additional funding is supporting dozens of regional road construction projects and will continue to do so through 2026, including Interstate 11, which will connect southern Nevada and Phoenix. Projects such as these ensure additional traffic capacity for a booming region with rapidly expanding needs to move people and goods.
No conversation about infrastructure would be complete without mentioning McCarran International Airport. The eighth-busiest airport in the United States, McCarran broke its all-time record in 2017, servicing 48.5 million passengers. McCarran is perhaps the state’s most critical piece of infrastructure, as it provides a crucial link that connects visitors not only to the Las Vegas Strip, but also the university and countless local businesses. The recent development of the $2.4-billion Terminal 3, which was ambitious and forward thinking at a time when critics said it was the wrong project at the wrong time, made 2017’s record passenger volume possible. It also ensures that airport capacity will not be a limiting factor on the community’s ability to grow.
Important infrastructure isn’t limited to transportation. Take the Southern Nevada Water Authority’s third intake. The project drilled 600 feet beneath Lake Mead to install what is essentially a new straw to suck in water even if lake levels decline past a critical point. The seven- year, $817-million project was not without its challenges, but the foresight to construct it has helped secure the regional water supply as ongoing drought conditions throughout the Western United States put pressure on increasingly scarce water resources.
Even as the economy tumbled and fiscal pressures climbed following the recession, Nevada officials led the push for many of the state’s largest infrastructure projects. Just a few years later, those investments are already paying off, helping Nevada return to a period of population and job growth that outpaces almost anywhere else in the nation. Perhaps the fact that our state’s infrastructure is so commonly overlooked is merely a reflection of how well it has been managed. That said, we should never take it for granted, as it adds immeasurably to our quality of life and is at the very foundation of our economic potential.
Southern Nevada again ranks among the fastest-growing regions in the nation, reporting a population growth rate roughly three times the national average. Renewed growth is increasing demand for everything from houses to hospitals, roads to restaurants. While the construction industry is struggling to keep pace, rising investment tends to be a harbinger of economic prosperity.
On Las Vegas Boulevard, cranes once again loom over the Strip. The echo of dynamite fills the air at the future site of the Las Vegas NFL stadium, and the convention center expansion has broken ground. But it’s not just high- profile projects along the Las Vegas Strip filling the development pipeline. More than 13,500 residential units were permitted during the past 12 months. Roughly 800,000 square feet of office space is actively under construction, with another 1.7 million square feet on the drawing board. Not to be outdone, the industrial sector currently has 2.3 million square feet going vertical and another 3.2 million square feet planned for future development. Buoyed by incremental fuel tax revenue, there are literally hundreds of millions of dollars in roadway construction actively underway, including the $900-million project NEON, the largest public works project in Nevada’s history. In total, commercial permits totaled $660 million during the past 12 months, up nearly 30 percent from the total reported just one year ago. Perhaps more impressive, $21.6 billion in new construction projects is underway statewide, with another $7 billion in planned projects in the development pipeline.
The sight of so many hard hats, earthmovers and orange cones is certainly welcome for an industry that was hit harder than any other by the economic downturn. Statewide, the construction industry lost more than 100,000 jobs between 2006 and 2012, the vast majority of those losses coming in southern Nevada. The state has recouped nearly half of those jobs so far, and today the industry is again a growing, albeit smaller, piece of Nevada’s more diversified economy.
The construction industry’s recovery has been steady over several years, but what had been a gradual expansion has recently accelerated to levels not seen for more than a decade. Nevada closed 2017 with 11,300 more construction jobs than a year before, the highest annual growth since 2005 and nearly twice the number of construction jobs created in 2016. Construction employment expanded by 14.0 percent last year, more than four times the statewide job growth rate and nearly three times the 5.1 percent reported by the second-fastest growing sector, education and health services.
The construction surge is also apparent in industry trends for weekly hours worked and wages. While weekly hours for all private workers and other sectors have been on the decline or flat, weekly hours worked in the construction industry increased 2.5 percent over the past year. Those additional work hours combined with rising hourly wages mean more pay for construction workers. Compared to a year ago, their weekly wages grew by 5.5 percent, five times the 0.9 percent growth rate for private wages overall.
While the construction industry’s impact on Nevada’s economy cannot be understated, a key point to remember amid the rapid growth is how much more the economy has diversified over the past decade. In 2006, construction jobs accounted for more than 11 percent of statewide employment. Today, that number is 6.7 percent, which is above the national average of 4.8 percent, but well below the worrisome levels of years past.
Nevada’s construction industry has long proven to be an accurate barometer for the economic health of the state as a whole. When the construction industry is thriving as it is now, it’s a good bet that the rest of our economy is, too. Obviously, avoiding the feverish pace reported more than a decade ago is critical to the long-term stability of the region. But for now, the resurgence of the state and regional construction sector is a welcome sign of both recovery and revitalization.
We are inundated by data. Job growth. Wages. Visitor volume. Unemployment rate. Consumer spending. Graduation rates. GDP. House Prices. It can be overwhelming. Yet, as the volume of data has grown, so has the number of tools for collecting, organizing and analyzing it. These tools make it possible to wade through reams of information and distill it into the critical insights necessary to make the best decisions.
This idea is at the heart of the United Way of Southern Nevada’s Community Connect website (communityconnect.uwsn.org). The organization has been helping children and families for six decades and is one of the most recognizable nonprofits in the region. It works as a conduit for ideas, support and resources from throughout the community and focuses them on finding solutions to improve early childhood education, high school achievement, post-secondary attainment and workforce support. The first step in finding solutions is identifying the problem, and United Way relies on community data to help it do so. Yet identifying, collecting and managing accurate up-to-date data presents a challenge for any organization, especially considering the alphabet soup of government agencies that produce critical datasets, such as the CDC, BLS, DETR, ACS and DOE.
Community Connect was created to pull this key data together into one place, where it can be easily accessed, updated and processed into usable insights for fulfilling the United Way mission. The data available at Community Connect aligns with the United Way’s focus: demographics, education, financial stability, and health and well-being. Each category contains a range of relevant indicators, such as race and ethnicity, educational proficiency, poverty rate and work status, that can be viewed in charts and maps to understand how needs change and vary in different parts of the community. Together, these indicators help the United Way staff spot trends and areas, including neighborhoods, where they can help. Community Connect also includes a section for Community Stories, where site visitors can read personal stories and informational posts about the impact of United Way programs throughout the community. Community Connect is available to the public, allowing nonprofits, government agencies, businesses and residents to learn more about the community they live in and how they can help make it a better place.
As someone who relies on data as much as I do, I take care not to forget that each number represents something in the real world: a parent, a child, a family, a household, a worker, a business. The data is the forest and helps us see the big picture, but we can’t overlook the trees. The United Way’s Community Connect helps us see both the forest and the trees, and that perspective will help us all in improving the understanding of our community and identifying new ways to make it better for all.
Inside the T-Mobile® Arena, it was easy at times to question which city we were standing in. Wave after wave of blue-clad Winnipeg Jets fans moved through the concourse. Spontaneous chants of "Go Jets go!" echoed through the arena. During the Canadian national anthem, thousands of Jets fans circling the ice belted their trademark "True North!" in unison, just like they do back home.
Of course, we weren’t in Winnipeg. We were in southern Nevada at the home ice of the Vegas Golden Knights, and the hometown fans countered the visitors with their own "Go Knights go!" chants and raucous cheers. As
the game wore on, the Jets fans' enthusiasm dimmed with each Knights goal. By the time the final horn sounded in a 5-2 win for the Knights, the visiting fans were mostly subdued as they shuffled out to The Park and
beyond. By contrast, Knights fans were in a celebratory mood after watching their team chalk up another win and continue to defy the typically dismal expectations that come with being an expansion franchise.
In just their first month of existence, the Knights have captured our community's attention and enthusiasm. The team has been selling standing-room only tickets to accommodate fan demand, and home attendance based on capacity percentage is third in the league among hockey hotbeds Chicago, Minnesota, Toronto and Pittsburgh. While the commitment of our local fans has been a driving factor in the attendance numbers, there is no denying the impact that visiting fans are making. The Knights' home schedule has already featured matchups against popular NHL franchises such as the Detroit Red Wings, Boston Bruins and Chicago Blackhawks, and their dedicated fans have helped fill T-Mobile Arena.
While some opposing fans are transplants now living in southern Nevada, many are visitors who traveled here to get away from the frigid weather back home and spend a few days vacationing in the nation's top tourism destination. During the Winnipeg game, I spotted a fan wearing a Jets jersey, shorts and flip-flops. That shouldn't have been a surprise since it was 75 degrees here, a relative heat wave compared to the 21 degrees in Winnipeg, which is situated about 50 miles north of Minnesota. That fan left the game disappointed, but he was here for several days to vacation and enjoy everything else that Las Vegas has to offer. When he returned to Canada, the game was just one of the memories he brought back with him.
The visiting fans who flock from Winnipeg, Boston and everywhere else are a visible sign that the addition of an NHL franchise to southern Nevada has created new economic development opportunities. As it has decade after decade, Las Vegas is continually evolving to maintain its status as a top tourism destination for visitors from the United States and around the world. That evolution has led to the development of world-class resorts, high-end shopping malls, celebrity chef restaurants, and renowned entertainment options that make Las Vegas what it is today. Each new amenity provides another potential reason to visit. That list of reasons now includes the Knights, and it will soon include the Raiders and the dozens of large-scale events that will be held at the new stadium at the south end of the Las Vegas Strip.
The stadium's ability to leverage southern Nevada's existing tourism infrastructure to host new and impactful events was a key consideration in the state committing $750 million in new room tax revenue toward construction. Between Raiders games, concerts and other events, an estimated 450,000 additional visitors will come to southern Nevada each year, creating an annual economic impact of $620 million. Among those visitors will be plenty of Raiders fans, a team with a global brand and the following to match. As the Golden Knights have proven in just a short time, the emergence of professional sports in southern Nevada provides not only a growing sense of civic pride, it also adds to the ever-evolving tourism landscape and strengthens our economy.
For the 2.2 million people who call southern Nevada home, our city is much more than the glittering resorts that dominate the skyline. We know that beyond the neon glow of Las Vegas Boulevard lies a community where men and women work, raise families, and pursue their dreams. We know that we come from across the United States and every corner of the globe, and, in many ways, we represent the very best of America, thanks to the diversity that underpins our community. We know that our city is unique in the most obvious ways; yet, at its core, it is just like anywhere else.
We've always known about the things that make us a community, but perhaps we did not know how strong our community could be until a madman unleashed terror on an innocent crowd, stealing 58 lives and injuring hundreds more. The horrors of that day, October 1, 2017, will forever be remembered. So too will the shock and the pain.
I will not forget the tragedy of that day, but I will also not forget that, when the worst of humanity was upon us, I saw the best of humanity on display.
I saw it in the heroic deeds carried out under fire by police officers, paramedics, and ordinary citizens. I saw it in the tireless life-saving work of doctors and nurses. I saw it in the patience of the hundreds who stood in line for hours to give blood. I saw it in the outpouring of donated goods and money from friends, co-workers, neighbors, and community leaders. I saw it in the vigils and memorials that honored the vibrant lives that were taken from us too soon. I continue to see it today, as we bond together and refuse to let the evil actions of a single man define who or what we are.
The rest of the world saw, too. From Los Angeles to London, they saw this community rise in the face of unspeakable tragedy. They saw a community bound by grief and buoyed by resolve, coming together to mourn, to heal, and to recover. They saw, maybe for the first time, the community that exists beyond the Las Vegas Strip and the emotional fabric that brought it closer together than ever before.
We will not be defined by our tragedies, but by our resiliency and resourcefulness in overcoming them. Las Vegas will move forward as it always has. The world has now seen a different side of Las Vegas, one that includes a community of caring people that isn't unlike their own. We also know that the strength and determination of our community has been building for the past century, only to be seen by the world on the first of October.Â As we return to the more normal ebbs and flows of daily life, I believe those connections will be stronger, forged by the pain that united us and the unwavering determination to push ahead as one.
As we emerge from our darkest days stronger and more resilient, I am reminded of a quote from novelist Arthur Golden: “Adversity is like a strong wind. It tears away from us all but the things that cannot be torn, so that we see ourselves as we really are.”
We have seen the community we really are, and we can be proud.
There is a lot of excitement in southern Nevada about what professional sports means for our community. The Vegas Golden Knights will take the ice in their first regular season home game on October 10; and, with a little luck, the Raiders will begin construction on their new $1.8 billion home a month or two later.
The excitement is warranted. There are only 30 cities with NHL franchises, and 30 with NFL franchises. The number of cities with both is, of course, a smaller number. This is not only a rite of passage for Las Vegas on its way to becoming a world-class sports city, but, for countless sports fans, it is a dream come true.
All this having been said, the opportunities created by sports as entertainment pale in comparison to those created by sports as a business. Beyond game day, beyond fight night, Las Vegas is well positioned to become a key market, if not the epicenter, of the nation’s sports industry. In fact, we are already well on our way to becoming just that.
Las Vegas is rarely mentioned among the nation’s premier “sports cities,” even though southern Nevada plays host to more professional and championship events than almost anywhere in the country. The short list includes the National Finals Rodeo, NASCAR, NBA Summer League, UFC and boxing bouts, NCAA basketball tournaments, the Las Vegas Bowl, Rugby Sevens, international soccer friendlies, the Las Vegas Marathon, and the United Soccer League, as well as bowling, bull riding, curling and equestrian championships. Add to the mix at least two professional sports franchises, increasingly competitive collegiate sports, improved and expanded minor league teams and the opportunity to host events like the World Cup and Super Bowl in a state-of-the-art, 65,000-seat stadium, and Las Vegas rivals any sports city in America.
Las Vegas is as important to the success of these events and franchises as they are to the success of Las Vegas. They bring a quality product; we bring 2.2 million residents, 43 million visitors, 150,000 hotel rooms, the country’s second-busiest origination and destination airport and 290,000 tourism-industry workers dedicated to the proposition that the party’s not over until the last person goes home.
Sports is already a multi-billion-dollar industry in southern Nevada; but it has the potential to be so much more. While the expanding array of sporting events provides a significant boost to our region’s core tourism industry, it also generates new opportunities to extend the economic impact of sports o the fi eld. The growing number of teams, players and professional staffs who support them, combined with Nevada’s business-friendly environment, presents ample opportunity for developing businesses and industries centered on sports and the athletes who compete in them.
Case in point: UFC.
Few could have imagined what the UFC would become when Frank Fertitta III and Lorenzo Fertitta purchased the organization in 2001. But in the more than 15 years since, UFC has grown from a niche combat sport into one of the most valuable and visible sports organizations in the world. There is no argument that UFC events have had a tremendous impact on southern Nevada. Las Vegas has hosted more than 100 UFC fights, easily more than any other city. International Fight Week, the UFC’s annual premier event, by itself generates an economic impact that easily exceeds $200 million.
UFC further grounded its presence in southern Nevada with the recent opening of its company headquarters in the southwest valley. The multi-million dollar 184,000-square-foot facility not only serves as the global headquarters for the organization, it is also home to the new UFC Performance Institute. Modeled after the top training facilities in the world , the 30,000-square-foot tech-laden institute was designed to provide UFC fighters with the best resources and expertise in nutrition, training, rehabilitation and other areas of human performance.
UFC has become a model for developing relationships and economic impacts both inside and outside the Octagon, including partnerships with nationally recognized medical groups such as New York’s Hospital for Special Surgery and Cleveland Clinic Lou Ruvo Center for Brain Health. With a focus on the development of innovative training methods, techniques and equipment to optimize athletic performance at its core, the Performance Institute is already becoming a hub for maximizing performance for athletes from any sport. In fact, UFC executives encourage athletes from other professional sports to use the Performance Institute and to cross train with UFC fighters.
Simply put, that’s just good business.
Critical mass, the ability to leverage existing economic assets and accretive benefits of collaboration are the building blocks of Nevada’s economic development strategy. All are clearly present here, and we would be remiss if we fail to exploit the unique opportunity to expand our economy while enhancing our community’s quality of life.
As a new academic year begins, a renowned college at the University of Nevada, Las Vegas is set to celebrate its 50th year. For half a century, the William F. Harrah College of Hotel Administration has served as a living laboratory for its students, producing thousands of educated workers for the hotel and hospitality industries while setting itself apart as one of the best in the world. The college was founded in 1967 to help supply an educated workforce for the fast-growing Strip.
Through the years, it has lived up to that purpose to educate generations of students, many of whom are now the industry leaders who are shaping the world-class experience that attracted 42.9 million visitors to Las Vegas last year. Those visitors are critical to the southern Nevada economy, directly providing a quarter of all jobs and wages, while generating $35.5 billion in economic activity. When the ripple effects of indirect and induced impacts are included, the southern Nevada tourism industry generates nearly $60 billion in total economic output.
The close ties between the tourism industry and the regional economy are as evident today as they were five decades ago when the Harrah Hotel College was founded with funding from the Nevada Resort Association. Back then, Las Vegas hosted fewer than 7 million annual visitors, Nevada was the only state with legalized gambling, and the hotel college had only 16 students. The community and industry have grown tremendously since then; so too has the college, which today has 2,500 students.
The ability to tap into the world-class hospitality expertise of the local resort community has been a major contributor to the growth and success of the college, which consistently ranks among the top hotel and hospitality colleges on Earth. The college’s world renown is evident in its students. Only about one in four students is from Nevada, while half hail from other states. The remaining quarter are students from international destinations, particularly Asia, ensuring that the college’s influence extends not only across the country, but around the globe.
As the Harrah Hotel College celebrates its 50th year, it will soon move into a new home. The $56 million Hospitality Hall is scheduled to open in October with classes starting in January. Located in the heart of the UNLV campus, the 93,500-square-foot building will feature multi-purpose meeting spaces, convertible classrooms, a student-run café, beverage and PGA Management laboratories and a fully equipped executive kitchen. As it has throughout the college’s history, the relationship with the resort industry played an instrumental role in the new facility becoming a reality. Industry stalwarts including MGM Resorts International, Caesars Entertainment, Las Vegas Sands, Boyd Gaming, Station Casinos, and Konami Corporation, among others, gave more than $20 million in private donations toward building construction. Governor Brian Sandoval and the Nevada State Legislature approved the remaining funding for the new building.
The state-of-the-art building will go hand-in-hand with an updated curriculum that is being reshaped under the Hospitality 2025 initiative. The program brought in dozens of hospitality companies to help evaluate the knowledge and skills that will be needed in the future. The faculty is using the program to design and develop a curriculum to ensure that students will be prepared for the tourism industry well into the next decade.
Through 50 years, the resort industry and the Harrah Hotel College have enjoyed a symbiotic relationship that has helped Las Vegas evolve and adapt to maintain its status as a world-class hospitality destination. With a new home and a new curriculum, the college is poised for another half century of collaboration and innovation that will make Las Vegas a premier entertainment and hospitality destination for decades to come.
One of the driving forces of southern Nevada’s economic rebound in recent years has been the record-setting pace of Las Vegas visitation, which last year peaked at 42.9 million. While the majority of visitors come to Las Vegas to enjoy eating, shopping, dancing, gambling and partaking in the wide array of amenities the destination offers, for millions of people the primary reason for visiting Las Vegas is to do business.
Last year, a record 6.3 million visitors traveled to southern Nevada for conventions, trade shows and other business gatherings to make connections, show off new products and close deals. The recovery of the convention visitor segment is welcome news considering the dramatic drop experienced during the economic crisis. The convention recovery is even more notable for its role in driving overall visitation into record territory over the past two years. Since January 2015, overall visitation has grown by 1.7 million; convention visitors made up 1.2 million of that total. Put another way, Las Vegas added twice as many convention visitors as leisure visitors during that time frame.
The return of strong convention visitation is crucial for the southern Nevada tourism industry and economy. Not only do convention attendees help fi ll hotel rooms during traditionally slower midweek periods, they also spend about $400 more per trip on average than their leisure counterparts. Because of that additional spending power, convention delegates accounted for 15 percent of Las Vegas visitation but 20 percent of the economic impact produced by the tourism industry in 2016. The convention segment’s $12.4 billion in economic impact included $3.5 billion in wages for 85,000 workers such as hotel clerks, restaurant servers, taxi drivers and trade show staffers.
Southern Nevada’s ever-evolving convention infrastructure, combined with the world-class experience the destination provides, have helped Las Vegas maintain its position among the top convention and trade show locations in the country. Last year, Las Vegas hosted 57 of the nation’s largest conventions, making it the Trade Show News Network’s top trade show destination for the 23rd consecutive year. Those conventions, as well as thousands more small and mid-sized shows, are made possible by the availability of exhibit and meeting space throughout southern Nevada.
Notably, southern Nevada is home to three of the 10 largest convention centers in the country, yet growing demand continues to crowd out potential shows looking for a home in Las Vegas during prime convention periods. That demand for additional space from existing and potential new shows is a driving force behind a wave of convention center expansion projects that are under construction or on the horizon. The Las Vegas Convention Center’s $1.4 billion expansion and renovation project will add a 600,000-square-foot hall to its existing 1.9 million square feet of exhibit space. On the heels of its 350,000-square-foot expansion at Mandalay Bay Convention Center, MGM Resorts International announced it will add 200,000 square feet of meeting space at Aria and another 250,000 square feet to the MGM Grand Convention Center. Finally, Wynn Resort’s Paradise Park project will include 260,000 square feet of meeting space. Combined, space contained in these projects alone would rank as the fourth-largest convention center in the country.
Amid increasing competition from cities such as Chicago and Orlando, these expansions are critical to retaining existing shows that continue to grow and attracting new shows that want to come to Las Vegas but have been turned away due to space limitations. Throughout decades of success, Las Vegas has remained a top tourism destination because of its ability to both adapt and evolve to meet the demands of an ever-changing consumer, whether that’s a budget-conscious leisure traveler or an experience-seeking international visitor. With the continuing expansion and evolution of its convention-focused amenities, Las Vegas is reinforcing its reputation as not only a place to play, but as a place where business gets done.
All across the country, entrepreneurship is in decline. Nobody really knows why for sure—whether it’s lingering caution since the economic crisis, overwhelming student debt among the young, tighter access to investment capital, or some other underlying cause. Whatever the reason, the reality is that the number of American companies being created each year is near a four-decade low.
Thankfully, Nevada is not like the rest of the nation when it comes to the entrepreneurial spirit. Business startup activity in the Silver State remains among the nation’s best, and small businesses remain key drivers for our state’s economy and its resurgent job market. Since 2010, the number of businesses in Nevada has surged by more than 11,200, and businesses with under 100 employees have accounted for an overwhelming majority of those, at 10,800.
This is a terrific sign for Nevada, as entrepreneurship is the highest order of broad economic development, often reflecting a coveted mix of investment and innovation. Some of the largest and most successful companies in the world today—Amazon, Apple, Google, Starbucks, Microsoft and Mattel, just to name a few—were started in a garage or a neighborhood storefront by founders with a dream and some drive.
However, a small business doesn’t have to rise into the Fortune 500 to make an impact. The majority of small businesses have employees, and as a collective, businesses with under 100 employees in Nevada employ more than 613,500 workers, which is more than their large-business counterparts. That wasn’t always the case. As recently as 2005, large businesses in the state had more workers than small businesses (558,600 vs. 549,100).
The Great Recession and subsequent economic downturn wreaked havoc on Nevada’s economy, causing businesses of all sizes to cut back and costing the state tens of thousands of jobs. The state economy has since rebounded into a period of sustained expansion, and small businesses have been integral in the recovery. Those small businesses not only lost fewer jobs than large businesses through the depths of the downturn, they have recovered lost jobs faster. Since 2010, small businesses have led the way by adding roughly 96,000 new jobs through the end of 2016, which is more than the 93,000 jobs added by large businesses. When compared to peak pre-recession employment levels, small businesses today employ more than 28,000 additional Nevadans. Meanwhile, large businesses remain 20,000 jobs short of pre-recession employment peaks.
Thanks to that resurgence, today small businesses account for more than 53 percent of Nevada’s private sector jobs.
Nevada has long fostered a spirit of entrepreneurship by enacting policies that support and encourage new ventures. The state continues to rank among the nation’s top five in the Tax Foundation’s annual Business Tax Climate Index, and Nevada routinely places among the country’s most favorable for business in terms of regulation and certainty in the courts. The result: Nevada’s startup activity ranked first among the 25 smallest states, and Las Vegas ranked fifth among all of the nation’s metropolitan areas, in the annual Kauffman Foundation Startup Activity rankings released last month.
Nevada’s entrepreneurs were a key ingredient in our state’s economic success in our state’s earliest years, and our future will rely on ambitious men and women who take the risk of starting their own business and pursuing their own version of the American dream. Preserving their ability to do so is something we should protect vigorously.
The nation’s best personal income growth, the second-fastest population growth and the third-fastest job growth are just a few of the welcome signs of Nevada’s continued economic expansion and stability. Those signs tell us that more Nevadans are working and have more wealth, and that many new residents are moving here from across the United States and abroad in search of the opportunities our state provides. Another key metric that underscores these positive economic trends is taxable retail sales, which captures purchasing activity by individual consumers and businesses throughout the state. Since consumer activity accounts for about two-thirds of the economy, taxable retail sales are a particularly important barometer of the economy at large. They can also provide insight into economic activity in some of Nevada’s most important industries.
Overall, statewide taxable retail sales have been climbing for six consecutive years following the economic downturn, and total annual sales activity has set annual records in each of the past two years. At the end of 2016, taxable retail sales in Nevada grew by 5.1 percent over the year to reach a record $54.4 billion. The upward trend has continued into 2017. In the 12 months ending February 2017, taxable sales totaled an all-time high of $55.0 billion, representing growth of 6.0 percent over the year before. In Clark County, where the majority of statewide retail sales take place, total taxable retail sales grew 4.1 percent to $40.3 billion in the 12 months through February. Meanwhile in Washoe County, taxable sales grew more than twice as fast (8.6 percent) to $7.9 billion for the previous 12 months. On a broad note, these are positive trends that illustrate the economic well-being of the state, its residents and its visitors.
Digging deeper into the numbers provides additional insight into certain sectors of the economy. Nonstore retail sales, which capture online sales from companies like Amazon, have consistently remained atop the fastest-growing sales categories in the state. Through February, trailing 12-month sales for nonstore retailers grew by 15.8 percent to $1.1 billion, the highest point yet. Growth in this category was even stronger in Clark County (17.5 percent) and Washoe County (17.2 percent), illustrating the continued shift in consumer shopping habits and the growth potential for Amazon and other online retailers that have established distribution and fulfillment centers in Nevada.
Sales at motor vehicle and parts dealers have also remained strong, suggesting Nevadans feel economically secure enough to commit to significant purchases of new vehicles. Statewide sales through the 12 months ending February 2017 grew by 6.8 percent to $6.5 billion, with growth in Washoe County (9.2 percent) outpacing the 5.8 percent growth rate in Clark County. Sales growth at restaurants and bars, which captures spending by both residents and visitors, has slowed somewhat but remains strong. In the 12 months ending February 2017, total sales at food services and drinking places increased 4.1 percent to $12.1 billion, which is an all-time high.
Finally, sales of building material and garden equipment and supplies are approaching highs not seen in nearly a decade, indicative of the recent surge in the construction industry. Through February, trailing 12-month sales in this category reached $2.4 billion, recording growth of 10.7 percent over the year. The double-digit growth during the period marked just the seventh month of double-digit growth in the past three years, with three of those coming in the past three consecutive months. Growth in Clark County (11.1 percent) outpaced Washoe County (9.6 percent), but both regions are experiencing significant construction activity with more on the horizon. Apple recently announced a $1 billion investment in its northern Nevada data center on top of ongoing construction at Tesla’s Gigafactory, while in southern Nevada, major projects expected to start construction this year include the $1.4 billion Las Vegas Convention Center expansion and renovation and the $1.9 billion Las Vegas Stadium.
Nevada is in the midst of an economic revival that again has it sitting at or near the top of the nation in many key measures. As these trends continue, we can expect them to carry over into taxable retail sales as a reflection of the growing confidence among our state’s consumers.
Today, the number of Nevadans seeking unemployment insurance is as low as it’s been in a decade. On a monthly basis, the state receives roughly 11,000 initial claims for unemployment insurance, which provides a financial safety net for out-of-work residents while they search for new jobs. Not that long ago, nearly three times as many laid o workers were applying for unemployment benefits as the state struggled through the economic downturn.
Like most of our state’s economic measures, this figure has improved immensely in recent years as Nevada emerged from the recessionary fallout and returned to a state of economic growth. While monthly claims are at their lowest since 2006, perhaps even more notable is the fact that, as a share of the total labor force, the rate of unemployment insurance claims today is below even the boom years of the early to mid-2000s.
These trends are the result of years of steady improvement in Nevada’s economy, particularly the rebound in employment and wages. The number of jobs has been growing steadily since 2010 and surpassed the pre-recession peak in 2016. Today, seasonally adjusted employment sits at a record 1.32 million. As employment climbed, the unemployment rate fell. At its peak, Nevada’s seasonally adjusted unemployment rate was about one and a half times the national rate. Today, the state and national rates are nearly identical as they approach what is known as full employment. In general terms, full employment is a state of balance between supply and demand in the labor market whereby anyone who wants to work can find a job, while businesses can hire workers without raising wages to a point that spikes inflation. Meanwhile, average weekly wages in Nevada continue to climb to record levels as the demand for labor increases.
On both the local and national levels, these key economic figures are reported each month and often discussed and dissected in terms of whether the economy is getting better or worse. These discussions often isolate the economy from its role in society as a whole, yet these macroeconomic measurements have tangible impacts on not just the health of the economy, but the health of society. When jobs disappear and unemployment rises, the costs to society climb alongside economic hardship. These costs are often borne by government programs and nonprofit agencies, which help provide a social safety net for those who need it.
Yet for most, that safety net is just a short-term solution designed to weather the economic storm. Ultimately, a strong economy where willing workers can find jobs and earn incomes to support themselves and their families will provide the greatest impact in reducing those societal costs and improving quality of life. Today, we are seeing those effects for ourselves. More Nevadans have jobs than ever before. Unemployment insurance claims are at historic lows. The statewide poverty rate has fallen from 16.4 percent in 2012 to 14.9 in 2015, one of the largest improvements in the nation.
What we are seeing is something that has been proven over centuries of American life. When an economy is thriving, people can, and do, improve their economic fortunes. In turn, those individuals avail themselves less of social programs, providing the opportunity for even greater economic growth.
Lately there’s been a lot of excitement about major new entertainment venues in southern Nevada. Whether it’s the T-Mobile Arena and its slate of top musical acts, UFC fights and Vegas Golden Knights hockey games, or the potential NFL-ready stadium that would host the Raiders football team, Super Bowls and other mega events, these venues carry the potential to transform both the Las Vegas entertainment scene and the regional economy. Yet while these venues and their developments garner mentions on ESPN, there’s another major sporting venue in town that is already hosting a Super Bowl of sorts, and you probably haven’t heard much about it.
The South Point Bowling Plaza is in the midst of hosting the U.S. Bowling Congress Open Championships, considered the largest participatory sporting event in the world. The tournament started last month and will continue through mid-July. During the tournament’s 149-day run, more than 50,000 bowlers on 10,000 teams will take their turns on the Bowling Plaza’s lanes while spending an estimated $120 million on hotel rooms, restaurants, shopping and other local amenities during their multi-day trips.
The Open Championships are just the type of major event that South Point owner Michael Gaughan envisioned when he built the $35 million Bowling Plaza. In fact, before a shovel went in the ground on the 60-lane, 90,000-square-foot facility, the South Point, Las Vegas Events and the Las Vegas Convention and Visitors Authority already had an agreement with the USBC to host more than 40 tournaments over a dozen years. Last year, the Bowling Plaza hosted its first USBC major event, the Women’s Championships, which welcomed nearly 25,000 bowlers over the 94-day tournament.
The Bowling Plaza will host the Women’s Championships again in 2020, 2023 and 2026, and the Open Championships return for 2019, 2021, 2024 and 2027. The Bowling Plaza continues Michael Gaughan’s strategy of carving out a niche in smaller-scale sporting venues in southern Nevada. The South Point Arena and Equestrian Center, a 4,600-seat facility, has hosted some of the most prestigious equestrian and bull riding events in the nation since it opened in 2006. Together, the world-class bowling and equestrian venues draw hundreds of thousands of participants, families and fans to southern Nevada. These events obviously help the bottom line for the South Point, but their impact extends even further. For example, an estimated 60 percent of bowling event participants stay at the South Point, meaning thousands more will sleep, eat and spend at other area resorts, spreading their economic impact throughout southern Nevada.
Decade after decade, Las Vegas has succeeded in large part because it has continued to evolve and o er so much to so many different people. That evolution continues today with large-scale venues like T-Mobile Arena and a potential NFL stadium, as well as smaller niche venues like the South Point Bowling Plaza, all of which are playing roles in the ongoing transformation of Las Vegas from a gambling-centric destination into a multi-faceted tourism mecca where visitors can experience the world’s best in accommodations, dining, shopping and entertainment.
Ever since Chick-fil-A’s recent grand opening in Nevada, it seems like the lines of cars through the parking lot and the lines of people out the door have been never-ending. Fans of the famous chicken sandwich even camped out overnight to be among the first through the door. The excitement was not unlike last year’s opening of Swedish furniture store IKEA, which also drew campers eager to christen the first Nevada location.
The entry of these iconic brands into southern Nevada obviously sparked a lot of excitement among consumers. Yet some have wondered whether they pose a threat to existing local competitors like Raising Cane’s or Walker Furniture. Naturally, any business would prefer a monopoly where it could control prices and virtually guarantee annual profits. That said, I believe most business owners would agree that a competitive market is a healthy market.
On the consumer side of the equation, competition among businesses leads to lower prices, better products and improved service. As the old saying goes, consumers vote with their pocketbooks. They have a fi nite amount of money for purchasing goods and services, and businesses that can’t find the right balance of quality and price risk losing customers to the competition. This risk is what motivates businesses to innovate, find efficiencies and improve quality as they strive to separate themselves from the competition. In short, a competitive environment isn’t just good for consumers, it also makes businesses better at what they do.
For example, the Raising Cane’s location on St. Rose Parkway reported its highest sales volumes of the year on the same weekend that Chick-fi l-A opened less than a mile away, and several Raising Cane’s and Chick-fi l-A locations have successfully co-existed in Phoenix for some time. And Walker Furniture is not only taking the IKEA opening in stride, the company is opening a new store literally across the street from the IKEA location.
While the grand openings of Chick-fi l-A and IKEA grab headlines and inspire parking lot campouts, they are just two of thousands of businesses that have opened in the past couple of years. In the past year alone, southern Nevada has added nearly 2,400 new private businesses. These include doctor’s offices, retail stores, casinos and other establishments across all industries. This is evidence not only of our vastly improved economy but also the of fact that entrepreneurs, instead of avoiding competition, are meeting it head on. They are confident in their products, their business plans and their ability to succeed, even in markets with established competitors.
They are also entering a positive economic environment where population is growing and consumer spending is climbing. Annual taxable retail sales in Clark County are approaching $40 billion and rising by nearly $1.3 billion a year. The proverbial pie of consumer demand is getting bigger, and that means more dollars for businesses to compete for.
The basic tenet of free market competition has been a foundation of our nation’s economy for centuries, and it has stood the test of time. We should welcome new businesses into our backyard, because ultimately that competition means benefits for consumers and a healthier economy overall.
Is it the wealth or prosperity of its people? If so, this would make Loudoun County, Virginia the nation’s greatest community. According to the US Census Bureau’s American Community Survey, Virginia, is home to three of America’s five wealthiest counties, with Loudoun County placing atop the list with a median annual household income approaching $118,000.
Is it the quality of the community’s education system that best indicates greatness? If so, the greatest community in the nation would likely be Tredyffrin Township, Pennsylvania, home to the Tredyffrin-Easttown School District. With an average student-teacher ratio of 16:1, the District reports a reading proficiency rate of 88 percent and math proficiency rate of 72 percent. The District spends $16,800 per student, with teachers earning $95,000 on average. The result is a 99 percent graduation rate and an average SAT score of 1,290. Notably, if this were to be the best measure of a community’s greatness, it would be pretty exclusive; Tredyffrin-Easttown has only 6,500 students.
Job prospects are often used to measure one community against another. If this were the case, the greatest community in the nation would be Ames, Iowa, where the unemployment rate is a mere 1.7 percent. Key employers in Ames, population 59,000, include Iowa State University, American Packaging Corporation and Bethany Life Communities. According to the Ames Economic Development Commission, the region ranks high nationally in terms of best places to retire (8th), best places for college graduates (25th) and best small cities for job growth (56th).
Perhaps the best measure of greatness is a community’s ability to innovate. From this perspective, Santa Clara County, California would be the clear frontrunner, reporting nearly 143,000 utility patent grants between 2000 and 2015. This rate dwarfed the next closest community, San Diego County, California, which reported only 45,500 utility patent grants during the same period.
Maybe greatness is less about economic prosperity and more about the health, well-being and quality of life. Should this be the appropriate measure, greatness would be assigned to places like Highlands Ranch, Colorado, routinely ranking among the healthiest places in America as a result of having its lowest obesity rate; Minneapolis, Minnesota, where an outdoor lifestyle is credited with lowering rates of diabetes, heart disease and asthma; San Jose, California, where life expectancy is a nation-leading 83 years; Logan, Utah, where the overall death rate is a remarkably low 4.2 per 1,000 population; or Naples, Florida, which Esquire called the happiest city in America.
Perhaps there is no single thing that makes a community great; rather, there are many ways to both define and achieve greatness. For me, the best measure of a community’s greatness can be summed up in a single word: opportunity. This is the simple idea that the true measure of a community is its ability to provide a foundation for those who would build, a canvas for those who would paint and a classroom for those who would teach.
I don’t know, or particularly care, where southern Nevada is listed in national rankings of the greatest communities in America. What I do know is that this community has created the opportunity for a better life for countless families during the past 50 years and that should be the primary measuring stick used to evaluate our success or failure during the next half century.
The southern Nevada housing market has been one of the many positives of the regional recovery. The rebound of the housing market is even more notable considering how far it has come since our state became the epicenter of the national housing crisis. It took time and patience, but the state and regional markets have found their level in a period of stability and steadily rising prices.
Over the past year, Nevada registered the seventh-fastest growing home price increases in the United States, according to the Federal Housing Finance Agency House Price Index. At 7.8 percent, the annual home price appreciation rate has slowed somewhat compared to the double-digit increases of recent years, but it remains among the best in the nation. Over the past five years, Nevada home prices have improved by nearly 84 percent, by far the highest of any state and nearly triple the national appreciation rate of 31 percent.
The statewide trends are mirrored in the Las Vegas market, where the House Price Index climbed 8.6 percent over the past year, ranking 27th among the 100 largest metro areas. On a five-year basis, home values in southern Nevada have skyrocketed 84.8 percent, giving it the second-fastest rising home prices behind only Oakland, California. Today, the median sales price of an existing home is $202,000, the highest point in eight years. These remarkable price gains are particularly welcome given how much home values collapsed during the crisis.
Rising home values have also greatly reduced the number of underwater homes in southern Nevada. Although the latest CoreLogic report showed Las Vegas with the second-highest share of negative equity homes among metro areas, the 17.6 percent rate is a fraction of the 73 percent underwater rate reported seven years ago. Another positive data point is the significant decline in foreclosures, which have fallen to the lowest point in a decade.
The positive news surrounding the southern Nevada housing market does come with caveats. Homeownership has declined, in part due to the wave of investor sales when home prices were at their lowest. Those investments infused capital into the flagging market, but the trade-off has been the homeownership rate in southern Nevada falling below 50 percent, ranking it among Los Angeles, the Bay Area and New York metro areas.
While home affordability concerns aren’t as acute in southern Nevada compared to those cities, it is a growing issue. According to the National Association of Realtors Housing Affordability Index, the ability for the typical family to purchase a single-family home declined by 2.8 percent in 2015. Since 2011, the Housing Affordability Index has dropped 34 percent, the eighth-largest decline among metro areas. Homes in southern Nevada remain more affordable than many regions in neighboring states, including Los Angeles, San Francisco, Denver, Seattle and Portland, but less affordable than Salt Lake City or Phoenix. This is a trend we need to watch closely. Rising wages in Nevada will increase household buying power, but we don’t want to see home values continue to outstrip those gains and put the dream of homeownership out of reach for so many southern Nevadans.
The housing market is an important component of the southern Nevada economy and a telling measure of the economic well-being of its residents. While some concerns linger regarding home affordability and negative equity, the stability we are experiencing today is a much welcomed improvement over the tumultuous times of the past decade.
Jobs are the fundamental building block of any economy, so we can tell a lot about the economic health of a nation, state or region based on the rise and fall of job numbers. More jobs mean more people are earning a living and businesses are expanding, which are positives for any economy. This is why the recent employment news in Nevada is so heartening.
By itself, the August statewide employment number of 1.3 million is impressive, as it represents an all-time high for jobs in Nevada. Even more notable is that this number means the state has finally regained all of the 186,000 jobs it lost amid the Great Recession and economic downturn. To understand how significant this milestone is, we must look back at how far we’ve come.
In the years leading up to the Great Recession, Nevada’s economy was one of the most prolific in the country. Employment growth was central to that success, as the state added 220,000 new jobs between 2002 and 2006. That period included a two-year span of annual job growth topping 5 percent that helped drive seasonally adjusted employment to a peak of 1,297,600 jobs in mid-2007. Then the recession hit, and over the next three years, more than 186,000 jobs disappeared as the effects of the economic crisis lingered in Nevada for roughly four years.
Since hitting the low point in 2010, employment has grown steadily as the economy transitioned from recovery to stabilization and, finally, to the current expansion that pushed jobs to their highest total in history. Today, Nevada has 2,000 more jobs than the pre-recession peak. Southern Nevada has led the state’s job surge with 7,900 more jobs than ever, while the Reno area still trails its all-time high by roughly 1,400 positions. Those numbers should only improve as Nevada remains among the top 10 states for job growth rate.
The recovery of jobs in Nevada is a remarkable milestone, and perhaps even more remarkable considering the breakdown of where that jobs recovery has come from. In 2007, one of the largest employment sectors in the state was construction, with 136,000 jobs. The downturn devastated the industry, and 86,000 jobs were lost in the construction sector alone. That industry has recovered just a fraction of those lost jobs, but several other sectors have helped make up the difference. Leading the way has been the health care and social services sector, which has over 27,000 more jobs today than before the recession. Transportation and utilities (+11,000), leisure and hospitality (+10,000), professional and business services (+10,000), and educational services (+7,000) have each experienced notable job growth since 2007.
This is a double dose of good news for our state’s economy. Not only have all the lost jobs returned, but those new jobs are spread across more industries, creating a more diverse economy that is more flexible and more resilient against future economic downturns. While it has taken many years to recover our lost jobs, the new jobs that replaced them have established a stronger foundation for economic growth and stability for years to come.
About a year from now, the first class of students at the University of Nevada, Las Vegas School of Medicine will be on their way toward becoming doctors. That inaugural class of 60 medical students will mark a notable milestone for healthcare in southern Nevada, which for many years has lacked the necessary medical professionals to serve the region’s fast-growing population. While efforts in both the private and public sectors have increased the number of doctors in Clark County, our state and region continue to lag the rest of the nation by a wide margin. In fact, southern Nevada has a healthcare economy only 70 percent of the size it should be to serve a community of 2.1 million people.
The negative economic effects of this shortage are well-documented and clearly visible throughout our community. The shortage was also a primary motivation for state and local leaders to develop the UNLV medical school. By providing an additional opportunity for competitive allopathic medical education in Nevada’s largest metropolitan area, boosters hope the new institution will be able to attract, train and retain more of the brightest young minds from across the state and throughout the nation. Notably, about seven in 10 doctors remain in the state where they completed their medical education and training, so the vast majority of new doctors attending the UNLV medical school are expected to remain in Nevada, helping to alleviate the state’s doctor shortage. The medical school will also serve as an important component of UNLV’s pursuit of top-tier status.
In just two short years, the medical school has already achieved a great deal, including securing much-needed funding commitments from the state, as well as significant donations for scholarships and campus construction, recruiting and hiring key faculty and staff positions, and agreeing to build the region’s first Academic Health Center in collaboration with University Medical Center of Southern Nevada. Early achievements also include the opening this month of the Ackerman Center for Autism and Neurodevelopment Solutions, a first-of-its-kind center in Nevada that will provide families with autistic children a wide range of specialists for diagnostics, treatment and behavioral support.
These milestones are the first of many that the UNLV medical school will achieve in the years to come, thanks to broad-based support of elected officials, the business community and philanthropists. Moreover, their combined support and investment will generate returns that will not only improve the health of our state and the quality of southern Nevada’s flagship university, they will also create tangible economic returns that will ripple throughout the region. By 2025, the medical school is projected to create 5,300 new jobs, a number that will grow to 8,000 by 2030. Meanwhile, total economic impact is projected at $800 million in 2025, growing to $1.2 billion by 2030. Importantly, these impacts will be concentrated within the health services sector, a critical need for our community and an important growth industry for diversifying and strengthening our regional economy.
As the UNLV medical school continues to progress toward its inaugural class, I’m thankful for the foresight of our state’s leaders and their commitment to the development of such an important institution, one that will improve our community’s health, education and economy.
Perhaps no other indicator of economic health is more important than employment. The balance of jobs and workers is critical, and this balance tells us a lot about the state and direction of our economy. During the recession, there were far more workers than jobs, and the unemployment rate climbed in response. Today, that balance has tipped in favor of workers as the national unemployment rate has fallen below 5 percent and employers are competing for a limited supply of labor.
These trends are illustrated through a little-known set of national economic statistics known as Job Openings and Labor Turnover, or JOLTS. The figures include job openings, hires, layoff s and voluntary quits. These numbers, published by the U.S. Bureau of Labor Statistics, can tell us a lot about the state of the American worker and the national jobs market. Like most other markets, the labor market is influenced by supply and demand. Workers provide the supply of labor, while employers provide the demand.
When jobs are scarce, employers have the advantage of choosing from a larger pool of potential workers who are forced to compete with each other for limited job opportunities. In early 2009, when the U.S. unemployment rate was climbing past 9 percent, the national layoff rate peaked at 1.9 percent while the voluntary quits rate hovered near 1.3 percent. Stated otherwise, significantly more workers were being laid o as opposed to those quitting on their own.
This was very good for employers, but not so good for workers.
Today, that trend has reversed. Employment is growing throughout the nation, and the labor market is the healthiest it has been in years. The layoff rate has fallen to 1.1 percent, tied for the lowest mark in the past 15 years, while the quits rate has risen to 2.1 percent. In simple terms, this means about twice as many workers are voluntarily quitting their jobs rather than being laid o . When it comes to labor, it’s now a seller’s market. Employers must compete with each other to hire and retain the best employees, and with 5.9 million job openings nationally compared to 5.2 million hires in July, it appears that the competition to hire qualified employees will continue into the foreseeable future. As it does, workers will continue to reap the benefits of better job opportunities, stable employment and higher pay.
In Nevada, we don’t have the benefit of detailed JOLTS statistics. However, the rising trend in weekly wages suggests we are seeing the national trends playing out here. Wages in the Silver State grew by an annual rate of 3.5 percent in July, the 21st-consecutive month of 3 percent annual growth or higher. Nevada’s wage growth has also outperformed the national average for 24 straight months, including a period last winter when wages grew twice as much as the rest of the country. These wage growth trends suggest that Nevada employers are increasing pay to attract and retain employees in an increasingly competitive labor market. That’s good news not only for the workers of Nevada, but for the state economy as a whole.
It seems like I can’t drive anywhere these days without seeing construction cones. Like anyone else trying to get home, to work or to the store amid the sea of orange on southern Nevada’s roads, I share the frustration with stop-and-go traffic, closed lanes, detours and delays. It can be easy to miss the positives of construction when you’re on the fourth light cycle waiting to get through an intersection, but the wave of ongoing road building is a welcome sign that our economy is not only back, but also preparing for the future.
Infrastructure is one of the most important elements of a successful economy. A comprehensive and well-maintained road and highway network is critical to the safe and efficient flow of commerce, whether it’s moving workers to job sites, consumers to stores, or goods and materials to retail and commercial centers. It also enhances quality of life by reducing the amount of time we’re stuck in our cars each day. That congestion costs our community more than a billion dollars in lost time and wasted fuel.
Southern Nevada’s road building boom has been made possible in part by the rebound in the overall economy, but the biggest factor has been the implementation of fuel revenue indexing. Since 2014, indexing has raised the local gasoline tax based on annual inflation. That 3-cents-per-gallon increase each year has generated hundreds of millions of dollars that the Regional Transportation Commission of Southern Nevada is using to fund literally hundreds of needed road projects, including $79.7 million for Interstate 11-related construction, $29.5 million to upgrade the McCarran International Airport connector, $43.2 million to bring the northern stretch of the 215 Beltway up to freeway standards, and dozens of other projects from traffic light installations to pedestrian safety improvements.
When the Clark County Commission approved fuel revenue indexing in 2013, RTC officials estimated the program would support about 200 projects costing between $700 million and $800 million. Thanks to rising gas consumption and lower construction costs, the program has already provided $695 million in funding for more than 220 projects across the region. I should note that without fuel tax indexing, the RTC would have had just $22.4 million available each year for new projects. At the cost of an extra dime per gallon of gas, the indexing program had greatly improved our transportation infrastructure quality and capacity while creating about 9,000 construction jobs.
The initial three-year fuel revenue indexing program is set to expire at the end of this year, but in November Clark County voters will need to decide whether to extend the program for another 10 years. The extension would provide an estimated $3 billion for a sizable backlog of transportation infrastructure. While it might be difficult to imagine another decade of road construction seasons, the investment will help southern Nevada’s transportation network keep pace with the community’s expected population and economic growth.
Fuel revenue indexing was originally conceived as equal parts infrastructure investment and economic stimulus. It has worked better than intended on both fronts. Perhaps most importantly these investments will help us avoid some of the pitfalls of communities that have failed to proactively address transportation (looking at you Los Angeles, Honolulu and Miami).
It might be difficult to show any affection toward the orange construction cones that have become a semi-permanent part of our lives. But the next time you find yourself in a detour or navigating a lane shift through a construction zone, remember what those orange cones symbolize and how they will eventually make our community better. Maybe, instead of cursing them, you just might want to take a moment and consider where we would be without them.
Today if you need to get around town, you might hail an Uber car to come pick you up. In the future, you very well might hail a driverless drone taxi to pick you up and fly you to your destination. That's the plan of a Chinese company called EHang, which recently agreed to move to Nevada to develop its autonomous aerial system. Officials with the Governor's Office of Economic Development and the Nevada Institute of Autonomous Systems first saw EHang's technology in Las Vegas during the Consumer Electronics Show in January. Just six months later, EHang is bringing its testing and development program to the Silver State.
While the idea of riding in a drone taxi with nobody at the controls won't appeal to everyone, the arrival of EHang marks another milestone in Nevada's ongoing development of its autonomous system industry.
In May, a project by the Desert Research Institute performed the first successful cloud-seeding test flight using a fixed-wing unmanned aircraft at the Hawthorne Industrial Airport in northern Nevada. The project is studying the effects of drought and possible solutions to shrinking water resources.
In April, Nevada and NASA announced a new partnership to create the Nevada Unmanned, Autonomous, and NextGen Collaborative Environment (NUANCE). The program teams NASA researchers and students at the University of Nevada, Reno to perform drone simulations that will be used to develop an air traffic control system for smaller unmanned aircraft.
In March, Hawthorne was the site of the nationâ€™s first package delivery by an autonomous drone in an urban setting. The delivery was conducted by Flirtey, an Australian company researching and developing a drone delivery service in partnership with the University of Nevada, Reno.
Four straight months. Four significant developments. And those don't include the January creation of the Center for Advanced Mobility, a state initiative under the Nevada Institute of Autonomous Systems focused on researching and testing self-driving ground-based vehicles.
These advancements are hardly an accident. When Governor Brian Sandoval took office in 2011, he made development of unmanned aerial systems and autonomous vehicles a priority. With more than 300 sunny days a year, vast unpopulated areas, a history of unmanned military flight operations and more restricted airspace than all other states combined, Nevada had several built-in advantages conducive to the unmanned aerial systems industry. The Federal Aviation Administration agreed, making Nevada one of just six locations where unmanned aerial systems could be flown and tested in 2013. That designation, along with the leadership and guidance from the Governor's Office of Economic Development and the Nevada Institute of Autonomous Systems, has pushed Nevada to the national forefront of testing and developing unmanned aerial systems.
Nevada has also been leading the pack when it comes to autonomous vehicles. In 2011, it became the first state to allow driverless cars on its roadways, which opened the doors to companies, notably Google, to test their vehicles in the state. Since then, automakers Tesla and Faraday Future, which each have self-driving vehicle technology, have moved into the state, and the Center for Advanced Mobility was created to firmly establish Nevada as the national leader for developing, testing and building autonomous vehicles.
In just a short time, Nevada has moved to the forefront of the autonomous vehicle industry, bringing innovation and diversification to an economy that desperately needed them. Thanks to the forward thinking and commitment by leaders in government, education and private industry, the state is poised to solidify its position in the field, thereby attracting (and retaining) more bright minds, more cutting-edge technologies and more economic opportunities to push the envelope of this advanced industry. I don't know what the next big innovation in autonomous systems will be, but I have a feeling that Nevada will somehow be in the middle of it.
Last month, more than 20,000 young robotics enthusiasts from 42 countries converged on St. Louis for the FIRST World Robotics Championships. Among them was a group of students from Cimarron-Memorial High School known as Team 987. The team, whose nickname is the High Rollers, has developed into one of the top high school robotics teams in the world. A year ago, the High Rollers made it to the world finals before finishing in second place; and earlier this year, they won regional competitions in Los Angeles, and in their own backyard, here in Las Vegas.
The High Rollers didn’t win this year’s world championship, but they brought home the coveted Chairman’s Award, the highest honor given out at the event. This award honors the team that best represents a model for other teams to emulate, and embodies the purpose and goals of FIRST (For Inspiration and Recognition of Science and Technology). It was well-deserved recognition for a program that started as an extracurricular club 15 years ago in a small school storage room with two mentors and 10 eager students. The fledging robotics team has come a long way since then by tapping into the curiosity of young minds and helping them cultivate skills in engineering and computer coding.
Today, the program has progressed into a full-fledged academic course, and as Team 987 expanded, so did its reach throughout the community. Team members helped establish FIRST Nevada and regional competitions, started workshops and camps for younger students, and helped develop a robotics curriculum that is currently used at 21 elementary, middle and high schools across Nevada. The High Rollers have traveled overseas to share knowledge and camaraderie with international students. They have also worked diligently to recruit girls into the program. Today, 15 of the 32 team members are female, a notable and important achievement considering the traditionally male-dominated STEM (Science, Technology, Engineering and Math) industries.
These initiatives, both on campus and off, have helped send numerous Nevada students off to college and into careers in STEM-related fields. That success attracted the attention of state officials who provided $750,000 in grant monies to create a new Manufacturing Technology Academy at Cimarron-Memorial. When it opens this fall, the magnet program will serve as a training ground for students entering various STEM-related fields and prepare them to step into positions with high-tech companies, like Tesla and Faraday Future, which are central to Nevada’s economic diversification plan.
Education and workforce development are perhaps the two most important pieces to the state’s economic strategy, especially when it comes to high-tech and STEM-related industries. Our state and local economic development agencies can offer many types of incentives to attract companies in these desirable sectors, but without a pool of potential workers to hire from, companies will be reluctant to relocate. The young men and women of Team 987 are proving to the world that Nevada is home to some of the brightest young minds on the planet, and if given the right opportunities and instruction, they can compete with anyone, anywhere. They also inspire younger generations by exposing them to robotics, engineering and other STEM specialties, creating a “virtuous” cycle that will elevate Nevada, both educationally and economically, for many future generations.
Nevada’s run of employment growth last year made headlines with the release of each month’s job report. The consistent growth kept our state ranked at or near the top of national rankings, and we finished 2015 with the country’s sixth-best job growth rate (3.1%).
That kind of economic news is always welcome.
Perhaps just as welcome, and even a little surprising, is the news about Nevada’s surge in weekly wages. This might be one of the most important measures of our economic health, and the Silver State closed the year with the best wage growth of any state. Average weekly wages climbed 5.2 percent in 2015, raising the typical worker’s annual earnings by nearly $1,900.
Arguably the best news behind those numbers is that the rise has been fueled not by more hours at work (those have remained fl at), but by strong growth in hourly pay. In fact, Nevada’s workers are getting paid, on average, an extra dollar per hour compared to a year ago.
What’s happening here is a microcosm of what we are witnessing across the United States. The economy is growing, unemployment is falling and, at present, there are more jobs than workers. This is a far cry from the depths of the economic crisis, when there were far more workers than jobs. The result: today’s employers that are looking to add positions or fi ll vacancies or even keep employees are finding themselves competing over a shrinking pool of potential labor.
And how do they compete? By raising wages and salaries.
If recent trends are any indication, the competition for employees doesn’t appear to be slowing down anytime soon. In December 2015, more Americans voluntarily quit their jobs than in any month since before the recession, and the 3.1 million people who quit was nearly double the number of workers who were laid off that same month. This labor market is clearly a seller’s market.
Here in Nevada, workers are reaping the rewards, but the economic benefits don’t end with their larger weekly paychecks. As workers see their fortunes rise both in terms of job security and earning potential, they are more likely to spend their additional income throughout the economy. From grocery stores to movie theaters to car dealerships, the entire state economy appears to be profiting from the ripple effect of workers’ newfound discretionary income.
Over the past year, job and wage growth have spearheaded the best year for Nevada’s economy in nearly a decade. With new businesses opening and more jobs being created, workers should continue to see more opportunities and better pay. And that means more good things for our state economy.
Las Vegas was built on “What ifs?” From its earliest days as a lonely stop along a dusty railroad track through the current megaresort era, Las Vegas grew and developed because someone with a vision first asked “What if?” That question is as relevant as ever for the city of North Las Vegas, which is trying to rebound from the housing collapse and subsequent recession that put the city on the brink of insolvency and a state takeover. Even with some recent improvements, the city’s financial picture is far from rosy, but what if the script about North Las Vegas’ demise is being rewritten?
What if southern Nevada was again among the fastest-growing areas in the country, and the bulk of the region’s undeveloped land was sitting within North Las Vegas’ city limits? What if the lower cost of land and development made the city more attractive to developers? What if the affordability and availability of homes made North Las Vegas a desirable bedroom community, especially for workers looking for easy access to jobs in burgeoning downtown Las Vegas?
What if southern Nevada lacked warehouse and distribution spaces larger than 50,000 square feet, and North Las Vegas became the region’s hotbed for large industrial center development? What if electric automaker Faraday Future’s $1 billion factory became the nucleus of a long-awaited economic development boom at Apex Industrial Park? And, what if Faraday and Hyperloop Technologies were merely foreshadowing Apex’s potential to become something akin to Silicon Valley for futuristic transportation research and development?
What if southern Nevada’s health care sector was woefully underserved, and North Las Vegas had a Veterans Administration hospital that could anchor a new medical district on the northern edge of the valley? What if unmanned aerial vehicles were a cutting edge technology that had federal approval for testing in just a handful of states, including Nevada? And, what if North Las Vegas was located near a critical Air Force base, a national test site and a military base used for development and deployment of drones?
What if people are underestimating North Las Vegas and its ambitious rebound projects in the same way they underestimated the chances of a railroad town in the middle of the desert a century ago?
With operations on five continents, Barrick Gold Corporation is known around the globe as the world’s largest gold producer. Company holdings include three mines with 4,000 employees in Northern Nevada, where it has operated for nearly three decades. Despite that long history in the Silver State, for most of it Barrick had no presence in Southern Nevada.
That changed in September when the Toronto-based company opened an office in Henderson to house its global information technology, finance, supply, environmental and energy teams. The relocation was clinched thanks to local data center powerhouse Switch and its vast IT infrastructure, which supports hundreds of the country’s largest and most connected companies. The new Barrick office is now home to about 80 employees earning well-above average salaries—a definite win for economic diversification in Southern Nevada.
Notably, Barrick’s positive role in the region goes well beyond the new jobs it created. The company has invested heavily in community philanthropic and economic development efforts that will enhance the quality of life for Southern Nevadans for years to come. Barrick supports organizations such as Communities in Schools, Three Square Food Bank, Opportunity Village, Nevada Ballet Theatre, Foundation for an Independent Tomorrow, and even the UNLV volleyball program. On top of that, Michael Brown, Barrick’s president in the United States, spearheaded the creation of the Nevada Corporate Giving Council, which aims to improve and enhance corporate philanthropy strategies and campaigns throughout the state. Barrick also supports the Las Vegas Global Economic Alliance’s “Engage Southern Nevada” investment campaign, which seeks to raise $7.5 million for regional economic development.
The success of Barrick’s growing footprint in Southern Nevada is a testament to the company’s vision and dedication to the community. Every company we bring to the state or region is a victory for economic development and diversification, but we should seek more companies that, like Barrick, bring a philosophy and commitment to community investment that goes beyond employee wages and business infrastructure. Greater investment in the community helps develop deeper roots and connections for both the community and the company.
We can also look at the Barrick relocation as a prime example of maximizing our regional resources to not only attract new businesses, but also to find ways to expand existing ones. Tax abatements and other state support will always play a role in recruiting companies to Nevada, but many other states can and do offer similar or even better incentives. The best kind of economic development involves expanding existing businesses, and the best incentive we can offer them is a quality community that includes a robust workforce, a high quality of life, and unique business assets, such as the information technology resources of Switch and the global connectivity made possible by McCarran International Airport. By making Nevada a more attractive place not just for businesses but for their employees, we enhance our prospects as a viable location for future company relocations and expansions.
Barrick is an international company that could have moved anywhere in the world; it chose Henderson. As an existing company that expanded in Nevada because of the opportunities it found here, Barrick’s expansion represents exactly what we want our economic development to become.
At this time of year, we look forward to New Year's Eve celebrations to close out the year and start anew. We prepare to turn the calendar, make resolutions and set new goals, all with an underlying optimism that in another 12 months we will be better off than we are today.
When I look back at what we achieved as a state in 2015, I have no doubt that we are better off now than a year ago. That hasn't always been the case, especially during the depths of the economic downturn that hit Nevada harder and longer than most everywhere else. During that time, each passing year seemed to leave us worse off than the one before, and yet we went into each new year with the hope that it would be the one that fi nally reversed the trend.
Thankfully, those days are well behind us. Over the past few years, the majority of our key economic indicators regained all or most of the ground that they lost during the downturn, and in some cases, all-time highs are again being set. In fact, many indicators in Nevada have outperformed most of the nation. Job growth is a shining example.
In October, Nevada was 42,100 jobs ahead of last year, generating an annual employment growth rate of 3.3 percent. That rate was better than all but two other states and well ahead of the national average. Job growth has gone hand in hand with private business growth, which climbed 3.5 percent in the second quarter by adding 2,625 new businesses over the previous year. During the same timeframe, personal income in the state rose by $6 billion.
The state's core tourism industry has been integral to these positive trends. Through October, Las Vegas was on pace to add another one million annual visitors in 2015 and set an all-time high for the second consecutive year. That record would not be possible without a surge in passenger traffi c at McCarran International Airport, which is approaching 45 million for the year after reaching 43 million in 2014.
Consumer spending and housing prices continued their strong trends in 2015, as well. Statewide annual taxable retail sales reached a record $51 billion in September, while Nevada's home prices appreciated more than 12 percent in the third quarter over the previous year, the second-best rate in the nation.
The year also saw a variety of new development announcements and beginnings. Added to the list of ongoing projects, they reinforce rising confi dence in the long-term economic future of our state. That list includes the Las Vegas Arena, Alon Las Vegas resort, Resorts World Vegas, the Las Vegas Convention District, new convention space at Aria, Swedish furniture store IKEA, Hyperloop and Faraday in North Las Vegas, and a UNLV school of medicine, among others.
As these many milestones in 2015 make clear, we have entered a period of building instead of rebuilding. We are no longer recovering from the damage wrought by the Great Recession. Instead, we are building upon a new foundation of stability and growth, and success will be measured not by how far we've come but by how far we go.
As we say goodbye to 2015, here's to our successes of the past year and to the hope that next year will be even better.
Nevada’s corporate community has a long tradition of philanthropy throughout the Silver State. That tradition of giving was perhaps no more important than in the recent past as our state took the brunt of the Great Recession and its aftermath. As our unemployment rate skyrocketed to a nation-leading 14 percent, thousands of people lost their jobs, and much- needed public services and charitable causes struggled with tighter budgets and soaring caseloads.
During these times of great need, Nevada’s companies stepped in to provide financial donations and volunteer hours in support of all-important community charities and nonprofit groups, even as they wrestled with their own cutbacks and tightening bottom lines. Although the state’s economic picture has improved much since then, the need for private-sector philanthropy remains high. Thankfully, our corporate community remains engaged in doing its part.
In 2013, companies throughout the state donated an estimated $134 million to charitable causes. As a share of company revenues, that amount represented nearly twice the national average corporate giving rate, according to a recent survey commissioned by the Nevada Corporate Giving Council. These donations support a wide variety of community programs and needs, including health and social services, culture and arts, education, and the environment.
Corporate giving doesn’t stop with financial donations, either. Eight in 10 companies surveyed also supported and encouraged volunteering through specific programs, including paid time off for volunteer activities and company- sponsored volunteer events. During the survey period, Nevada’s companies contributed 260,240 volunteer hours, the equivalent of 125 employees working full time for an entire year.
Many companies are involved in charitable giving, including some of the state’s most recognizable entities. MGM Resorts International donates a specific percentage of company profits to a variety of programs, provides an employee-funded foundation where employees can donate to their charities of choice, and encourages employee volunteerism. Barrick Gold supports nonprofit agencies in communities around the globe, including the Foundation for an Independent Tomorrow in Las Vegas. NV Energy sponsors volunteer days and awards financial grants in support of hundreds of nonprofits across the state. Station Casinos partners with at-risk local schools, providing financial support, volunteers, mentors, and donations.
This is just a sampling of the many charitable efforts companies support each and every day in our state. These efforts should only improve with the assistance of the Nevada Corporate Giving Council, which is led by top executives at Barrick Gold, MGM Resorts International, and NV Energy. The council’s mission is focused on tracking corporate philanthropy throughout the state, sharing best practices, and collaborating on charitable giving initiatives to better the community.
Through the years, Nevada’s companies, large and small, have proved their commitment to philanthropy. Going forward, greater collaboration and communication when it comes to charitable giving will only strengthen this commitment, and ongoing corporate philanthropic initiatives will tighten the bond between the state’s business entities and the communities they serve.
Throughout much of its history, Nevada’s independent streak, entrepreneurial spirit and economic opportunities have attracted people from all over the world. Today, it seems as if everyone in the state is from somewhere else, and to a large degree that’s true. Nevada has a lower share of native residents than anywhere else in the United States, with just one in four Silver State residents being born here. A little more than half of Nevadans were born in another state. One in five residents is foreign-born, the fifth-highest rate in the U.S.
Nevada has a long history of welcoming residents from beyond our nation’s borders. Through the first half of the 20th century, Italians were Nevada’s largest immigrant group, according to the Pew Research Center. Canadians held that designation for a couple of decades before Mexicans took the top spot in 1980. Since then, our nation’s southern neighbor has remained the primary source of immigrants in Nevada and nationwide. Hispanics, born either in the U.S. or abroad, represent Nevada’s largest minority group, making up 28 percent of the population, a threefold increase from 1990.
The influence of the large and growing Hispanic population is evident from the strip malls of northwest Las Vegas to the Governor’s Mansion in Carson City. However, the state has reported significant growth in other minority populations. Over the past decade, the Asian population has grown by 60 percent and now accounts for close to 8 percent of total population, and the African American population, which expanded by 39 percent, also makes up 8 percent of the state’s residents. However, neither grew as much as multiracial residents, who grew by 82 percent in the past 10 years, adding more total residents than the state’s white population.
The expanding multicultural landscape of the state, and especially southern Nevada, is evident in the annual events calendar, which is peppered with heritage festivals and events that celebrate that diversity. The Chinese New Year, Mexican Independence Day and Cinco de Mayo bring celebrations every year, while locals can enjoy festivals featuring culture and food from Greece, Italy, Hawaii, Japan, Puerto Rico, the Philippines and Brazil, among others.
This cultural diversity extends to our neighborhoods and our schools. A recent study by Pennsylvania State University researchers found Las Vegas was the seventh-most diverse metropolitan area in the country. Meanwhile, our flagship institution of higher learning, the University of Nevada, Las Vegas, was named the second-most diverse university in the nation in the annual rankings by U.S. News and World Report. It was UNLV’s fifth straight year in the top 10.
Our state’s growing diversity comes with its challenges, such as educating the large numbers of students learning English. That said, the overall positives far outweigh those challenges and create a richer cultural experience for everyone in the state. The face of Nevada is changing, just as it has always done. It is who we are, and it is who we will be. That’s something we should embrace and celebrate.
Southern Nevada is known as a region of constant transformation. For many decades, its status as a modern- day boomtown attracted residents, businesses, and investments seeking to capitalize on the region’s rapid expansion. That growth was evident in the ubiquitous high-rise construction cranes transforming the skyline of the Las Vegas Strip and the earth movers priming desert lots for new subdivisions and shopping centers.
During the Great Recession and in the years that followed, the signs of transformation were replaced by signs of stagnation. Planned developments were scrapped or suspended, and the construction cranes and earth movers vanished, leaving behind the unfinished skeletons of half-built projects and still- empty desert lots.
Throughout the downturn, southern Nevada persevered, and as the national and world economies recovered, so did Nevada’s. Jobs and businesses have returned, as have the cranes, earth movers and construction workers that are again transforming the region’s landscape. These changes have been fueled by the return of investments in new resort hotels, shopping centers, industrial centers, and other building projects.
Last year marked a milestone in the economic turnaround, as major projects such as SLS Las Vegas, the LINQ and the High Roller, and Downtown Summerlin were completed. Those three projects alone represented more than $2 billion in investment. Other recently completed projects include the $172-million Wyndham Desert Blue resort, the $100-million renovation of Westgate Las Vegas, and the $55-million Bellagio room remodel.
The upward trend has only grown stronger, as currently planned or under- construction projects in southern Nevada total more than $12 billion in investment. Those include high-profile projects such as the $375-million Las Vegas Arena, the $2.3-billion Global Business District, the $1.4-billion All Net Resort and Arena, the $4-billion Resorts World Las Vegas hotel, the $373-million Lucky Dragon boutique hotel, and a $47-million renovation of the Thomas & Mack Center.
The investment pipeline extends well beyond the confines of the Strip, as well. Several local shopping centers, including Las Vegas Premium Outlets North, Galleria at Sunset, Boulevard Mall and Tivoli Village have completed or are undergoing renovations or expansions. Meanwhile, iconic Swedish furniture retailer IKEA will open its 351,000-square-foot Las Vegas store next year.
Available land and opportunities have attracted significant investment in new industrial building construction as well. That includes a $1-billion expansion for Las Vegas-based technology giant Switch Communications, the $34-million Republic Services Recycling Center, and a new North American headquarters for Ainsworth Gaming Technology. Notably, about 2.0 million square feet of new industrial space is under construction on a speculative basis, meaning it will be built without committed tenants. This list includes the $32-million Jones Corporate Park, Henderson Freeways Crossing, Lone Mountain Corporate Center, and others.
The list of current and planned investments includes many other commercial developments across southern Nevada, and the investment total grows even more with the inclusion of major projects in northern Nevada, such as $5-billion Tesla Gigafactory and Switch’s $1 billion expansion there. These investments are a testament to how far the state has come since the depths of the economic downturn and reflect the belief that southern Nevada is once again a competitive and growing market.
After another long summer, students across southern Nevada are heading back to campus for the new academic year. In Clark County, most of the 320,000 public school students will attend their neighborhood campuses and learn the typical curriculum. However, about 24,000 students will be enrolled in the Clark County School District’s magnet schools or career and technical academies. In addition to teaching the standard curriculum, these specialized programs offer students unique educational opportunities that add to their personal development, help jump start their careers, and prepare them for working in high- demand emerging industries.
The district offers more than 60 programs at 32 elementary, middle and high schools, including math and science, law, video game design, nursing, visual and performing arts, international studies, and hospitality and tourism. Many of these programs focus on in-demand or emerging industries, such as healthcare, information technology and aerospace engineering, thus creating a workforce that is better-equipped as the southern Nevada economy diversifies.
Magnet schools and career and technical academies have a consistent record of academic success, with students routinely outperforming their peers in the classroom and in standardized testing. In Clark County they have also been recognized as among the best in the country by Magnet Schools of America, an organization that recognizes the top public magnet schools each year. Earlier this year, the group handed its top award for excellence to 15 of Clark County’s magnet programs. Another six programs earned the second-highest award.
That track record of success has put the district’s magnet programs in high demand for students and their families. In 2014, the district received 16,700 student applications for only 5,700 open spots. In an effort to help satisfy that demand while easing overcrowding at some schools, the district is expanding the magnet program, adding seven schools this year and another four next year. Those new programs will add 4,800 openings that district officials hope draw students from overcrowded schools to the new magnet programs, which were placed at campuses with extra room for students. The district also created the Select Schools program, which added career and technical training and Advanced Placement courses at five standard high schools. Together, these changes mean more students will have access to these specialized education programs.
The ongoing success and development of magnet schools and career and technical academies are a significant bright spot for southern Nevada education. As the fifth-largest school district in the country, the Clark County School District has many challenges to tackle to improve student performance, but the magnet schools and career and technical academies program is not one of them. The program’s history of success should be celebrated, and its expansion should be encouraged as it continues to grow and develop new academic programs that satisfy the demands of students and the community alike.
Imagine robots wheeling down the halls of Las Vegas’s largest hotels, delivering room service and turning down beds. Imagine a real-life Tomorrowland that showcases the cutting-edge technology of robotics and unmanned aerial vehicles. Imagine a university where the world’s best and brightest engineering students and professors create robots for the front lines of disaster response.
Welcome to the world of Dr. Paul Oh, who has not only imagined these scenarios, but is making them a reality as the Lincy Professor of Unmanned Aerial Systems at the University of Nevada, Las Vegas. Oh came to UNLV a year ago from Drexel University in Philadelphia, where his work at the Autonomous Systems Laboratory made him one of the world’s foremost experts in robotics. He has also worked with Boeing and NASA’s Jet Propulsion Laboratory.
For UNLV, convincing Oh to move across the country wasn’t just luck of the draw. Oh was attracted by the commitment of the university, the governor’s office and private industry to develop the emerging technology and use it to diversify the economy. In 2011 Nevada was the first state to allow autonomous vehicles on public roads, making it an early testing ground for Google’s self-driving cars, and last year the state became one of just six sites approved by the Federal Aviation Administration for research and testing of unmanned aerial vehicles. Additionally, Creech Air Force Base, about an hour outside Las Vegas, has for years served as the military’s hub for unmanned drone flights around the globe. These and other developments positioned Nevada at the forefront of the autonomous vehicle industry, which helped convince Oh to move to Las Vegas, bringing his expertise and millions of dollars in federal grant funding with him.
In less than a year, Oh has already made his mark. In June his team of students entered the prestigious U.S. Defense Advanced Research Projects Agency (DARPA) Challenge finals, an elite competition between the world’s best minds in robotics engineering. The goal of the challenge is to create robots that can respond to disaster areas, so the machines must be able to drive, open doors, climb stairs and other tasks. UNLV’s DRC-Hubo robot, named Metal Rebel, completed six of the eight tasks, placing it eighth in the field of 23 that included entries from the Massachusetts Institute of Technology and Carnegie Mellon University. Oh also recently helped UNLV secure a research and development partnership with Local Motors, a Phoenix-based company that manufactures vehicles with a 3D printer. As one of just three universities in the partnership program, UNLV received 3D-printed vehicles to use in research of autonomous technology as well as advanced materials for additive manufacturing of vehicles.
Oh aims to do far more than win robotics competitions or drive around in high- tech cars. Using the disasters of the 9/11 terrorist attacks and Hurricane Katrina as motivation, he wants to change the world for the better by creating robots that improve disaster response efforts and help save lives. His robots will have other applications, as well. He sees a growing market for autonomous robots in many other areas of the economy, including the hotel industry, agriculture and warehousing distribution. These ongoing developments and partnerships between UNLV, government and private industry will generate new opportunities to create jobs, attract in-demand knowledge workers, diversify the economy, and even make the world a more attractive place. In September, Metal Rebel will be at the Life is Beautiful music festival, drawing art on one of the walls.
In just one short year, Dr. Oh has transformed southern Nevada’s potential for robotics and autonomous vehicle research and economic development. Imagine what he’ll do in the years to come.
Throughout southern Nevada’s history, the home building industry has served as a measuring stick for the health of the overall economy. During decades of economic boom, new homes were built by the tens of thousands each year to meet the needs of an ever-growing community that was attracting new residents with plentiful job opportunities and one of the lowest costs of living in the western United States. The home building boom reached its peak in mid-2006 before plunging by half in the following year. Few would understand just how far reaching the nancial crisis would become, but the dramatic tumble in home building would be an ominous harbinger of the brutal recession to come.
In the wake of the Great Recession, new home activity in Clark County bottomed out in mid-2011 at fewer than 5,000 units, 90 percent below the peak. Many home builders couldn’t survive the fall and were swallowed up by other builders or closed for good. However, some companies did survive and weathered the economic downturn when everyone counted them out. Many of the surviving builders are arguably stronger today, as severe nancial hardship led to streamlined operations and new building strategies focused on more stable, more sustainable growth.
Home builders are also better prepared to meet the demands of the current new-home buyer, despite the attention being put on the price difference between new and existing homes. The current median sales price for a new home in the Las Vegas area is $298,375, while the median price of an existing home is $174,277. That 71-percent price gap is twice the national average and re ects the current trends in new home building in Las Vegas, which produce superior homes with larger lots, bigger oorplans, more technology and better energy ef ciency. On a per-square-foot basis, the cost difference of 22 percent is not nearly as stark and is in line with historical averages.
As home building has rebounded—currently about 10,000 units a year—so has construction employment. During most of the past 24 months, the construction sector has consistently enjoyed double-digit or near double-digit year-over-year job growth. In recent months, employment in construction has grown faster than in any other industry, and its most-recent 11.4-percent growth mark was more than twice the rate of any other sector. Other positive signs in the housing market include the ongoing rise of home prices in Nevada. The House Price Index has climbed for 13 straight quarters and is at its highest point since 2008. Also, the state’s home price appreciation over the past year ranked second in the nation, continuing the trend of a rst- or second-place ranking for 10 consecutive quarters.
These are all positive signs that show just how far the housing industry has come since the Great Recession. It is good news for the entire economy, as the housing industry that was once at the leading edge of the recession is now marking the end of a prolonged period of recovery.
Public safety is a top priority for every community across the nation. That's no less the case here in Nevada, where tourism drives our economic engine. From Las Vegas to Reno and everywhere in between, the Silver State annually attracts more than 50 million visitors who come to gamble, dine, dance, hike and enjoy many other activities. Nevada remains a top tourist destination not only because of the unique experiences and amenities it offers, but also because of the secure environment it provides for visitors from all over the world.
Crime trends show that our state has become safer in recent years, bucking the conventional wisdom that crime rises during economic turmoil. In fact, the state's overall crime rate climbed rapidly during the economic boom in the early 2000s before peaking in 2006. It gradually fell through the Great Recession and has remained relatively stable during the economic recovery.
In 2013 (the latest year available), the statewide crime rate had dropped by about a third from its level a decade earlier. Most of that improvement came from a dramatic fall in property crimes, though violent crime was slightly lower than where it stood shortly after the turn of the century. Those trends held true in southern Nevada, home to 73 percent of the state's residents and 84 percent of its visitors. In Clark County, the violent crime rate in the past few years was essentially unchanged from a decade ago, while property crime had fallen by roughly one-third.
Are these positive trends happenstance? I think not.
More officers on the streets means less crime. A decade ago, Clark County Sheriff Bill Young championed the More Cops sales tax to fund hundreds of additional officers across southern Nevada. As those officers were hired and put on the streets, the crime rates stopped growing and started shrinking, despite one of the worst economic environments in American history. Today, the More Cops sales tax is responsible for more than 800 extra officers, 25 percent of all local police officers in Clark County. Those additional officers helped southern Nevada police agencies weather a significant loss of officers from budget cuts made necessary by the severe loss of government tax revenues during the downturn.
Now Nevada has transitioned from a period of recession to one of recovery. While we probably won't see the exponential growth reported in the early 2000s anytime soon, Nevada is again among the top states in the nation for both population growth and employment growth. With more people calling Nevada home, policymakers and police officials will need to keep a watchful eye on crime trends and work to ensure the gains made in public safety during the last decade are not lost. Less crime is critical to the success of our all-important tourism industry, our economic development efforts and the quality of life for Nevada residents old and new.
From the outside, Touro University Nevada looks like just another warehouse in an industrial center at the southeast corner of the valley. But inside, the private nonprofit college is Nevada’s largest medical school. Since opening in 2004, the university has graduated more than 1,500 health care professionals. It started with 78 osteopathic medical students and has since grown to more than 1,300 students in programs such as nursing, physical therapy and other medical disciplines. Some of Touro’s programs, including master’s degrees in physician assistant studies and occupational therapy, are the only ones in Nevada.
For more than a decade, Touro has been working to fill some of Nevada’s most pressing health care needs. Our number of medical doctors and registered nurses per resident ranks among the worst in the nation. In fact, as a state we have only two-thirds of the medical professionals necessary just to meet the national average, and our population is again among the fastest-growing in America.
More help is on the horizon with the forthcoming UNLV School of Medicine, a new campus that will educate and train future doctors and nurses in Las Vegas with the hope most of them will stay after graduation. But the public medical school is still securing funding and won’t open for at least two years. That’s about the same timeline for a new College of Medicine planned by the private nonprofit Roseman University of Health Sciences.
Meanwhile, Touro University Nevada will continue with its mission of educating future doctors and nurses for a community that desperately needs them. But the school’s commitment to improving southern Nevada health care goes beyond the classroom. Touro runs a number of community outreach and clinical programs that help underserved and vulnerable people access health care. The school’s Mobile Healthcare Clinic makes regular visits to the Las Vegas homeless corridor to give basic health screenings and care. It runs a clinic at The Shade Tree shelter for battered women and children. Its Active Aging Center provides outreach and education for senior citizens, and its Center for Autism and Developmental Disabilities helps assess and treat children with developmental disabilities.
These are important medical services that would be left unfilled without Touro University Nevada. And they show the university’s commitment to southern Nevada both now and in the future, filling immediate health care gaps while educating the medical professionals who will serve our community and create a more diverse economy. Yet, the demand for medical education is still great. Touro University Nevada gets more than 3,000 applications each year for just 135 medical school spots. And of the 135 graduates, only 90 can train at the university’s residency program at Valley Hospital. Residencies are important because doctors tend to stay and practice in the city where they train.
Given our community’s looming needs now and into the foreseeable future, we should look at Touro University Nevada not as a competitor to the UNLV School of Medicine, but as a complement. That’s how Touro University officials see it, and they support the new medical school. The fact is, southern Nevada will require both private and public investment in our medical education infrastructure if we hope to not only meet the expanding health care needs of an aging population, but also continue to diversify our economy through a growing health care industry. The only surefire way to guarantee that our economy and health care system will fail to benefit from needed public and private investment is to support the belief that mutually beneficial investments are mutually exclusive.
Rising from the ashes of the Great Recession has not been easy for Nevada. The Silver State suffered harder and longer than most states under the combined negative effects of just about every key economic metric, from devastating unemployment and withering layoffs to crippling foreclosures and plunging home prices. Even as the state slowly emerged from those depths, we kept one eye on the rearview mirror, measuring every sign of economic recovery, no matter how small, against the specter of the Great Recession still looming behind us.
For half a decade, the signs of recovery trickled in. Unemployment dropped. Tourists returned. Homebuilders built. Home prices climbed. Businesses opened. Year after year, good news mixed with bad as some indicators showed promise and others lagged. Yet the momentum of recovery continued, and in 2014 the state reached a turning point, as many economic vital signs reached or neared pre-recession levels. In many respects, we could finally say, “Welcome back.”
Welcome back jobs; Nevada was third in job growth. Welcome back population growth; the state grew second fastest. Welcome back Las Vegas tourists, who hit a record 41.1 million. Welcome back home values, which rose faster than in any other state. Welcome back consumer spending, which hit levels not seen since 2007 in Clark County.
Sure, some areas have yet to recover. Convention attendance still lags. Gaming revenue is stagnant. Unemployment remains too high. Yet, as we head further into 2015 and beyond, the Great Recession is far enough behind us that we can take our eyes off the rearview mirror and turn our gaze to the road ahead and the opportunities over the horizon. And instead of saying, “Welcome back,” we can start saying, “Welcome forward.”
Welcome forward to a diversified economy where companies such as Tesla and Switch lead the way for continued expansion in high-tech industries, including aerospace and information technology. Welcome forward to better education for our children under Governor Brian Sandoval’s plan to remold the tax structure and generate hundreds of millions of dollars for schools.
Welcome forward to billions of dollars in new construction in the tourist corridor, including World Resorts Las Vegas, the Global Business District and the MGM/AEG Arena. Welcome forward to road projects such as Project Neon, which will untangle Las Vegas’ Spaghetti Bowl, and the Boulder City Bypass, the precursor to a Las Vegas-Phoenix interstate. Welcome forward to as many as 150,000 jobs in the next three years and the accompanying residents and homes and consumer spending they will generate.
We will not forget the pain of the Great Recession. Nor should we. However, our state and our economy have turned the corner. We are poised for new opportunities and growth. We are prepared to take advantage of emerging technologies and industries. We are putting the worst behind us and moving into a promising future.
Nevada has a reputation as a pro-business state. Too often, however, the term “pro-business” is thought to be little more than a politically correct way of saying “low tax.” While Nevada does have some of the lowest general business taxes in the nation—as well as no personal income tax—low taxes are far from the only reason that businesses are relocating to or expanding in the state. This was clearly evidenced in the November 2014 board meeting of the Governor’s Office of Economic Development.
Consider the comments from Don Ritzman, CEO of Ghost Systems, a leader in cybersecurity, which recently announced it would be developing its SafePlace ecosystem in northern Nevada. Noting that Ghost Systems evaluated a number of domestic and foreign markets for the location of its “key resources,” the company chose Nevada because it had the “ideal geographic location.” Mr. Ritzman also noted, “The kinds of products and services that [Ghost Systems delivers] to the marketplace require a very, very talented workforce” and the company was looking to leverage the state’s existing workforce and training capabilities. This is not to say that state incentives and a low-tax environment were not also important. Lower operating costs were expected to allow Ghost Systems to hire additional Nevada-based employees and roll out its SafePlace ecosystem 20 percent faster than would have been possible elsewhere.
Consider also comments from Johnnie Stoker, founder of K2 energy, an advanced lithium battery manufacturer founded in the City of Henderson in 2006. Internationally competitive and the sole supplier for the electromagnetic railgun program, K2 turned down $600,000 of incentives offered by the state of Texas because the company wanted to stay in Nevada. Mr. Stoker reaffirmed K2’s commitment to the state, noting that the company is actively working with UNLV as well as ITT Technical College on curriculum and technical projects because, as Mr. Stoker put it, “when you look at the next two to five years we’ve talked about hundreds of jobs and much more investment.”
Perhaps most notable are the comments made by Rob Roy, founder of Switch, arguably the most important technology startup in Nevada’s history. Governor Brian Sandoval asked Switch representatives about their experience with “getting local talent.” Mr. Roy, who recently announced a $2-billion expansion in both southern and northern Nevada, responded by saying that 85 percent of Switch’s employees are from the Silver State. He went on to say that the common perception that the education system and workforce in Nevada are not up to par is something they would tend to disagree with, as they have “grown one of the largest technology companies in the world” with 85 percent of their talent sourced to Nevada.
I doubt very much that Messrs. Ritzman, Stoker or Roy would disagree that Nevada needs to improve its K-12 education system or the technology programs in our colleges and universities. In fact, their investments and other actions would suggest just the opposite. Nevada’s economic development prowess, however, is more a function of the state’s strengths than its weaknesses and extend well beyond a low-tax operating environment. Building on those strengths, as opposed to resting upon them, will be the key to Nevada’s economic future.
The holidays came a bit early this year when, in late November, the price of regular gasoline dropped below $3.00 per gallon for the first time in four years. As of mid-December, the average price continued to drop to $2.68 per gallon, the lowest level reported since late-2009/early-2010.
At first blush, a few pennies at the pump may seem relatively insignificant. Consider, however, that total gasoline consumption in Clark County, Nevada is 760 million gallons per year. Thus, every penny decrease in the price of gasoline saves Nevada consumers about $7.6 million.
In mid-December, the price of regular gasoline was nearly 60 cents cheaper than it was at the same time last year; and, all told, during the past eight weeks, lower gasoline prices saved the typical southern Nevada household about $50. Multiplying that $50 figure by the roughly 720,000 southern Nevada households translates into $36 million of freed-up disposable income.
How are consumers spending the $36 million they just found in the couch cushions? Early reports would suggest they are spending it on holiday gifts, eating out and other discretionary items. In fact, the saving sourced to declines in gasoline prices arguably could not have come at a better time for Nevada’s retailers. The sharpest declines in prices since 2008 almost paralleled the start of the holiday shopping season. Nevada’s taxable retail sales in December tend to be about 20 percent higher than in a typical month. Giving people more money when they tend to consume the most is essentially the best-case scenario for traditional retailers.
It is not just Nevada households that are benefiting from the drop in gasoline prices. The cost of gasoline affects businesses, from landscapers to shipping companies. While prices would have to remain low for an extended period to stimulate increased business activity, a small business whose fuel cost is normally $6,500 per month adds incremental profit as the year comes to an end if its monthly fuel cost falls to $5,000; in a number of cases, this may result in increased spending on year-end celebrations or holiday bonuses.
Let’s also not forget about the 41 million visitors who will get on a plane or get into a car and come to Las Vegas during 2014. I have written previously about the danger in overestimating the implication of higher gas prices on visitor spending decisions; caution is similarly warranted as prices drop. That said, consumers have already adjusted to $3.50 gasoline by driving less, buying more fuel efficient vehicles and spending their money a bit differently. Lower prices tend to work a bit differently as consumers consider what they want versus what they might be willing to give up. We are looking for a late-year bump in visitor spending, including strong numbers for the important Wrangler National Finals Rodeo event, bolstered by favorable economic conditions, including, without limitation, lower fuel prices.
Lower gasoline prices are far from a panacea. What they are is a little bit of relief that could not have come at a better time for southern Nevada’s consumer-driven economy.
Perhaps the greatest sign of southern Nevada’s economic resurgence is the return of the consumer. During the past 12 months, Clark County’s taxable retail sales totaled $35.6 billion. This is only 2.2 percent below the $36.4 billion peak value reported at the end of 2007, as spending increased at an average rate of 8.5 percent during the past 12 months.
When consumers feel secure in their jobs, when their homes and retirement accounts are going up in value, and, for far too many, when their 20-something children finally have a job and leave home, they spend more. Consumer spending flattened in 2006, a full year before the economy went into recession. It then declined sharply from 2008 through early 2010 and has risen steadily since 2011, mirroring the pace and intensity of the region’s methodical recovery and reminding us that while “three economists can agree if two of them are dead,” consumers tend to provide a perfect barometer of the direction and strength of our consumption-driven economy.
Consumers are spending more in nearly every sales category. Durable and non-durable goods have both risen significantly during the past 12 months. Eating and drinking place and general merchandise store sales are back to pre-recession levels. Automobile sales have reported double-digit growth rates for most of the past two years; and, perhaps most notably, building materials and equipment sales also posted a higher-than-expected 7.5 percent growth rate during the past 12 months.
The sole exception to this trend among major taxable sales categories is in electronics and appliance stores. This sector rebounded well between 2010 and 2012, but has remained relatively fl at since. During the past 12 months, the category is down 1.6 percent.
At the other end of the spectrum are the curiously named “non-store” retailers, which reported a 45.8 percent increase during the past 12 months. Non-store retailers include Internet companies that collect taxes and remit them to the state. On January 1, 2014, Amazon began collecting Nevada sales taxes on most transactions, contributing significantly to the $150-million increase in non-store sales reported during the past 12 months. (Side note: consumers are actually required under Nevada State Law to remit the sales tax themselves to the Nevada Department of Taxation if the Internet retailer does not collect it — I am still looking for someone who has actually done this.)
Importantly, it is not just southern Nevada residents who have contributed to the rising tide of consumer spending; businesses and visitors have also done their part. Equipment sales and leasing services have both reported above average increases; concurrently, record numbers of visitors are spending more than ever on shopping, dining and drinking, bolstering both industry employment and taxable spending totals.
Heading into the all-important holiday season, consumers appear to be feeling better than they have at any point in the past fi ve years. Do not be surprised if December 2014’s total taxable retail sales spending totals break the $3.48 billion single-month record reported in December 2007. If realized, this would be the best sign yet that the economy has moved well past the recession.
Earlier this month the Nevada Department of Employment, Training and Rehabilitation reported that Nevada’s unemployment rate fell to a seasonally adjusted 7.3 percent. Down more than two full percentage points from the 9.6 percent reported just one year ago, the current rate is the lowest reported for the month of September since 2007.
Some will argue that the labor market is actually much better than the unemployment rate might suggest, noting that Nevada ranks among the nation’s highest in terms of new job formation (38,200 jobs during the past 12 months) or that the number of unemployed jobseekers has fallen from 197,000 in January 2011 to 95,000 today, down 26.6 percent in just the last 12 months alone. By contrast, those seeking to temper enthusiasm will quickly point out that Nevada’s unemployment rate is well above the national average (5.9 percent) and remains among the highest in the nation, or that Nevada’s labor force continues to shrink, with an additional 6,000 workers exiting the labor force during the past 12 months.
Reasonable minds can differ, and often do, as it relates to the health of our economy and what all of the statistics mean. That said, for working men and women throughout the state, there is one measure that likely means a great deal more than the others: the layoff rate.
In September 2013, 13,560 initial unemployment claims were filed in the state of Nevada. That figure translates into roughly 1.1 percent of the 1.2 million people currently employed statewide. Not only is the layoff rate roughly one-third of what it was during the depths of the recession, it is significantly lower than the average reported for the past 5 years (1.6 percent), the past 10 years (1.5 percent) or the past 20 years (1.4 percent). In fact, the current rate is almost uncomfortably close to the 0.9 percent reported during the economy’s 2006 peak, a time when Nevada was creating 65,000 jobs annually and boasting an unemployment rate that hovered around 4.5 percent.
The bottom line is this: Nevada businesses are laying off workers at historically low levels. As a result, Nevada workers’ job security is very strong and continues to trend in a favorable direction.
Currently, Nevada has more than 95,000 people actively looking for work, while many businesses, from construction to healthcare, are having a difficult time finding quality candidates to fill open positions. This is the new reality of our complex economy, where statistics like the unemployment rate tell only half the story and often obscure the true nature of market conditions. In fact, our labor market is much stronger than our 7.3 percent unemployment rate might otherwise suggest.
Much has been written, positive and negative, about Tesla's decision to build its lithium ion battery gigafactory in Nevada and the incentive package approved by Governor Sandoval and the Nevada State Legislature to “lure” the company here. Respecting that reasonable minds can differ as to the long-term implications Tesla may have on the state, the bottom line is that Tesla will pay almost no state taxes. This is about the same amount Nevada would have collected had Tesla decided to build its factory in Arizona, New Mexico or Texas.
Notably, Tesla will also receive nearly $200 million in transferable tax credits, which is the functional equivalent of a cash payment from Nevada taxpayers. However, the Tesla legislation concurrently closed existing tax loopholes and reduced less economically beneficial tax incentive programs, making the deal essentially tax neutral for the state's taxpayers. Tesla's contractors, vendors and suppliers will pay all state and local taxes, many generating significantly more than they would have otherwise because of the increased demand for their labor, goods or services. Nevada also gets 6,500 new direct jobs, likely twice that many when the ripple effects are considered.
Perhaps more important than the direct jobs or the tax implications is that Tesla's decision to invest upwards of $3.5 billion in Nevada instantly changes the dialog surrounding what the state “is” from an economic development perspective. High taxes may keep a company from locating into a state or even prompt it to leave, but low taxes alone are far from a determinative factor for site location. Proximity to markets and suppliers, regional accessibility, infrastructure, labor force depth, facility availability and operating cost, quality of life and the regulatory environment are all critical considerations underlying a company's actual ability to do business. Tesla chose Nevada because the state provided the best opportunity for the company to maximize its return on investment; in doing so, it opened eyes and doors for those who might follow.
If Tesla is willing to build what will likely be the most advanced battery technology factory on the planet in Nevada, is it that farfetched that other companies will follow? What about companies that will provide equipment, parts, materials or services to Tesla? Would they not want to be closer to the five million square foot mothership? I think so.
Does Tesla's decision to invest make the prospects of unmanned aerial vehicle research, development and manufacturing in Nevada a bit more plausible? Nevada already has arguably the best base locations and testing sites in the nation; and, last June, the Federal Aviation Administration cleared Nevada to begin testing the ScanEagle drone at the Desert Rock Airport in Mercury, 65 miles northwest of Las Vegas. I think so.
Does Tesla's status as an automotive innovator capture the attention of others who operate on the cutting edge? Does the Tesla deal bring closer similar investments in industries as far-flung as hydroponics whose technology can grow fruits and vegetables with one-tenth the water of traditional farming and who have recently been considering Nevada for significant investments? I think so.
Yes, Tesla got a good deal from the state of Nevada. Yes, economic development requires a certain degree of optimism that companies, like Tesla, will be able to deliver on their promise. Yes, there will be bumps along the way. All of this having been said, what Nevada has given up may very well pale in comparison to what the state will get in return, particularly if you look beyond Tesla.
On May 28, 2014, the Federal Reserve Bank of Philadelphia released its April leading economic indexes for the 50 states. At 4.4 percent, Nevada ranked second in the nation in terms of expected growth over the next six months, behind only Rhode Island.
Also on May 28, 2014, the United States Department of Labor, Bureau of Labor Statistics released its Regional and State Employment and Unemployment Summary for the month of April 2014. That report stated:
The largest over-the-year percentage increase [in employment] occurred in North Dakota (+5.2 percent), followed by Nevada (+3.8 percent) and Florida (+3.3 percent).
In April, Illinois and Nevada had the largest over-the-month unemployment rate declines (-0.5 percentage point each).
On May 27, 2014, the Federal Housing Finance Agency (FHFA) released its Housing Price Index for the first quarter of 2014. The FHFA concluded:
The seasonally adjusted, purchase-only HPI rose in 42 states and the District of Columbia during the first quarter of 2014 (up from 38 states during the fourth quarter of 2013). The top annual appreciation was in: 1) Nevada, 2) District of Columbia, 3) California, 4) Arizona, and 5) Florida.
On May 8, 2014, The Guardian magazine released its first Guardian Cities global brand survey, which placed Las Vegas as the 9th most powerful city brand on the planet. Earlier this year the Las Vegas Convention and Visitors Authority (LVCVA) released its report on visitor volume in 2013, concluding:
Despite one fewer day last year due to 2012 being a leap year and less room inventory for the majority of the year, visitor volume was just 58,802 visitors shy of setting a record in 2013. Las Vegas hosted 39.67 million annual visitors last year, the second highest visitation total ever.
On May 28, 2014 the LVCVA reported visitor volume was up 4.8 percent during the first four months of 2014, suggesting that the "second highest visitation total ever" in 2013 will very likely be followed by the "highest visitation total ever" in 2014.
On May 1, 2014, the UNLV Center for Business and Economic Research (CBER) at the Lee Business School issued the results of its Nevada Business Confidence Index for the second quarter of 2014. CBER Analyst Ryan T. Kennelly reported:
Southern Nevada businesses' expectations increased for the second straight quarter and are at an all-time high.
Finally, on March 25, 2014, the United States Department of Commerce, Bureau of Economic Analysis released its State Personal Income Summary for 2013. That release noted:
Nevada's 4.3 percent earnings growth in 2013 exceeded the national average for the first time since the recession ended in 2009.
I rest my case.
In March 2014, Las Vegas welcomed 3.7 million visitors. Up 4.3 percent from the same month of the prior year, March's visitor count was the highest ever recorded for a single month. Arguably more important is the fact that visitor volume for the past 12 months was 40.2 million, the highest annual count in southern Nevada's history.
The leisure and hospitality industry employs 273,000 workers in Nevada, roughly 1 in every 3. The industry contributes a similar share of wage and salary payments and combined economic output. The industry bears a disproportionate share of state and local taxes, allowing Nevada to be one of only three states in the nation without a corporate or personal income tax. Important efforts toward economic diversification notwithstanding, southern Nevada has benefited, and continues to benefit from being hyper-focused on being the world's greatest destination city.
Las Vegas has compelling competitive advantages, including 150,000 hotel rooms and the nation's 10th busiest airport. That said, with 40 million annual visitors, Las Vegas has had to become all things to all people, which is clearly reflected in our changing visitor profile.
Respecting that convention volumes remain well below pre-recession levels, convention attendance was up 20.5 percent in March. Conventions and tradeshows like CONEXPO-CON/AGG; MAGIC International and CES are posting record attendance levels, helping to push occupancy rates back above 90 percent and room rates to levels not seen since 2008.
Notably, 15 percent of visitors report that they are coming to Las Vegas for the first time, the lowest "first trip" level reported during the past five years. This reflects an uptick in repeat visitation, as the typical traveler now reports 6.4 trips to Vegas during the past five years. Although only 15 percent of visitors report that the primary purpose of their visit was "to gamble", 71 percent of them placed a bet during their trip.
The average visitor was 45.8 years old, a demographic factor that has been skewing younger in recent years. Notably, however, nearly 80 percent of visitors were married, 50 percent reported incomes of $70,000 or more, and they tended to be more highly educated than the population at large.
One in four visitors was from a foreign country, the highest level ever and a notable success for Las Vegas Convention and Visitors Authority, which has been targeting lucrative international markets. One in seven travelers visits nearby places, such as the Grand Canyon, Hoover Dam or Lake Mead. About two percent will play golf and a slightly higher share will visit a spa.
While 97 percent of visitors decided where to stay before they arrived, 72 decided what show they would see and 60 percent decided where to gamble after they arrived in Las Vegas. In fact, the typical visitor traveler now visits nearly six casino-hotels per trip, suggesting Las Vegas' critical mass is also an important competitive advantage.
You would be hard pressed to find another destination market in the country reporting similar quantity and diversity.
Respecting Las Vegas' remarkable staying power, one visitor statistic remains a concern. In 2013, 89 percent of visitors were "very satisfied" with their current trip to Las Vegas. This was the lowest level reported during the past five years and five points below the 94 percent reported in 2012. We have 40 million reasons to ensure that each visitor's experience exceeds expectations, and we would be well served to make certain the decisions we make today will keep them coming back tomorrow.
According to the Federal Housing Finance Agency, the state of Nevada is once again the fastest-appreciating housing market in the United States. During the past 12 months, Nevada reported price increases of 24.3 percent, more than three times the national average and nearly five percentage points higher than the next closest state (California, 19.5 percent). The Las Vegas metropolitan area also ranked 5th nationally among 283 major metropolitan areas, with an annual appreciation rate of 24.7 percent, slightly higher than the statewide average.
The result of the recent price increases has been a 50-percent reduction in the number of homes classified as “underwater” (i.e., that are worth less than the mortgage on the property), a notable increase in residential construction activity, and nearly $30 billion in recovered home equity (or reduced negative equity) for residential homeowners.
To be clear, 20-percent-plus housing price appreciation rates are neither healthy nor sustainable. That said, residential prices today are better aligned with household incomes than they were when housing prices reached their peak of $290,000 (October 2006) or when they bottomed out at roughly $100,000 (January 2012). At present, the ratio of existing median home prices to median household income is roughly 3.3:1, substantially lower than the 5.5:1 reported in 2006 and very much in line with the current national average ratio of 3.6:1.
Southern Nevada’s median existing home price in January 2014 was roughly $158,000 on 3,000 closings. Both the pace of sales and sales prices have shown some signs of slowing during the past couple of months. This settling is to be expected after the strong gains reported during the past year and in light of recent increases in mortgage interest rates. Notably, a total of 47,200 homes closed during the past 12 months. While this figure was down approximately 8.4 percent compared to the prior year, total prices and values per square foot increased by 21.9 percent and 17.5 percent, respectively.
Additionally, many sellers who have been sitting on the sidelines have also reentered the market. The number of homes listed by southern Nevada REALTORS® is up more than 96 percent from where it was a year ago, pushing the effective resale inventory from 1.6 months a year ago to a more balanced 3.4 months.
Higher prices have also breathed new life into southern Nevada homebuilders. New home closings totaled nearly 7,000 units during the past 12 months, up 22.5 percent year over year. Median prices during the same period increased from $220,000 per unit to $305,000, or by 38.5 percent, even though pricing per square foot increased by only 8.3 percent, or from $116 to $125, during the same period. What this means is that home builders are constructing larger homes and selling them for more, a trend nonexistent during the past decade. Permitting activity suggest that nearly 9,000 residential units will be added in 2014. Again, current levels are much more in line with where the market should be in terms of new construction as compared to the market’s peak of 39,000 units (2006) or its trough of 3,800 (2012).
Housing market stability is critical to our community’s economic health. Not only does homeownership represent the single most important wealth-building vehicle for the middle class, but the preservation of existing neighborhoods and the development of new ones are at the core of our quality of life. A recovery in the housing market has been a long time coming and should be embraced, respecting that stability and preservation, and not nation-leading price appreciation rates, should be our focus from this point forward.
The best sign of our economy’s resurgence has been the return of the consumer. Nationally, consumer confidence stands at 78.1, up nearly 15 percent from levels reported just one year ago and three times the dismal 25.3 reported in February 2009. Improved consumer sentiment has translated into increased consumer spending. Nationally, retail and food service sales were up 3.7 percent in 2013. They now stand at $5.1 trillion, the highest level ever reported. The National Retail Federation® is predicting that traditional sales will increase by 4.1 percent in 2014, with online sales growth projected to expand by between 9 and 12 percent this year.
Local retail spending has reported a similar trend, with taxable sales up 4.8 percent in southern Nevada during 2013. Leading the way was motor vehicle and parts dealers, posting an 11.8-percent increase year over year. Polk®, the global leader in automotive industry research, reports the average age of light vehicles on the road at 11.4 years, the highest rate since that statistic began being reported in 2002 when the average age stood at 9.6 years. A strong sign for continued strength in the auto sector, Polk expects an average growth rate of 7.1 percent for newer vehicles (i.e., 0 to 5 years) and a decline in middle age vehicles (i.e., 6 to 11 years) through 2018.
A close second in terms of retail spending growth is building materials and garden equipment sales. Up 10.6 percent to $1.13 billion in 2013, the building sector has benefited from an increase in both residential and commercial construction activity. Residential home permitting rose 11.6 percent during the past 12 months, with the 8,500 units permitted outpacing the 7,100 new home closings. Perhaps even more notable is permitted commercial construction value, which increased from $194 million to $482 million during the past 12 months, or by 148 percent. Remarkably, construction-related employment ranked first in terms of percentage growth, reporting a 9.2 percent uptick in 2013.
Arguably the most important sector in terms of taxable retail spending is food service and drinking places, essentially restaurants and bars. At $8.9 billion annually, the sector accounts for more than one in every four taxable retail dollar spent. Restaurant and bar spending grew by a below average 4.3 percent during 2013; however, eating and drinking places continued to post strong gains in the visitor sector. Eating and drinking in hotel casinos totaled $4.6 billion in 2013, with beverage sales reporting a higher growth rate than in any other department. Today, there are nearly 36,000 food department workers and 9,600 beverage department workers, roughly one in every three people employed in Clark County’s hotels, casinos and resorts.
When it comes to forecasting where the economy will be one year from now, three economists can generally agree if two of them are dead. Consumers, by contrast, are a near perfect predictor of where the economy is heading, for better or worse. The health of our economy is driven by consumers’ willingness to reach into their pockets and spend the money they have earned or saved. More normal spending levels have translated into stronger economic growth rates, record corporate profits and the lowest unemployment rate since October 2008. Assuming these trends continue, 2014 will be another strong year for consumers and those who serve them.
Casino gaming has evolved significantly over the past 20 years. What started with reel slot machines and traditional table games like blackjack, poker and craps has been transformed into a multitude of thematically enticing digital games virtually tailored to the preferences of individual players, as well as innovative table games like Caribbean Stud, Pai Gow Poker and Let it Ride Stud Poker.
Mark Yoseloff has been at the center of this transformation. As the former chairman and chief executive officer of SHFL Entertainment, Inc., he helped transform SHFL from a small, three-product company to a global provider of innovative casino products. The company introduced blackjack and poker shufflers that increase the speed of games, side bets that make table games like blackjack more exciting for players, and new casino games like Caribbean Stud and Ultimate Texas Hold 'em. Late last year, SHFL Entertainment was acquired by Las Vegas-based Bally Technologies, Inc. for approximately $1.3 billion.
Mr. Yoseloff has recently taken his talents to UNLV, where he created the Gaming Innovation Program within the William F. Harrah College of Hotel Administration. The program is open to 20 undergraduate and graduate students and focuses on the development and commercialization of new casino games. I recently had the opportunity to observe as students from the fall session presented their ideas. I signed a confidentiality agreement prohibiting me from disclosing any of the specifics of the students' work; however, I am safe to say that it was nothing short of extraordinary. The thoughtfulness and creativity of these students reflected their experiences, their diversity and a willingness to collaborate. Mr. Yoseloff provided the simple framework: (1) make it different; and (2) maintain the necessary house advantage; the students did the rest.
What the students were able to achieve was compelling, as was the generosity exhibited by Mr. Yoseloff, who made the Gaming Innovation Program possible through a $250,000 gift from the Yoseloff Family Foundation. That said, it is the broader implications of this program that are worthy of additional attention. As a result of the work of these 20 students and their instructor, 12 patents have or are in the process of being filed with the United States Patent and Trademark Office. This not only provides real-world opportunities for the student-inventors, but it is precisely the blend of public university research and private sector application that is critical to Nevada's longer-run economic viability.
Turning university research into private sector jobs through the commercialization of innovative ideas and scientific discoveries has been a top priority for the university system and state economic development officers, as well as Governor Brian Sandoval. The Gaming Innovation Program is a shining example of what is possible, and hopefully, what is to come. As Nevada continues to struggle with elevated unemployment rates and state budget shortfalls, empowering students at all levels to develop ideas that leverage not only their abilities but also our community's core competencies should be at the center of our policy and budgeting discussions.
There are a great many things to give thanks for this holiday season. After the health and well-being of friends and family, atop my list is that it is no longer 2010. Looking back at where we were just a few years ago provides not only a sobering reminder of how fragile our economy truly is, but also a compelling perspective on just how far we have come.
At the national level, gross domestic product, personal incomes, retail sales, corporate profits and the S&P 500 are all at record levels. The U.S. economy lost 8.7 million jobs between December 2007 and September 2010. Since that point, 7.4 million jobs have been added back to the economy. The nation's unemployment rate, which reached 10.0 percent in October 2009, now stands at 7.0 percent. Industrial production and capacity, which hit decade lows in 2009, are now at or above prerecession levels. Finally, after falling 23 percent between 2007 and 2010, national housing prices have risen 13 percent in just the past 12 months and homebuilders are getting back to work.
Closer to home, the numbers are even more remarkable. Nearly every southern Nevada economic indicator trended positive in 2013, in sharp contrast to 2010, when every indicator was moving sharply in the opposite direction.
Southern Nevada shed nearly 15 percent of its workforce between December 2007 and February 2011, 2.3 times the loss rate reported nationally. During the past 12 months, southern Nevada reported an employment growth rate of 2.1 percent, outpacing national averages by a healthy margin. The local unemployment rate, which peaked at a staggering 14.6 percent in July 2010, has fallen to 9.4 percent as nearly 54,000 jobs have been added back to the economy since it bottomed out.
Housing prices, which reported declines for four consecutive years, posted gains in excess of 26 percent during the past 12 months. In response to population growth rates three times the national average, residential permitting is up 7.1 percent, and sales per active subdivision are up more than 17.5 percent.
Even with more hotel rooms on the market today, hotel occupancy rates that were barely above 80 percent in 2010 averaged 84 percent during the past 12 months and approached 88 percent in October. Visitor volumes are at near-record highs, pushing average daily room rates up 2.1 percent year over year and up 16 percent since 2010. Visitors are also spending more than ever on retail, restaurants, nightclubs and shows.
Taxable retail spending in Clark County is up 4.9 percent during the past 12 months. By way of comparison, in December 2010 taxable retail sales had reported 35 consecutive months of year-over-year declines. Key spending categories such as motor vehicle sales (+12.0 percent), building materials and equipment (+7.3 percent), durable goods (+6.1 percent), and electronics and appliances (+5.8 percent) have all reported above average gains this year.
Remnants of the Great Recession remain in every corner of our economy. There are those who cannot wait for every remaining fragment to be extricated from both our economic landscape and our collective memory. I would respectfully submit that we should be cautious not to discard them too quickly, as they serve as a valuable reminder of both our struggle and our triumph.
Las Vegas' tourism economy is changing rapidly. In 1990, casino gaming accounted for 58 percent of hotel-casino revenue along the Las Vegas Strip, a number which fell to 46 percent a decade later. Last year, casino gaming accounted for only 36 percent of Strip operators' gross revenue. Today, there are 20,000 fewer slot machines on Clark County casino floors than there were in 2001, even with 25,000 more hotel rooms.
While casino gaming remains a vital revenue center and rooms, food, beverage and retail are contributing more than ever before, it is next-generation nightclubs, bars and ultra-lounges that have emerged to become the second most profitable square footage along the Las Vegas Strip.
According to the 2013 Top 100 list developed by Nightclub & Bar and Technomic, Inc., Las Vegas is home to seven of the top ten nightclubs in the United States, including four of the nation's top five clubs. Sharing the top spot were XS Nightclub (Encore) and Marquee LV (Cosmopolitan), both reporting gross revenue of between $80 and $90 million per year.
Not included in the 2013 rankings was MGM's Hakkasan, which opened in April of this year. With a facility construction price tag north of $100 mi l l ion, the 80,000-square-foot, multi-level club and restaurant is expected by most observers to set a new high water mark for the industry. Perhaps more impressive than the facility's construction cost is the $70 million set aside for superstar DJs. Tiesto, Calvin Harris and Steve Aoki may not be household names to most; but, to Grey Goose-guzzling Millennials with a puzzling quantity of disposable income, these guys are like the Pied Piper of Hamelin. And they had better be. Calvin Harris topped Forbes 2013 list of the world's top-paid DJs at $46 million per year.
Las Vegas visitors are beginning to skew younger, and the reality is that you simply don't see many 30-year-olds playing video poker machines on casino floors. Some believe this is a recipe for disaster for Las Vegas; others believe it is only the beginning of Las Vegas' next evolution.
Las Vegas has always known how to throw a party, and club developers and operators like Angel Management Group and Light Group are setting a whole new standard. Add to these major events like the Electric Daisy Carnival and a round-the-clock club atmosphere made possible by the emergence of poolside day clubs-which can easily generate $1 million in gross revenue a day on summer weekends-and you have a billion-dollar industry that is now driving a healthy share of demand for Las Vegas room nights.
Las Vegas' greatest strength has always been the destination's ability to constantly reinvent itself. Nightclubs, dayclubs and ultra-lounges are merely the most recent in a long line of entertainment innovations that have helped Las Vegas draw nearly 40 million visitors per year. While its economics may appear confounding on the surface, their results and relative impact are undeniable. These younger, sophisticated partygoers are opening new doors and new opportunities for the Las Vegas resort industry; they also represent a source of longer-run demand when they reach into their 40s, 50s, 60s and beyond. Their affinity for Las Vegas as a vacation destination may start with high-end vodka and pricey table rentals within our nightclubs, but it is the broader experience that will keep them coming back.
To find the areas in the United States with the greatest economic potential, you need look no further than a list of the nation's Tier 1 research universities. These institutions have annual research budgets ranging from $500 million to well over $1.0 billion, and they have become remarkably adept at spinning off commercial ventures in science, technology, engineering and health care.
Tier 1 universities are creating patents and Ph.D.s, and in doing so, laying the foundation for future economic development. Notably, a majority of university research funds are sourced to federal grants and other national research programs. These funds generate an inflow of research capital, building labs and supporting faculty and support staff. Perhaps more importantly, they also operate as seed capital for new businesses designed specifically to bring innovations to market; they have created an incentive for business expansion in places like Austin, Salt Lake City, Phoenix, San Jose, San Francisco, Boston, Raleigh and Ann Arbor.
No one better understands UNLV's importance in our community's economic future than university president Neal Smatresk, who is focused on making UNLV a top-tier research university. Las Vegas is the largest metropolitan area in the country without such an institution; and, with an annual research budget of only $30 million, the state's flagship university is well behind the curve. California has multiple universities boasting annual research budgets well in excess of $500 million. University of Arizona ($560 million), Arizona State University ($280 million), University of Utah ($331 million), and Utah State University ($143 million) all report significantly higher research budgets.
There are those who believe that such a goal is overly ambitious, suggesting UNLV should focus solely on preparing undergraduates to join the workforce. They contend that an increased emphasis on research will detract from this core mission, making the state's workforce less competitive and ultimately leading to higher rates of unemployment. In fact, the exact opposite is more likely the case. The innovation sourced to research and development-whether on or of f university campuses-is what is driving economic growth globally. Absent this investment and the innovation stemming from it, the employment prospects for the masses will almost assuredly be reduced.
There are those who argue that the cost is simply too high and that university professors should spend more time teaching and less time researching. Not only does this argument fail, based on the merits of the research outlined above, but such a position completely overlooks the leveraging mechanics of research funding leading to more faculty, not less. Not surprisingly, universities attracting the best researchers tend to get more research grants. This translates into hundreds of millions of dollars flowing into a university. By contrast, the $75 million cut from UNLV's budget over the past five years will likely cost the state 10 times that amount in research funding. Concurrently, class sizes have gotten bigger, fewer sections are being offered and innovative programs have been suspended. At Tier 2 universities the average number of students per full-time faculty is roughly 22 to 1; notably, at Tier 2 UNLV this ratio is approximately 32 to 1. Among Tier 1 universities, this ratio is roughly 14 to 1.
President Smatresk's focus on making UNLV a top-tier research university is not only appropriate, it is essential. Absent the development of new programs borne through research, exploration and innovation, the university will continue to lose hundreds of millions of dollars in grant opportunities and the community stands to lose billions in economic potential.
Like many communities around the world, southern Nevada aspires to be a technology hub. To illustrate our progress toward this lofty goal, observers commonly point to Zappos CEO Tony Hsieh's $350-million investment in Downtown Las Vegas-ostensibly designed to increase "collisions" among creative thinkers-and Switch Communications CEO, founder and chairman Rob Roy's relentless focus on building the world's most efficient, high-density data center.
Respecting that Mr. Hsieh's influence on Downtown has been nothing short of transformative and Mr. Roy's vision arguably led to Nevada's most important start-up in a generation, such a narrow focus completely misses the economics underlying our community's metamorphosis from analog to digital.
Even the idea that there is a "technology industry" is ill-conceived. Switch Communications is to technology today what the railroad was to technology in the early 1800's, providing the infrastructure for companies around the world to do things that were inconceivable just a decade ago. Zappos-perhaps more appropriately its parent company Amazon-provides the most efficient link between retailers and consumers in the history of mankind. Far from a novel economic concept, Amazon is equal parts port and bazaar, giving anyone in reach of a computer or smartphone instant access to the Port of Louisiana and the Mall of America.
Technology is not an industry; it is the common denominator underlying the future of all industries.
Our state's most important sectors, including gaming, mining, banking, manufacturing, construction and development, energy, transportation, and health care, are all replete with examples of this transformation.
While we would all love Las Vegas to join the ranks of the world's great innovation clusters like those in Silicon Valley, Boston, Tech City London, Israel and Bangalore, India, our best opportunity to exploit technological innovation is to facilitate its use and development within our base economy. A case in point is Ultimate Poker, the first legal online gaming site in the United States, made possible by technological
innovations developed by a local family that entered the bricks-and-mortar gaming business in 1976 at the corner of Interstate 15 and Sahara Avenue. While unemployment remains somewhat elevated, U.S. worker productivity is at its highest level in history, and so are corporate profits. Stated differently, those people who are working are producing more than ever before, and corporations that have used technology to lower costs are bringing those savings to the bottom line. This trend is expected to continue, with an ever-growing divide between the people who are building robots and the people who are being replaced by them.
The expectation is that over time, human workers will have the capacity and ability to focus on higher-level tasks, as computers are used more and more to efficiently perform mundane jobs. The catch, of course, is that the pool of available workers needs the ability to contribute at this higher level.
Southern Nevada is already becoming a technology hub. That said, the speed and success of this transition will come as much from our schools and universities as from the relocation of software developers from San Jose, Boston or Beijing. It will come as much from the businesses that have invested in our economy during the past fifty years as from those willing to invest during the next five. It will come because southern Nevada's greatest economic strengths are resiliency and adaptation, and our collective focus has shifted from surviving the recession to building for our future.
In February 2012, Governor Brian Sandoval called for Nevada to create 50,000 jobs by 2014. This was a particularly bold move by the Governor considering that when he took office, the state had shed nearly 175,000 jobs from its May 2008 peak, had reported job losses for 35 consecutive months, and was still reeling in the aftermath of the Great Recession.
Remarkably, while Governor Jim Gibbons suffered through negative growth for the last three years of his term, Governor Sandoval has benefited from positive annual employment growth rates every month since taking office in January 2011. Nevada has created nearly 39,000 jobs since Mr. Sandoval took office; and, with 18 months of reporting remaining through 2014, he should easily reach his goal of creating 50,000 new positions.
There are those who believe the Governor has just been lucky-right place, right time; others contend he should be given full credit for every new job that has been created on his watch. As usual, reality lies somewhere between these two extremes.
Those who wish to downplay any credit Mr. Sandoval might take for Nevada's economic course correction will undoubtedly point to the fact that the jobs trend shifted from positive to negative before the Governor had the ability to effect any meaningful policy changes and took place a full year before his economic development road
map was even released. They will also surely point to the 330,000 jobs created under the admittedly longer Miller and Guinn administrations, suggesting that Governor Sandoval will need to do much more to equal the economic accomplishments of his predecessors.
I would respectfully submit that such comparisons are misplaced , as are countless other attempts to use our state's historical growth as a measuring stick for current economic progress. Irrespective of whether Nevada reaches the Governor's 50,000-job goal by 2014, Mr. Sandoval has already placed himself among the most progressive economic development governors in Nevada's history.
This is evidenced by any number of factors, including the creation of the Governor's Office of Economic Development, which has: strategically aligned the state's economic development efforts; reduced needless competition among regional agencies; increased resources available to help relocating and expanding businesses; and launched the state's first economic development data repository. Mr. Sandoval has also expanded the state's reach with trade missions to China, South Korea and Mexico. He has called for Nevada's colleges and universities to refocus on emerging technologies and commercialization, and they have responded with new programs in areas such as cyber security and unmanned aerial vehicle research and development. The Governor has been a tireless advocate for the state's tourism industry, forwarding its causes both in terms of online gaming and international travel. At the same time, Nevada has also seen growth in small business activity and the announcement of some of the nation's most significant new projects (e.g., the $1-billion Apple® data center in Reno-Sparks and the $2.0-billion-plus Resorts World project in Las Vegas).
Governor Sandoval cannot take credit for every job that's created, nor should he be assigned the blame if the economy were to suddenly reverse course tomorrow. At the same time, the idea that the state's recent economic improvements are mere serendipity is equally preposterous. The economy transitioned from recession to recovery several months before Mr. Sandoval took office; but, more important than the economic hand the Governor was dealt, is how he's chosen to play it. Thus far, he appears to have been both lucky and good.
Apple® is a registered trademark of Apple Inc. and Nevada State Bank does not claim any ownership or exclusive rights to the use of this trademark.
There has been a lot written about southern Nevada's housing market during the past 30 days. The Wall Street Journal's Nick Timiros recently wrote an article entitled "Foreclosure Squeeze Crimps Las Vegas Real-Estate Market" in which he argues that a state law passed in 2011 has unintentionally created a glut of vacant housing that is outside the reach of would-be homebuyers. The Las Vegas Review-Journal's economic ace, Jennifer Robison, raised concerns that higher interest rates may put a stop to the local housing boom in her thought provoking piece: "Rising interest rates cast shadow over valley's housing market," and North Las Vegas' continued debate relative to the use of eminent domain to acquire underwater houses has provided fodder for the press locally and nationally.
While I am the first in line to raise concerns over strategic squatting, aggressive investing and ill-conceived government policies that are either ineffective or counterproductive, these concerns should not be distorted into the irrational conclusion that recent improvements in the housing market are somehow a bad thing.
Southern Nevada's housing prices are currently rising at or near the fastest clip in the nation. The Federal Housing Finance Agency reports that the Las Vegas Metropolitan Statistical Area has been the nation's sixth-fastest appreciating metropolitan area during the past 12 months, a conclusion consistent with reports issued by Case-Shiller nationally and SalesTraq locally. Southern Nevada's 481,000 single family residential housing units have a combined value of approximately $72.3 billion, suggesting that every one percent increase in home values generates $723 million in new or recovered equity for Nevada homeowners. Home prices are up at least 20 percent year-over-year, which translates into increased local equity of $ 14.5 billion, or just over $ 30,000 per household.
Respecting that these price increases are faster than we would like and are undoubtedly linked to a high incidence of investor purchases, housing supply constraints, and historically low interest rates, they also reflect the reality that southern Nevada was arguably among the most undervalued housing markets in the United States 18 months ago and is currently reporting above-average population growth rates.
Homebuilders are also getting back to work with 151 subdivisions currently active valley-wide. Southern Nevada reported 8,010 residential permits pulled during the past 12 months. This figure is up 35 percent compared to permitting levels reported 12 months ago; however, it is nowhere near the 43,300 annual permitting figure reported when the market peaked in 2006. Today, residential permitting accounts for only 1.7 percent of the local housing stock, and the ratio of new job formation to new home construction is well within the expected range. While rising interest rates are certainly a concern for the industry, 30-year mortgage rates remain well below their 10- and 20-year averages (5.3 percent and 6.4 percent, respectively).
A final element that is commonly overlooked in the housing discussion is the majority of homeowners who have remained current on their mortgages and out of foreclosure, often in the face of great personal sacrifice. Many continued to make payments knowing all too well that they owed more than their homes were worth, and frustrated by relief programs helping everyone but them. All the while, friends and neighbors seemed content to merely walk away from their obligations. There are those who will try to cast these people as the greater fools, but they do so only in an attempt to rationalize behavior that in any other generation would have been disgraceful. These stalwart homeowners are to be commended, as their choices provide not only the economic foundation, but also the moral fiber needed for long-term economic prosperity.
Las Vegas is unique in that roughly 17 percent of the people who put their head in a bed on any given night don't actually live here. This non-resident population share is higher than almost anywhere else in the country, with nearly 40 million visitor trips adding 340,000 people to our full-time equivalent population.
It goes without saying that these visitors contribute significantly to our local economy, supporting hundreds of thousands of jobs, billions in wage and salary payments and more economic activity than any other sector. What is often overlooked, however, is the contribution visitors make to the public services full-time residents rely on every day.
There is almost nothing that a tourist does that isn't subject to tax. For many, the first taxes encountered are on transportation from the airport, with both taxi and rental car charges generating revenue supporting state and local government services. In addition to the 10-percent short-term car rental tax allocated to the state, a special 2.0-percent levy provides critical funding for the Smith Center for the Performing Arts.
Among the largest sources of revenue for state and local governments is sales and use tax, which is currently levied at 8.1 percent on tangible goods sold at retail. Visitors account for an estimated 26 percent of all sales tax receipts, significantly more than their share of the full-time population base. This is due to a number of factors, not the least of which is the structure of Nevada's sales tax itself. It is not by accident, for example, that food purchased for home consumption is exempt, while food purchased at a restaurant is subject to the state's sales tax.
Visitors also bear the burden of the transient hotel lodging tax, which was increased to as much as 13 percent in 2009. Hotel room taxes generate more than $500 million annually, funding public schools, transportation improvements, state and local government services and the Las Vegas Convention and Visitors Authority (LVCVA). Originally levied specifically to promote tourism, today the LVCVA receives only 32 percent of room tax revenue, while nearly 40 percent benefits education programs.
Visitors who see a show while in town also pay the live entertainment tax, a byzantine levy of between 5 percent and 10 percent on admission and food, beverage and merchandise, which varies based on the size and location of the venue. Generating about $140 million annually for the state's general fund, this tax is structured specifically to avoid taxing entertainment commonly frequented by locals (e.g., movies or college athletics) while being particularly onerous on tourist-centric entertainment. Consider, for example, that a drink purchased at a typical Cirque du Soleil show bears the state's liquor tax, sales tax and live entertainment tax for a combined tax rate of approximately 20 percent.
Then, of course, there are the gaming taxes. Nevada currently imposes 13 separate taxes on gaming and related activities, the most significant of which is a gross gaming revenue fee of up to 6.75 percent. This levy alone generated more than $650 million for the state during fiscal year 2012, the vast majority of which was attributable to spending by southern Nevada's 40 million visitors.
Visitors account for more than $1.2 billion in tax payments annually, allowing residents and most non-gaming businesses to have among the lowest tax burdens in the United States. On the other side of the ledger, visitors do not have their children in our schools; they are not enrolled in our state health and welfare programs; they are neither our homeless nor our unemployed. They come to escape, to play, to spectate, to relax, to meet, to celebrate or just to have a great time. Tourists and conventioneers have built our community, and continue to support it with every dollar that they spend. They are deserving, not only of our hospitality, but also our gratitude.
Americans are going back to work. What was a jobless or even a job-loss recovery has transformed into an economy that is creating nearly 2.1 million jobs annually.
During the past 12 months, the nation's employment base grew by 1.6 percent. Nevada bettered that average, creating nearly 25,000 jobs and reporting a growth rate of 2.2 percent during the year. Of those new jobs, 20,000 were sourced to Clark County, where the annual growth rate was an even higher 2.4 percent. The bottom line: Nevada is now outpacing the nation in terms of job growth, and southern Nevada is accounting for 8 in 10 new jobs created statewide.
Perhaps more important than the sheer number of jobs created in the Las Vegas area is where those jobs are being created. Nearly every major industrial sector reported positive growth over the past 12 months. The two that did not, mining and information, were flat as opposed to negative. They are also the two smallest sectors of southern Nevada's economy, totaling only 1.2 percent of the workforce, combined.
Notably, it is the business and professional services sector that has led the way in terms of job growth, accounting for nearly 1 in every 4 jobs created and posting an annualized growth rate of 4.3 percent. Leisure and hospitality contributed an additional 4,000 new positions, but posted a lower-than-average annual growth rate at 1.5 percent. The hard-hit construction sector added a more modest 1,700 positions, but reported the highest year-over-year growth rate of any sector of the local economy at 4.8 percent. Our economy and our labor force gained some much-needed diversity over the past 12 months, with key sectors demonstrating marked improvement.
A healthy share of Nevada's economic growth is sourced to small businesses. At the end of 2012, the state had approximately 72,000 businesses, a figure 1,600 higher than reported at the end of 2011. Available data tend to suggest that roughly 43 percent of new business formation is attributable to businesses with fewer than five employees, and nearly 88 percent is attributable to businesses with 50 or fewer employees. In a 2010 speech addressing the nation's need to restore the flow of credit to small businesses, Federal Reserve Chairman Ben Bernanke noted that small businesses employ half of all Americans and account for 60 percent of gross job creation. While these statistics need to be viewed cautiously, southern Nevada's ability to attract, retain and create entrepreneurs is essential to our long-run economic viability.
This need notwithstanding, there are a number of ominous clouds looming over businesses, large and small. Primary among them are the impact of recent tax hikes at the federal level, a state business tax increase slated for the November 2014 ballot and costly mandates imposed by the Affordable Care Act (sometimes referred to as "Obamacare"). The impacts of these and other dynamics are uncertain, and businesses are reacting by hiring more part-time workers and exercising caution relative to expansion-based investment.
Concerned but not dissuaded, Nevada businesses are rightly reacting to what is while preparing for what may be. This is leading to increased profits for restaurants, retailers, banks and builders, who, in turn, are putting people back to work by the thousands. During our darkest hour, southern Nevada lost nearly 100,000 jobs in a single year. From that point, we have added back more than 34,000 jobs, our employment growth rate is now exceeding national averages, and nearly every sector of the state's economy is contributing to the recovery. If there is a better sign of our economy's resiliency, I am unaware of it.
Las Vegas as we know it today began with an auction of 1,200 lots on May 15, 1905. From the very beginning, there were those who expected Las Vegas to fail. In documenting Las Vegas' first 20 years, LA Times reporter Harry Carr noted that southern Nevada's boom towns had "expired with a sob and a groan...with desert winds blowing sorrowfully through empty hotels and deserted city halls." Carr was critical of Las Vegas, but noted that the real estate office-which "had been a good place for afternoon naps"- was suddenly abuzz with activity due to Congress' passing of the Boulder Dam bill.
The Boulder Dam (now Hoover Dam) commenced construction in 1931. In that same year, The Ogden Standard Examiner ran an article entitled "Boom Town Fails to Boom," declaring, "For the boom that has been rumbling faintly in this little city of 5,000 ever since the Boulder Dam project was assured, seems today to be only a disheartening dud." Nevada also legalized gambling in 1931, and not long after, the The New York Times questioned the move, remarking that "both Reno and Las Vegas are flops as Monte Carlos." Such prognostications would quickly be proven wrong as Las Vegas would rapidly become one of the fastest-growing communities in the United States.
By 1949, southern Nevada's population had surged to 26,000 and the tourism economy was generating $16 million annually. Calling our visitor-based economy untrustworthy, a January 1949 Long Beach Examiner editorial concluded, "The fabulous hotels and gambling halls operating 24 hours a day are finding that the boom is over."
This perpetual underestimation surfaces over and over and over again. Newsweek ran an article in 1950 called "Las Vegas Twilight?" and five years later Life magazine would run a cover story under the headline "Las Vegas-Is Boom Overextended?" The 1950s would also bring media concerns that atom bomb testing would be the end of southern Nevada's tourist trade. During recessions in the 1970s, 1980s and 1990s, numerous media accounts suggested the combination of economic uncertainty and gaming proliferation into Atlantic City and Midwest riverboats meant Las Vegas was "running out of luck."
The Mirage (1989) was too ambitious, the MGM Grand (1993) too big, and the Bellagio (1998) too luxurious for Las Vegas visitors.
During the most recent downturn, Time Magazine ran a 2009 cover story entitled "Less Vegas: The Casino Town Bets on a Comeback." Author Joel Stein's piece felt almost like a chronicling of the apocalypse as he observed, "Just as Las Vegas was the epicenter of the extravagant consumption of the past 20 years, now it's the deepest crater of the recession over the last year." While Stein's article was notably more balanced than those of his predecessors, he too could not resist the opportunity to predict Las Vegas' impending demise, calling it "the world's greatest ghost town in waiting."
Today, visitation is at an all-time high. Population, housing prices and incomes all are rising while unemployment is falling. There is roughly $6 billion of planned, proposed or under-construction projects in the resort corridor. I challenge you to find another community in the United States reporting a similar level of core industry investment. Our economy is far from perfect, but it is nothing if not resilient. And, to those who would suggest that our best days are behind us, I would simply point to a century of similar prophecies that have accompanied the nation's most prolific economic expansion.
Collegiate sports are big business. If you don't believe that, you need only look at Forbes' ® recent list of America's most valuable college teams. The Texas Longhorns® are currently valued at about $133 million; and, in 2011, they became the first college team in history to generate more than $100 million in total revenue. In basketball, Rick Pitino's Louisville Cardinals® sit atop the list, boasting a value of $36.1 million and an annual profit in excess of $23 million.
There is fairly strong evidence that winning college sports teams help bolster local universities. A recent study released by the National Bureau of Economic Research found a meaningful link between college football success and increases in charitable donations - both athletic and non-athletic - as well as an increase in the number of admissions applications, a decrease in the percentage of students accepted by the university, and a higher rate of in-state enrollment. Impacts were notably greater when the university was in a Bowl Championship Series®
(BCS) athletic conference or when they recorded a notable upset in the prior year.
Okay, fair enough. So, Alabama's Crimson Tide® has a positive impact on Tuscaloosa, and if the Gonzaga University Bulldogs® can carry their hot streak into the NCAA basketball tournament, perhaps a few more people will be willing to spend four years in Spokane, Washington.
But what about the broader impacts to the community?
The economic research on this topic is all over the board, but anyone who was here during the Runnin' Rebels'® national championship run during the 1989 - 90 season, or when Randall Cunningham led the Rebels to their first conference championship in 1984, or when the Rebs' Elbert "Ickey" Woods set the collegiate Division I rushing title just two years later will tell you that there was an energy that permeated every inch of our community.
I live in a world of 1s and 0s. That said, I cannot ignore the anecdotal accounts of cab drivers, hotel operators, retailers and restaurateurs who all say the same thing. When the Rebels win, people seem to be in a better mood, they go out a little bit more, and they spend a little bit more. For a service-based economy like ours, these accounts translate into jobs, wages and business receipts.
According to the ESPN's RPI poll, the UNLV Runnin' Rebels (23 - 8) closed out the regular season as the 22nd best team in the nation. The Thomas & Mack Center has been packed, and it has been loud (hat tip to the Rebellion). Not that they need any more pressure, but our economy can use all the help we can get, so here's hoping the Rebels make a run in the NCAA basketball tournament. I don't think our football team has any risk of getting picked up by a BCS conference in the near future; but, based on that national study, a notable upset will do-let's start with the UNR Wolf Pack (please).
In December, the United States Census Bureau released its 2012 population estimates for all 50 states, the District of Columbia and Puerto Rico. The United States reported an average growth rate of roughly 0.7 percent. Nevada's population growth rate was just over 1.4 percent, two times the national average and the sixth highest rate reported nationwide.
Clearly reflecting that population migration favors economic prosperity, the top five fastest-growing states were North Dakota (+2.2 percent), the District of Columbia (+2.1 percent), Texas (+1.7 percent), Wyoming (+1.6 percent) and Utah (+1.5 percent). It is worth noting, however, that Nevada's net population increase during the period, +38,900, was more than that reported by North Dakota (+14,888), the District of Columbia (+13,303) and Wyoming (+9,056) and roughly on par with that reported by the state of Utah (+40,940).
The fact that Nevada is growing again is a positive sign for our economy. The infusion of both needed talent and income has been an important element in our state's somewhat tepid economic recovery.
Today in southern Nevada, there are more households connected to the electric grid than ever before, we have a record number of students in our public schools and the number of newcomers surrendering out-of-state driver's licenses at local DMVs is well above recession-era lows. Perhaps as important as this resurgence in population growth is that our community is coming together to rethink how we grow.
Southern Nevada recently received a $3.5-million Sustainable Communities Initiative grant from the United States Department of Housing and Urban Development (HUD) to undertake a region-wide planning process. Across the country, a select number of HUD grantees are working to integrate housing, land use, economic development, transportation and infrastructure investments with the goal of building communities that are more collaborative, prosperous, equitable and sustainable.
At a recent kick-off meeting for the local effort-referred to as Southern Nevada Strong-Shelley Poticha, HUD's director of the office of sustainable housing and communities, noted that being awarded the Sustainable Communities Initiative grant was HUD's equivalent of "getting your child into Harvard." Not only does it present a unique opportunity for southern Nevada to rethink how we will grow in the future, but it also increases the region's competitiveness for other federal funding programs, an area where Nevada has perennially ranked at or near the bottom in terms of per capita allocations.
The problems of growth are infinitely better than the problems of contraction. That said, the way we grow will affect almost every aspect of our daily lives, not to mention how competitive we are in attracting new businesses and retaining our best and brightest students. Southern Nevada Strong is a clear indication that our community not only recognizes this need, but is willing to do the work necessary to ensure that we are building for a more prosperous tomorrow.
Often overlooked in the discussion of southern Nevada's economic assets are Nellis Air Force Base and the related facilities at Creech Air Force Base and the Nevada Test and Training Range Complex. Home to the largest civil engineer, logistics readiness, communications and force support squadrons in U.S. Air Combat Command, they employ roughly 15,000 active military, reservists and civil personnel, generating annual payroll upwards of $1.2 billion. By way of comparison, the largest hotel-casino on the Las Vegas Strip employs about 8,200 workers, Clark County general government employs roughly 8,100 workers, and McCarran International Airport employs about 1,700 workers.
What would ultimately become Nellis Air Force was the Army Air Corps Gunnery School established in January of 1941. At the time, fewer than 8,500 people called Las Vegas home, but the remote location made it strategically valuable, and the fact that 90 percent of the area to the north was unpopulated and could be acquired for $1 per acre made it ideal for air combat training and gunnery operations. By 1945, the base would grow to nearly 11,000 officers and enlisted people, quickly becoming the largest employer in the region. In 1950, the base was renamed in honor of 1st Lt. William Harrell Nellis, a young man from southern Nevada who was killed in action over Luxembourg in December of 1944. Few could imagine then what Nellis Air Force Base would become.
Today, as part of the U.S. Air Force Warfare Center, units at Nellis Air Force Base provide training for composite strike forces that include every type of aircraft in the U.S. Air Force inventory, along with air and ground units of the Army, Navy, Marines and air units from allied nations. Nellis is also charged with operational testing and evaluation, as well as tactics development. It is the home of both the U.S. Air Force Air Demonstration Squadron "Thunderbirds" and U.S. Air Force Weapons School. Forty-five miles northwest of Nellis Air Force Base is Creech Air Force Base, home to the Predator unmanned aerial vehicle. Creech Air Force Base is now the global hub of U.S. Air Force's remotely piloted aviation mission, not only providing training, but also directing the coordination of combat sorties around the world. Supporting both Nellis and Creech is the Nevada Test and Training Range, the largest contiguous air and ground space available for peacetime military training and operations in the nation. The range occupies 2.9 million acres of land, 5,000 square miles of air space and an additional 7,000 square miles of military operating area, supporting the testing of aircraft and the training that has contributed to our nation's air superiority for the last 50 years.
The men and women of our armed forces are deserving of our unwavering gratitude and respect. Led by Major General Lofgren, the U.S. Air Force Warfare Center, Nellis Air Force Base is not only an exceptional example of U.S. military might, but of a successful partnership between the military and its host community. As we seek to redefine our economy in the wake of the Great Recession, we would be well served not to overlook the impacts of, and competitive advantages created by, these critical community assets.
Nevada has approximately 325,000 residents age 65 or older. Although these older Nevadans account for a below-average share of the state's total population (12 percent in Nevada vs. 13 percent nationally), the segment ranks among its fastest growing. Where Nevada's overall population grew by a nation-leading 35.1 percent between the 2000 Census and 2010 Census, those age 65 and older grew by a staggering 48.2 percent. By way of comparison, the retirement havens of Arizona and Florida reported 65-plus population growth rates of 32.0 percent and 16.1 percent, respectively, during the same period.
There are those who believe that Nevada's influx of older residents is a bad thing. Common concerns include high rates of poverty among the elderly Americans who have failed to sufficiently plan for retirement, the cost of providing healthcare for uninsured and underinsured retirees, and an unwillingness of older residents to invest in education or needed infrastructure. A careful examination of the facts not only suggests these concerns are largely unfounded, but that Nevada's retiree population might very well be among the state's most valuable assets.
An estimated 21 percent of Nevada's residents are living in poverty; this figure is only 12 percent among the state's population age 65 and older. Similarly, while Nevada reports among the nation's highest uninsured populations, Medicare provides significant healthcare benefits to nearly 380,000 Nevada residents, 86 percent of whom are age 65 and older. This makes Nevada seniors among the state's least likely residents to be without access to healthcare.
Finally, it is certainly true that older residents tend to be more fiscally conservative, particularly when it comes to tax increases. What is often overlooked, however, is that older Nevadans are already significant contributors to vital state programs. A combination of smaller households and the reality that older Americans tend to spend a higher share of their incomes, per capita spending for 65-plus households is actually 19.4 percent higher than what is reported by younger households. Older consumers tend to spend significantly more on healthcare, entertainment, eating out and gifts. Additionally, 81 percent of older households are homeowners, considerably higher than the 61 percent reported by younger households. Thus, older households are significant generators of property, sales and gaming taxes - the largest sources of revenue for Nevada's schools, infrastructure and many other government programs.
Retirees are not without their challenges. The cost of long-term care programs, for one, is a growing concern that will continue to stress state and local budgets. That said, today's retirees are both healthier and wealthier than their parents were. Those relocating to the state often come with accumulated wealth and stable retirement incomes. They spend more than they earn, while taking relatively few jobs.
In short, Nevada's retirees should be viewed not only as a social asset but as an economic one. The first of the Baby Boomers turned 65 on January 1, 2011. An estimated 10,000 will do the same every day for the next 19 years. Attracting and retaining retirees will be a key to Nevada's economic vitality during the next two decades; the state would be well served to solidify its pro-retiree positioning.
Twice last week I heard the same comment: Nevada was the first state to go into the recession and will be the last state to come out of the recession. While the impacts of the economic downturn that began in December 2007 were unarguably more intense in Nevada and its residual effects continue to linger, Nevada was not the first state to enter the recession, nor is it still in recession today.
The National Bureau of Economic Research Business Cycle Dating Committee is charged with officially dating US recessions. The Committee determined that the last recession began in December 2007 and ended in June 2009. It is commonly referred to as "great" because the downturn lasted 18 months, the longest since the Great Depression, which spanned 43 months between 1929 and 1933.
Importantly, there is not uniform agreement on precisely how to define a recession. Most economists tend to follow economic statistician Julius Shiskin, who in a 1975 New York Times article defined an economic recession as two consecutive quarters of declining gross domestic product (GDP). Stated more simply, this means that a recession occurs when the economy shrinks consistently during a six-month period. Other economists prefer to link recessions to unemployment, defining a recession as a 1.5 percentage point increase in unemployment within a 12-month period.
Notably, Nevada is no longer in recession by either measure.
The US Bureau of Economic Analysis produces annual gross domestic product estimates at the state level. Nevada's economy shrunk by 0.91 percent in 2008, suggesting that the state's economy went into recession in that year. Nine other states reported negative GDP growth during 2008, including Michigan (-4.6 percent), Delaware (-2.7 percent), and Florida (-1.7 percent). By 2009, the recession had reached its trough and 41 states were reporting negative GDP growth. Nevada's economy shrunk by 5.6 percent in that year; only Wyoming (-12.1 percent), Oklahoma (-8.2 percent), Texas (-6.6 percent), and Arizona (-5.9 percent) reported sharper declines. In 2010, every state, including Nevada, reported positive economic growth.
According to the US Department of Labor Statistics, Nevada's unemployment rate first increased by 1.5 percentage points over a 12-month period in February 2008. In that month, both Florida and Nevada reported increases of 1.7 percentage points. Notably, however, it was North Carolina that was the first state to report a recession-level increase in joblessness. Between December 2006 and December 2007, North Carolina's unemployment rate jumped from 5.7 percent to 7.3 percent, or by 1.6 percentage points. By way of comparison, Nevada's unemployment increased from 4.2 percent in February 2007 to 5.9 percent in February 2008. Using this definition, Nevada remained in recession for only three months longer than any other state, with annual unemployment increases falling below the 1.5 percentage point threshold in August of 2010.
Economic cycles happen. Some are worse than others. The Great Recession was among the worst. That said, in much the same way as Nevada was never recession-proof, it is not today in a state of perpetual decline. The Great Recession has clearly given way to the Great Recovery; and, while it may be overshadowed by the residual effects of the longest and deepest recession in Nevada's modern history, the state's economy has expanded for nearly two years, new jobs are being created, business investment is increasing, visitor volumes are at peak levels and home prices are rising. Notwithstanding the challenges that remain, for many the transition from surviving a recession to taking advantage of a recovery is well underway.
There are those who like to say that Nevada ranks near the bottom of every "good" list and near the top of every "bad" list. Nevada has its challenges to be sure, but this generalization is little more than hyperbole. On closer inspection, Nevada's relative positioning is better than some might think.
Poverty is a key indicator of a community's relative wellbeing. As hard hit as Nevada has been during the Great Recession, the state's poverty rate remains below the national average. Nevada's 20 percent overall rate is lower than states like Arizona (25 percent), Texas (25 percent), and California (24 percent). Additionally, Nevada is also below the national average in terms of its share of children under 18 living in poverty.
A significant contributor to Nevada's lower rate of poverty is the state's higher household income. At $53,092 per year, Nevada reports the 18th highest median household income in the United States. This is higher than the median reported in states like Oregon ($50,938), New York ($50,656), Texas ($47,601), and Florida ($45,350).
In terms of business climate, Nevada also ranks well. The Small Business and Entrepreneurship Council's 2011 Small Business Survival Index placed Nevada second to South Dakota in terms of policy climate supportive of small business and entrepreneurship. The Kauffman Index of Entrepreneurial Activity identified the states experiencing the largest increases in entrepreneurial activity as Nevada, Georgia, Massachusetts, Tennessee and California (ranked in order). Although falling two spots in 2012, Nevada placed 12 in Chief Executive's Best and Worst States for Business, coming in ahead of Delaware (14), Wyoming (16), Oregon (42), Massachusetts (47), and California (50).
Nevada has also made great strides in energy conservation and sustainable development. Not only is Nevada home to some of the largest LEED-certified buildings in the world, the state also has more LEED-certified square feet per capita than any other state. Platinum certifications-the highest level achievable-have been awarded to the Desert Living Center, Origen Experience, and Guest Services buildings at The Springs Preserve and the Villa Trieste Residential Community developed by Pulte Homes. Additionally, the U.S. Energy Information Administration also ranks Nevada second in the nation in terms of net electricity generated from both geothermal and solar resources.
Perhaps the most notable of all is the Freedom in the 50 States rankings developed by the Mercatus Center at George Mason University. Researchers indexed and ranked each state relative to fiscal freedom, regulatory freedom, economic freedom, and personal freedom. Freedom is the foundation of American democracy, and a value held sacrosanct by Nevada residents. It should come as no surprise that Nevada ranked 6th highest on this list. That greater freedom, however, does not come without responsibility, including accountability for where Nevada ranks on every list that matters.
For the 12 months ending May 2012, Las Vegas recorded 39.32 million visitor trips. Reported with relatively little fanfare and in the general course, May's annualized visitor total might very well be one of the most important statistics in southern Nevada's recent history. May's tally represented the most visitors ever to Las Vegas in a 12-month period, breaking the all-time record of 39.27 million trips recorded back in February 2008.
A reflection of both resurgence and resilience, all but 800 of the 23,800 leisure and hospitality jobs lost since the February 2008 visitor peak have been added back to the economy. Visitors are spending more than ever on eating and drinking, shopping, sightseeing and transportation; and, thanks to a number of new direct international flights, Las Vegas is more accessible to major feeder markets abroad.
Las Vegas appears to have its mojo back. Roughly 16 percent of visitors came to Las Vegas for the first time in 2011. When asked about their likelihood to return, more than 60 percent of visitors indicated that they would "probably" or "definitely" return next year; 91 percent were inclined to recommend Las Vegas to others.
Now that the Las Vegas visitor base is growing again and the destination is more accessible than ever, perhaps the more important statistic is not the record number of people who came to Las Vegas during the past year, but rather, the vast pool of potential consumers who didn't.
The world's population is estimated at approximately 6.97 billion people. That means, after adjusting for repeat visitation, 6.95 billion people didn't come to Las Vegas over the past 12 months, about 99.7 percent of the world's consumers.
Now, I will fully admit that it is unlikely that a semi-nomadic Maasai tribesman and his clan are going to catch a flight from Kenya to Vegas for the weekend. There are also countless others who will likely never come due to financial limitations, religious or ethical objections, government oppression, or because Vegas is simply not their thing. Even if we assume that group accounts for 95 percent of the world's population, that leaves nearly 350 million potential consumers in the world, 325 million of whom missed out on the Vegas experience last year.
Although the global economy remains unsettled, the world's population is rapidly expanding its traveling consumer class. Forbes recently reported that Brazil has been adding 19 millionaires per day since 2007. A similar report in the Wall Street Journal noted that China now has over 1 million millionaires, an increase of 6.3 percent since 2010. The Economic Times reported in 2011 that India's high net worth population is not only at a record high, but is now the 12th largest on the planet. Germany, Japan, the UK, France, Canada, Switzerland, Australia, Russia and Italy are reporting a growing base of higher-income consumers.
Las Vegas may not be for everyone, but it remains one of the top tourist destinations in the world. The combination of improved accessibility and growing consumer freedom suggest southern Nevada is not done setting visitor volume records.
Much is written about the shortcomings of UNLV. Too often we measure our local university by what it lacks or the challenges that it faces-no medical school, no high-powered football program, no on-campus stadium, and nearly a third of local incoming freshmen requiring remediation, to name a few.
The measure of a university is not the makeup of its physical plant or the challenges it faces, but rather its ability to transform the lives of its students and its community.
UNLV held its first classes on campus in 1957. The largest public university in the state, UNLV currently serves 27,000 students, 22,300 of whom are resident Nevadans. During the past 55 years, UNLV has grown tremendously, providing a path to a better life for nearly 90,000 graduates. Notably, 53,900 of those graduates, about 61.2 percent, continue to live in southern Nevada.
Serving our community, UNLV was ranked by U.S. News and World Report as the 10th most diverse college in the nation for undergraduates in 2011. It also ranked 12th on the report's Most Popular Colleges list.
Beyond the sheer number of graduates are countless examples of how UNLV makes our community a better place to live. UNLV's Adopt-A-School program puts college students in at-risk elementary schools, promoting reading literacy and graduation to over 2,000 local students in 2011 alone. The UNLV College of Fine Arts partnered with the Las Vegas Art Museum to display its collection, which had been in storage since the museum closed in early 2011. Leading the way in sustainability, UNLV also recently earned a Silver Star from the Association for the Advancement of Sustainability in Higher Education with 60 percent of on-campus waste diverted from landfills and 95 percent of campus buildings maintained to sustainable operations standards.
The university also has a number of notable academic achievements. UNLV astrophysics professor Bing Zhang was credited in 2011 with providing the first evidence of a star being swallowed by a supermassive black hole, and sciences professor Dennis Bazylinski became the first researcher to identify and grow a new type of magnetic bacteria. UNLV's Sanford I. Berman Debate Team broke into the top 10 varsity teams in the National Debate Tournament rankings, and a group led by the UNLV School of Architecture was one of only 20 teams selected nationwide for the U.S. Department of Energy Solar Decathlon. One need not look far to expand this list.
The difficult reality is that only 21.5 percent of southern Nevada's adult population has a bachelor's degree or higher, a minimum requirement for more than 60 percent of available jobs. We are right to want more from our colleges and our universities, but in doing so we should never lose sight of UNLV's role in our community's success. As a proud graduate in 1997 and again in 2004, I for one will remain forever indebted to the university and its professors for the profound difference they made in my life. Go Rebels.
Currently in Nevada the average price per gallon for regular unleaded gasoline is about $3.80. Many of us remember when gas prices were advertised in cents, not dollars, and rising prices have created anxiety over reaching a tipping point where higher prices at the pump will cause local consumers to sharply curtail spending and visitors to make fewer trips to Las Vegas.
When analyzing rising gas prices, it is important to consider the impacts of price inflation. In 1990, the average price of gasoline nationally was $1.22 per gallon. Adjusted for inflation, $1.22 in 1990 has about the same buying power as $2.15 today. The U.S. average for all grades of gasoline currently is about $3.57 per gallon, suggesting that the real increased cost of gasoline between 1990 and 2012 is roughly $1.42 per gallon.
Okay, so in real terms we are paying $1.42 more than we did in 1990 for every gallon we consume. So, how much are we consuming?
In 1970, the United States averaged about 12.0 miles per gallon. By 1990, that figure had increased to 16.4 miles per gallon, and the latest available figure (2010) is 17.5 miles per gallon. Perhaps more importantly, the average fuel efficiency for 2011 model passenger cars was nearly 34 miles per gallon, suggesting households and businesses are getting more productivity out of every gallon they consume.
A shift from 20 to 30 miles per gallon is remarkably significant. The typical U.S. consumer drives about 12,000 miles each year. Without adjusting for inflation or fuel efficiency, that typical consumer's annual gasoline expenditure would have increased nearly 300 percent between 1990 and 2012, with costs rising from $732 to $2,142. When adjusted for buying power and increased efficiency, that increase is a much more manageable
11 percent during the same period, or from $1,290 to $1,428 annually.
An average western states household has 2.6 people and 2.0 vehicles. That same household spends approximately $2,200 per year on gasoline, about 3.23 percent of its gross annual income ($67,600). Notably, this is almost the exact percentage spent on gasoline in 1990 (3.15 percent), again suggesting that the combination of engineering and driving efficiency as well as rising incomes have largely offset higher gasoline prices.
Of course, fuel cost is an acute concern for visitor-dependent economies like Las Vegas. That said, we should be equally cautious not to overstate its impacts. A $1.00 increase in gas prices for a typical visitor driving from Los Angeles to Las Vegas averages roughly $20 per round trip. While that is $20 we would rather have spent in our local economy, it accounts for less than 3.0 percent of a typical visitor's expenditures. When you factor in the number of visitors per car, that impact percentage drops below 1.5 percent.
Five-dollar-a-gallon gasoline is coming, but so are cars that get 100 miles to the gallon. Continued advancements in transportation technology will not only reduce U.S. dependence on foreign oil, but also free up billions of dollars of household income, even at higher price points.
Where do Nevada residents go for quality health care? The airport. This pejorative quip has too of ten been used to reflect concern over the state's undersized health care sector. At 6.2 percent, Nevada has the nation's lowest concentration of health care industry workers. We rank third lowest in terms of physicians per capita; we rank dead last in registered nurses per capita. Not helping matters, the state also reports among the highest uninsured population shares and the lowest Medicaid payment rates in the United States.
Notably, health care was the sole sector of Nevada's economy to grow throughout the Great Recession, adding 7,600 new positions between December 2007 and December 2010-the balance of the state's economy shed 184,000 jobs during the same period.
Perhaps more important than the jobs that were being created is the type of investments being made. Consider the Cleveland Clinic Lou Ruvo Center for Brain Health, which opened on July 13, 2009. It may be known more for its unique architectural design than the extraordinary work that goes on behind its curved walls, but for patients suffering from Alzheimer's disease and a host of other cognitive disorders, the Lou Ruvo Center not only provides the highest standard of care, but cutting-edge medical trials and a compassionate support system for families.
U.S. News & World Report's "America's Best Hospitals" survey consistently ranks the Cleveland Clinic's neurology and neurosurgery program among the nation's 10 best. One visit to the Lou Ruvo Center, and it is easy to see why.
Also worth noting, Comprehensive Cancer Centers of Nevada had a dozen physicians named among the nation's best by U.S. News & World Report in 2011. Providing adult and pediatric medical and radiation oncology services, Comprehensive Cancer Centers has been affiliated with the widely respected Jonsson Comprehensive Cancer Center at UCLA for the past 15 years.
Three southern Nevada hospitals were also noted in the "America's Best Hospitals" report for high-performing specialties: Sunrise Hospital and Medical Center for Nephrology, St. Rose Dominican Hospital-San Martin Campus for Neurology and Neurosurgery, and St. Rose Dominican HospitalSiena Campus for Gynecology.
A number of Nevada hospitals have also received performance achievement Gold Plus awards from American Heart Association and American Stroke Association for their adherence to care guidelines for stroke patients. That said, only one Nevada hospital currently holds the Gold Plus award for both stroke and heart failure patient care-University Medical Center of Southern Nevada (UMC). Although UMC suffers from perception issues due to its status as the county hospital as well as perennial budget shortfalls, according to the American College of Surgeons, UMC operates Nevada's only Level 1 trauma center and only Level 2 pediatric trauma center.
Nevada has some of the most remarkable health care providers, researchers and facilities in the country. Unfortunately, they are too few relative to our population, and policy decisions that have reduced state and federal reimbursements to providers limit broader access to the highest quality of care. We should be cautious not to confuse quality of care with quantity of care. Economic and policy challenges aside, Nevada has a tremendous opportunity to build on the strengths of its health care system.
There has been a lot of discussion recently about diversifying Nevada's economy. Our state is among the nation's least diversified, with a disproportionate share of jobs, incomes and business receipts concentrated in the leisure and hospitality sector. This, combined with the fact that Nevada has lost nearly 180,000 jobs since May of 2007, has prompted a renewed focus on the form and substance of Nevada's economic policy.
In 2011, Governor Brian Sandoval championed Assembly Bill 449. Working closely with State Senate Majority Leader Steven Horsford, Speaker of the State Assembly John Oceguera and several other state legislators, AB 449 became law upon the Governor's signature on June 17 of last year. True to the Governor's campaign pledge, the legislation was extensive, ambitious and supported with increased funding.
The Governor rapidly appointed respected businessman Steve Hill as the state's new economic development czar, and the Nevada Board of Economic Development added notables like Heather Murren, Rob Roy, and Bill Weidner to its ranks. The newly minted Governor's Office of Economic Development retained the Stanford Research Institute and Brookings Institution to study the state's economic structure and identify opportunities; that report then became the basis for the state's new economic development plan released publicly in February of this year.
A recent survey of 401 Nevada businesses commissioned by the Nevada Development Authority (NDA) underscores the importance of Nevada's renewed focus on economic policy (notably the survey itself was of non-NDA member businesses). Roughly 88 percent of surveyed businesses indicated that attracting new companies to southern Nevada was either very important or critically important, and nearly two in every three suggested policymakers needed to take the lead on getting the state's economy back on track. When asked who played the most important role in bringing new businesses to the state, the Governor ranked atop the list, followed by organizations like the NDA, the Nevada Commission on Economic Development (now the Governor's Office of Economic Development) and the Nevada State Legislature.
Perhaps the most compelling finding from the NDA's survey is how business owners and operators responded when asked, "What is the single most important thing that can be done to attract new businesses to the region?" Nearly one in four (24.6 percent) businesses responded, "keep taxes low," with the second most popular response, "promote the state's pro-business environment," receiving 15 percent of the responses.
What is striking about the NDA survey is that businesses tend to believe Nevada's best strategy for attracting new businesses is to preserve the current environment and to make other businesses aware of Nevada's competitive advantages. Although businesses respected the need for change, improving education (11.4 percent), lowering the business cost environment (6.9 percent) and changing the mix of businesses (3.9 percent), all ranked significantly lower.
Nevada has undoubtedly elevated its game when it comes to economic development. And, with a quarterback like Governor Sandoval, it is a near certainty that we will move the ball down the field. In doing so, it will be important to keep in mind that the best strategy to attract new businesses to Nevada is making the state the best place in the nation to operate for the businesses that are already here.
Economists generally develop project ions of future economic conditions based on what has happened in the past. A one-percent rise in unemployment, for example, traditionally accompanies higher levels of poverty and crime but lower levels of health insurance coverage and divorce.
Analyses based on these relationships, commonly referred to as economic modeling, are routinely used by analysts to forecast tourism industry performance. Models are used to estimate how a one-dollar increase in hotel room rates will impact occupancy along the Strip or how a one-dollar increase in the price of gasoline will impact travel decisions in drive-in markets. Not surprisingly, models show that when the national economy grows, more people visit Las Vegas. As our community has witnessed over the past three years, these relationships also work in the opposite direction.
There is a general consensus that the Great Recession was the worst economic downturn since the Great Depression. Not only was there a near-collapse of our nation's financial system, but unemployment rose to its highest rate since 1983; and, for those lucky enough to keep their jobs, average hours worked fell to their lowest levels since 1964. Stock market and housing price declines devastated household wealth; bankruptcies and foreclosures skyrocketed.
Using the economic models of the time, the Las Vegas tourism economy should have essentially shut down in response to such punishing economic conditions. But it didn't.
In fact, at its lowest point-the 12 months ending August 2009-36 million people got on a plane, or in a car, or on bus and came to Las Vegas. Measured from peak tourism levels, Las Vegas lost only 3.3 million visitor trips, or about 8.4 percent of peak visitation. Visitors would spend in excess of $20 billion during that same 12-month period.
In economic terms, this was almost inconceivable; in Las Vegas terms, it was business as usual.
The genius of Las Vegas is its ability to constantly evolve, adapting not only to economic highs and lows, but to an ever-changing customer base. From ultra-luxury hotel suites to $1.99 breakfast specials, the people whose job it is to ?ll our 150,000 hotel rooms are unquestionably the best in the business. As the economy eroded, they refocused on core drive-in markets and grew international travel by developing an advertising campaign that centered on value and taking a break from the troubles of day-to-day life.
It worked. What the economic models said should have happened, never did because the Las Vegas Convention and Visitors Authority promoted a brand and Las Vegas' hotel-casinos delivered on it time and time again. Instead of fading away, southern Nevada's tourism industry is again leading our economic recovery and is on pace to record its highest visitor volume on record in 2012.
It's time to build some new models.
Imagine what it would mean for southern Nevada if Clark County schools were among the finest in the United States, with our students excelling in math and science, acing college entrance exams, and our high school athletes being academic All-Americans.
Imagine what we could do if our teachers and principals were nationally recognized for their innovative approaches to education and the extraordinary achievements of their students.
This is more than just a pleasant fiction; it is a side of the Clark County School District we hear far too little about.
In 2011, the Clark County School District had 34 students, from 14 high schools, recognized as National Merit Semifinalists. These students placed in the top one percent of 1.5 million high school juniors from 22,000 schools nationally.
Bonner Elementary School had 29 students who received a perfect score on either the math or reading portions of the 2010 -11 national proficiency exams, with three students receiving a perfect score on both the math and reading tests.
Hyde Park middle-schooler Ian Johnson managed a perfect score in the 2011 American Mathematics Contest, his second year in a row with a perfect score. Hyde Park actually had 11 students score in the top one percent in the nation, while another 12 students ranked in the top five percent nationally.
In 2011, Arbor View High School students received an 83 percent pass rate on the advanced placement calculus exam - 40 percent of those students received a perfect score. Two Green Valley High School students were recognized by the National Soccer Coaches' Association of America as scholar athletes; and Rancho High School senior Christopher Chacko earned a perfect score on the ACT college entrance exam, a feat achieved by less than 0.04 percent of 1.6 million test takers.
And what about our teachers and principals?
Rancho High School calculus teacher Susan Corbett was recently recognized by Stanford University for exceptional teaching; she was also invited to be a 2011 College Board Calculus AP Exam Reader for the third consecutive year.
Dr. Linda Archambault, principal of Gibson Middle School, was recognized as the National 2012 NASSP/Metlife Middle School Principal of the Year. The prestigious award, which recognizes outstanding principals committed to student achievement, had never before been received by a Nevada principal.
And our schools?
Green Valley High School was named one of Newsweek's Top 1000 Public Schools in 2011, its seventh consecutive year receiving the distinction. Green Valley has also won more Presidential Awards for Excellence in Mathematics/Science Teaching than any other high school in America.
A standout in the arts, the Las Vegas Academy is one of only three high schools in the nation to win the "Gold Grammy" award. Grammy Signature Schools are recognized as the top U.S. public high schools for contributions to music education. The Las Vegas Academy has received a record nine Grammy Signature School Awards and been awarded seven Gold Grammys.
All that is left is to imagine how these achievements might translate into greater success for more of the district's nearly 310,000 students. This will require that teachers and principals be evaluated based on student achievement, and that students and their parents take greater responsibility for underperformance and discipline problems.
But, these changes alone will not entirely solve Nevada's most pressing dilemma. Making education a priority in more than name only will require a critical look at a fiscal system that requires two-thirds of legislators to generate new funds for education, but only a simple majority to make cuts to schools. Simply telling our education system to do more with less, while also failing to make other systemic changes, has proven to be highly ineffective strategy. With a new superintendent at the helm whose passion and sense of urgency is making a marked difference in our schools, there has never been a better time for our community to rally around our educators to effect the change our students deserve.
At the end of each year, I get a number of calls and emails asking about our forecast for the year ahead. Forecasting tends to be equal parts astronomy and astrology, as the uncertainty of world events routinely confounds even the most skilled economists. Too often, a desire to foresee the future comes at the expense of lessons to be learned from the past. As we close out 2011, I believe it is well worth our time to look at just how far our community has come over the past 12 months.
Transition from employment losses to employment gains. At the close of 2010, southern Nevada's unemployment rate was 15.1 percent. This was the highest rate of joblessness for the month of December in more than 30 years, with the region's workforce shrinking by nearly 15,000 positions year-over-year. At the close of 2011, southern Nevada's unemployment rate will have dropped to around 13 percent, if not slightly below, with the region's economy creating more than 10,000 new positions.
Population base expanding. At the close of 2010, annual driver's license surrenders (a key indicator of population in-migration) totaled 51,150, the lowest year-end value recorded since 1993. Driver's license surrenders will approach 60,000 in 2011, translating into an annual growth rate of roughly 17 percent. At the same time, electric meter connections (a key indicator of housing occupancy) are reporting a growth rate of approximately 1.3 percent, suggesting that southern Nevada's population is expanding, and we are beginning to work through our housing surplus.
Employee wages and salaries growing. In 2010, wages and salaries paid to Nevada workers were essentially flat after falling by more than 8 percent annually in both 2008 and 2009. Employer contributions to pensions and insurance funds fell for the third consecutive year, decreasing by 0.8 percent to $11.8 billion in 2010. Through the first half of 2011 (latest data available), employee compensation has increased by 1.6 percent, with both wages and salaries and benefits contributions reporting increases.
More occupied hotel rooms. In December 2010, Las Vegas hotels and casino-hotels reported an occupancy rate of 72.4 percent, having averaged 80.4 percent during the year. This was the lowest rate of hotel room occupancy reported since 1991. During 2011, occupancy rates have increased by an average of 4.1 percentage points; at the same time average daily room rates have increased by nearly 11 percent. Should this trend continue, not only will southern Nevada report occupancy rates approaching 85 percent, but the market will also record a greater number of occupied hotel rooms than at the market's peak in 2008.
Consumers consuming again. Taxable retail sales were $28.3 billion in 2010. Adjusted for inflation, this was the lowest level of consumer spending in almost a decade, bringing to an end 35 consecutive months of annualized declines. By contrast, every month in 2011 except for April witnessed positive growth in taxable spending, with the most recent figures (September 2011) reporting a growth rate of 10.5 percent. Notable improvements were apparent in vital spending categories such as motor vehicle dealers (+8.0 percent), restaurants (+17.3 percent), and clothing stores (+19.6 percent).
When it comes to forecasts, three economists can generally agree if two of them are dead. We can only hope that southern Nevada carries the momentum regained during 2011 into 2012.
I recently received a call from a client based in St. Louis. An astute and seasoned businessman, he commented that watching the Las Vegas economy from Missouri was like watching reality TV. Clearly in response to what he viewed as a series of unbelievably dismal economic reports, he asked: "Does anyone still have a job?"
After pausing for a moment to decide which Snooki joke might be most appropriate in this situation, it occurred to me that he wasn't joking at all. I agreed that southern Nevada has been particularly hard hit by the recession, and that our unemployment, foreclosure, and bankruptcy rates were all at or near the nation's highest. I then offered some additional statistics I suspected he had not come across.
I asked if he was aware that southern Nevada had added 10,500 jobs during the past 12 months and that our annual increase, 1.3 percent, was higher than the national average and the rates reported by 248 metropolitan areas across the United States. He was not.
I asked if he would be surprised to know that the Las Vegas metropolitan area reported the largest unemployment rate decrease in the nation between September 2010 and September 2011. He was.
I asked if he was aware that southern Nevada's leisure and hospitality sector had reported positive year-over-year job growth for 20 consecutive months, adding 14,400 positions since bottoming out in November 2009. He was not.
I asked if he knew that health and education services companies added 8,600 jobs since the Great Recession began in December 2007, not once reporting a negative annual growth rate; or, that in September 2011 the business and professional services sector, now accounting for 1 in 8 Las Vegas jobs, reported its highest annual employment increase since October 2006. He did not.
I asked if he thought that it was meaningful that even the hardest hit sector of our economy, construction, has added jobs for six out of the past nine months. He conceded that it was.
My client then responded that I was merely pointing out a few bright spots in an otherwise decaying market. After reminding him that I was attempting to respond to his original question ("Does anyone still have a job?"), I suggested that my intent was merely to highlight some pockets of prosperity obscured under a pile of bad economic news.
Not wanting to leave my client with the impression that the sum of the parts was somehow less than the whole, I asked him to consider the concept of core employment. Core employment is total employment less government and construction jobs, which are generally dependent on investment decisions and prosperity in other sectors of the economy. Core employment has added 16,600 positions since October 2010, up 2.5 percent during the past 12 months. It has also reported year-over-year growth for 10 consecutive months and 15 of the past 17 months.
From the outside, I imagine that Las Vegas' economic drama does look like a particularly turbulent season of Survivor. That said, like most reality TV shows, that view likely bears little resemblance to reality.