The good news for Las Vegas is that our economic recovery outperformed the national economy in employment, population growth, job creation, home price gains, and population increases.
To put that into perspective you need to understand that much of that economic advance is due to the huge economic drop Las Vegas experienced earlier on.
It makes sense when you think about it. When a city leads the nation in job losses and sees the nation’s biggest drop in real estate values, it has a lot of upside room to move. What we have seen is an exaggerated upswing in our growth, recouping some of our earlier deep losses.
A better barometer of our health is our GDP growth, which hit 3.5% in 2015. This reflected the gradual, yet continuing recovery across the nation. That recovery gave consumers more spending money, which many chose to spend in Las Vegas.
While general economic recovery in Las Vegas has been consistent, our jobless rate remains at 7.2%, which is still high when compared to the national level.
Our population continues to grow as Las Vegas attracts many residents from the Northeast and Midwest.
The problem for Las Vegas remains a lack of industry diversification beyond gaming. We really have no technology industry or any other industries that require a highly educated and skilled work force. We are fortunate in that our tourist volume is expected to grow in 2016, but as a community, we need more emphasis in manufacturing, education and other activities to strengthen our financial foundation.
Economists are predicting unemployment levels to hit 6% by the end of 2016, which takes us back to pre-recession levels. That is a hopeful idea.
Las Vegas house prices have increased by 49.7% since the industry hit bottom in January of 2012. Over that same period US housing prices increased just 23.6%, so you can see why we are at the top of that particular list.
However, as we have discussed at many club meetings, Las Vegas remains the State with the highest percentage of homeowners with negative equity in their homes. Hopefully, time will eventually eliminate that situation.
Despite rising home prices, construction activity remains low in Clark County and residential construction is still far below its pre-recession peak.
What is fascinating to note is that, according to UNLV Economic Department, Las Vegas gaming is lagging well behind its national counterpart. US gambling is actually above its pre-recession peak, while gross gaming revenue for the Las Vegas Strip is still 4.7% below it pre-recession peak. The UNLV goes on to say that visitor spending on nongaming activities is more than triple that spent on gaming.
Normally, I end my Economic Report with guidance of what investors should do to maximize their gains in this economic environment. Instead, I will be discussing those ideas at our next club meeting, which I hope you will attend.