Despite stiff economic headwinds, local economist Brian Gordon said he wasn’t anticipating anything close to a repeat of the Great Recession that devastated Las Vegas more than a decade ago.
“I do not expect a repeat of where we were in 2008 and 2009 and the fallout that ensued,” said Gordon, principal with financial analytics firm Applied Analysis. “I think we’re more apt to be in the soft landing category.”
In those years, Las Vegas was in the early stages of one of the worst recessions to hit the city. In 2012, the median price of an existing home in Las Vegas bottomed out at $118,000, about a quarter of what that figure is today.
On Wednesday, Federal Reserve Chairman Jerome Powell said another recession was possible, based on economic indicators.
Powell’s comments came a week after the Fed announced a three-quarters of a percentage point interest rate hike, its biggest increase in almost three decades.
That was done as an attempt to curb inflation, which sits at a 40-year high, partially because of skyrocketing energy prices.
In Las Vegas, the price for a gallon of regular unleaded gasoline on Thursday was between $5.62, according to the American Automobile Association. On the same date last year, the average price in Nevada was $3.68.
Gordon, who spoke at the Las Vegas Global Economic Alliance’s Perspective forum Thursday morning at the M Resort, said the impact of high gas prices can’t be understated.
“I’m telling you right now, these gas prices aren’t coming down anytime soon,” Gordon said. “The state of Nevada, every year, consumes about 1.1 billion gallons of gasoline. If gas prices are up $1 per gallon over the course of a year, we’re talking about $1 billion that’s extracted out of our economy.”
Traditionally, economists define a recession as two consecutive quarters of decline in the gross domestic product.
The U.S. isn’t there yet, but recession talk has picked up nationally in recent weeks.
Last week, a team of Wells Fargo economists put out a joint statement saying they believe a recession next year is “more likely than not.”
This week, the Associated Press reported that Goldman Sachs estimated the likelihood of a recession in the next two years at 48%.
Gordon said significant short-term challenges remain for Southern Nevada’s economy — not the least of which is the tight labor market — but the region has bounced back well from the lows of the 2020 pandemic economy.
For nearly three months starting in mid-March 2020, casinos in Nevada were closed due to concerns over the spread of the coronavirus.
“We are the most tourism-dependent economy in the country,” Gordon said. “In the United States, we will forever be the most tourism-dependent economy because nobody has what we’ve built here. From a visitation standpoint, we’ve been recovering quickly, probably quicker than what most people thought.”
Citing visitation figures from the Las Vegas Convention and Visitors Authority, Gordon said the city was only about 15% off of the pace that saw more than 42 million people flock here in 2019.
For the first four months of this year, Las Vegas welcomed just under 12 million visitors, according to the LVCVA.
“We’re doing extremely well, but we’re doing it much differently than we were before,” Gordon said. “We’re doing it with special events — sporting events and entertainment. We’ve seen significant investment in our infrastructure and venues with large seating capacities. We’re a major market and everybody wants to be here.”
Another speaker at Thursday’s event said the region needed to further diversify its economy to ease worries about cyclical trends that can cut into Americans’ leisure travel budgets.
“We can’t keep getting excited when we see headlines that say that gaming is going well,” said DeRionne Pollard, president of Nevada State College. “While we celebrate our gaming industry, we can’t continue to let our economy be determined by games of chance. We have to be far more deliberate.”
One of the best ways to help diversify the region’s economy is to make “deep investments in our education system, both K-12 and higher education,” Pollard said.
In addition to economic topics, issues surrounding water conservation and land availability for development were also discussed at the annual forum.