After COVID-19 rocked economies worldwide in 2020, Nevada and the nation rebounded quickly in 2021, nearing – or in some cases surpassing – pre-pandemic economic levels.
In 2022, now that the coronavirus crisis appears to be moving from pandemic to endemic, the economic outlook suggests continued local recovery but a more murky situation nationally. That’s according to the 2022-23 economic outlook report released today by UNLV’s (CBER). The report was presented during a morning panel April 20 at the Strip View Pavilion inside UNLV’s Thomas & Mack Center.
CBER economists predict that Nevada’s economy will continue its recovery and expand through 2022 but the picture is less clear for 2023. That’s in contrast to the national economy, which currently is experiencing a significant structural adjustment toward a new normal in the midst of COVID-era impacts, the war in Ukraine, and related disruptions to the supply chain and trade.
Economic Outlook for Southern Nevada
Southern Nevada’s story continues to be that of a region on the rise that was hit hard by the pandemic. Then, following signs of a rapid economic surge into 2021, it evolved into what researchers termed a “broken-V” shaped recovery. That “broken-v” recovery pattern may now be coming to an end, researchers say, due to some gradual declines and recovery from mid-2021 through early 2022 that more closely mirror traditional economic trends than dramatic COVID-era swings.
As the Delta and Omicron variants continue to loosen their grip on the economy, signs of hope persist in Southern Nevada. Economists project local visitor volume, gross gaming revenue, hotel occupancy, and employment to increase throughout 2022 before declining slightly in all areas except employment in 2023. Slight forecast declines in 2023 are due in part to expected inflation, rising interest rates, and uncertainty in the national economy.
- A strong labor market is expected to continue locally, rebounding from a 33.5% unemployment rate in April 2020 to just 5.3% in February of this year. Economists project it could be two years before the rate reaches its pre-pandemic low of 3.7%.
- Despite an uncertain national economy, population growth in Southern Nevada is expected to continue at around 2% over the next two years. This will continue to limit the home supply and reduce affordability, capping what would otherwise be even stronger growth.
- Construction activity remains strong and the housing market is hot for the moment, with apartment vacancy rates at around 3% and home prices up more than 32% since the beginning of the pandemic. This may not last, as CBER is forecasting a correction in 2023 as rising mortgage rates, home affordability, and inflation will weigh on home values.
Additionally, CBER’s Clark County Tourism Index – which combines gross gaming revenue, room occupancy rates, and airport passengers – has recovered to more than 114% of its COVID-era decline. Researchers note that while weekend visitor volume in Las Vegas is strong, midweek visitation numbers still lag pre-pandemic numbers in part due to slowly rebounding convention business. CBER forecasts total visitor numbers for Las Vegas not returning to pre-pandemic levels until after 2023.
“Forecasting in this environment is a difficult task,” authors note, pointing to waves of coronavirus variants, the war in Ukraine, supply chain bottlenecks and inflation. “Because the Southern Nevada economy heavily depends on tourism, its outlook ties to the future path of all these factors. Continued progress on vaccinating a higher percentage of the population, the absence of a new variant that can avoid the protection of vaccines, a reasonable resolution of the war in Ukraine, and how the economy reacts to higher interest rates will make economic recovery more likely.”
The National Forecast
The CBER Outlook presents a more uncertain forecast for the national economy. According to researchers, the unprecedented and unexpected nature and scale of the pandemic recession and its equally surprising recovery makes it difficult to forecast how the national economy will respond going forward. While employment and housing sectors continue to recover, uncertainty in key areas of consumer sentiment and overall business confidence complicates projections.
Given this uncertainty, authors predict GDP growth rates (year-over-year) of 1.7% and 2.5% for 2022 and 2023, respectively. This is slightly down from CBER’s November 2021 report, due in part to continued impacts to the supply chain, higher-than-anticipated inflation, Fed actions in the coming months to clamp down on inflation, and the war in Ukraine.
“As we come out of a pandemic recession, the underlying strength of the U.S. economy still appears solidly in place to support a robust recovery going forward,” authors note in the report. “Nevertheless, we still view the road to recovery as having been paved with too many potential potholes in the short term. Economic recovery depends to a large extent on a continued recovery from the pandemic and inflation. We have made great progress in adjusting our habits to live with the coronavirus. But new variants, such as the BA.2 omicron variant, if more deadly, could throw us back into a recession. That is if inflation and rising interest rates don’t do it first.”
CBER Outlook Report
CBER’s biannual Outlook report forecasts economic trends for the U.S., Nevada, and Southern Nevada. Data is compiled from state employment, gaming, and tourism agencies and analyzed to predict local and national economic trends. Learn more by visiting the UNLV Center for Business and Economic Research .
