Is Nevada’s economy booming or middling? It depends on the questions, who you ask

Looking at traditional indicators to get a sense of how Nevada’s economy is faring is a bit like betting on roulette.

Betting on black — or in this case finding a positive metric? You may or may not come out on top because the state’s economy is filled with mixed signals.

Good news: The state has seen 32 consecutive months of more than $1 billion in statewide gaming revenue. Bad news: Nevada has the highest unemployment rate in the nation — and has for months. Good news: Record tax collections have furnished the largest budget in state history. Bad news: Nevada ranks near-bottom nationally for average wages and wage growth.

The national economy has been similarly difficult to parse.

While the annual inflation rate has declined significantly since last fall, prices continue to rise and remain far above where they stood prior to the COVID-19 pandemic. The Federal Reserve, meanwhile, continues to navigate a soft landing for the economy through setting interest rates at a high enough level to combat inflation without causing a spike in unemployment. Economists seem bullish about the chances of avoiding a recession — particularly when compared with projections from last year.

Last week, members of the Economic Forum — an appointed five-member board of finance and business professionals who approve revenue forecasts used to set the state’s budget — and state analysts met to discuss the outlook of the Nevada economy and the performance of tax revenues.

While the forum did not make tax revenue projections or decisions that affect the state budget at its December meeting, it nonetheless provided a detailed look into Nevada’s post-pandemic economy and more explanation about how economic indicators can paint very different pictures of the state’s economy.

Below, we use details from the meeting and other Nevada economic metrics to answer questions about Nevada’s economy, as well explain The Nevada Independent’s decision to retire our Economic Indicators Dashboard.

Why is Nevada last in unemployment?

Nevada’s headline unemployment rate in October was 5.4 percent, the highest rate in the country, according to the U.S. Bureau of Labor Statistics. That rate is just two and half years removed from the early months of the pandemic, when the state’s unemployment rate shot up to a record high of roughly 30 percent during a recession that economists have described as one of the deepest and shortest in the nation’s history.

The initial recovery occurred at a blistering pace. Businesses reopened. Travel resumed. Workers returned to work. But for the past two years, Nevada’s unemployment numbers have been stagnant. Between November 2021 and October 2023, Nevada’s unemployment rate hovered between 5.2 percent and 5.6 percent, often ranking as the worst in the nation despite the state recording nation-leading job growth.

During Tuesday’s Economic Forum meeting, David Schmidt, chief economist at the Department of Employment, Training and Rehabilitation, described the state’s current jobs trend as “good unemployment.”

“I would have thought that our unemployment rate would be creeping down a bit more than it has, but it’s been offset by people coming into the labor force, which, I like to argue, it’s good unemployment,” he said. “I would rather have 5.5 percent and people coming into the labor force than 4.5 percent with people staying on the sidelines. And so I think that’s the best way to think about it.”

Since January 2022, Nevada’s labor force has increased from 1.5 million to 1.6 million, a change of about 101,000 people. The number of employed people has grown during the same period by 95,000, while the number of unemployed people has risen by 6,000.

“Most of the unemployed people that we have in the state, the majority are not job losers. They are either someone who left a job, or they’re coming into the labor market,” Schmidt said. “It has a more voluntary component to it. And so what we’re seeing is people, to a large degree, coming into the labor market and looking for work and then finding work.”

Schmidt said that dynamic has led to more short-term unemployment, and he pointed to data showing that Nevada has the nation’s highest unemployment rate for people unemployed for 14 weeks or less, but sits roughly fifth for the rate of people unemployed for 15 weeks or longer.

Still, even Nevada’s position as the state with the highest unemployment rate can appear deceptive. Historically, a 5 percent unemployment rate would be considered “full employment,” Las Vegas-based economist John Restrepo said in an interview.

In the wake of the pandemic, which saw job losses concentrated in the state’s largest industry (leisure and hospitality), Nevada has experienced job growth diversification.

Manufacturing, transportation, professional and business services and other higher-paying industries now have more jobs than pre-pandemic. Jobs in the accommodation sector, which includes hotel workers and are typically lower paying, still sit below pre-pandemic levels.

In February 2020, leisure and hospitality industry jobs made up 24.8 percent of Nevada employment. In October 2023, that number was 23.1 percent.

With the state economy broadly continuing to add more jobs, Schmidt predicted that “eventually we should see the unemployment rate coming down.”