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Southern Nevada’s economy continues its slow — and so far, steady — years-long recovery from the Great Recession, a pair of financial experts say.
Real estate remains strong and building a domed stadium would be a shot in the arm for the construction industry, according to economist John Restrepo of RCG Economics and Mike PeQueen, managing director of investment company HighTower Las Vegas. Together they publish the Fact Pack and Stat Pack economic reports.
“We’ve come a long way,” Restrepo said. “This was a very brutal recession. So, considering where we were in 2009 to 2011, I think we’re doing pretty decently at this point.”
Among potential economic risks, PeQueen said the series of interest rate increases initiated by the Federal Reserve could crimp the housing market in Southern Nevada, making it more important that the region gets momentum in other areas of the economy.
“We’re now going to have that as a headwind for our recovery of the housing market,” he said, “We have to build our momentum in our job growth, our diversifying our economy to offset that.”
PeQueen and Restrepo were joined on KNPR’s State of Nevada by Ken Evans, president of the Urban Chamber of Commerce in Las Vegas. Evans said economic recovery has been uneven in the minority business community.
“There’s even more work to be done for our portion of the business sector to recover and make advancements,” Evans said.
To increase access to capital for minority business owners, Evans and his organization support an effort by state Senate Majority Leader Aaron Ford to create a revolving loan fund for disadvantaged businesses.
“The fact that we could create a revolving loan fund that is targeted to… helping out the traditionally underserved or unserved individual so that they can develop themselves that’s good not only for the specific African-American community or the Latino community, it’s good for the overall community,” he said.
There are some warning signs in the economy that have Restrepo and PeQueen concerned. The biggest worry is the increase in consumer debt. It is now easier to get credit cards, car loans, and student loans.
PeQueen said student loans for for-profit trade schools is at $1 trillion, which could be a big drag on the economy.
“That threatens to keep the next generation of Americans and Southern Nevadans from starting households and buying homes until their late 30s, early 40s,” he said, “It really does hold economic development back.”
PeQueen is also concerned about the return of easy money for home loans. One of the factors that brought about the housing crisis was subprime loans, which were home loans for people with low incomes, poor credit and very little to put towards a down payment.
“Lending standards for consumers buying homes has dropped precipitously and they’re taking people with lower credit scores and they’re requiring smaller down payments,” he said, “All those things allow people to get into the housing market, but it doesn’t bode well in the next downturn.”
While the announcement this week that the Raiders would be allowed to leave Oakland for Las Vegas excited sports fans and tourism officials, economists like Restrepo and PeQueen are still skeptical about what the real impact will be.
“The jury is still out when you look at the data and you look at the case studies of whether or not stadiums – whether they’re publicly funded or not – are transformative in terms of economies,” Restrepo said.
Restrepo said that while the stadium and the team will drive tourism and create jobs in the short term, it won’t remake the valley’s economy from low-paying, low-skill jobs to higher paying, higher skilled jobs.
One of the main critiques of the stadium and the Raiders deal is that Las Vegas does not have the people to support three sports franchises: The Raiders, the Golden Knights, and the UNLV Rebels.
PeQueen believes that decision making will be an indicator of just how well the economy is doing.
“I think you’ll start to get the answer to how well we’re doing when we begin to see how well people buy Rebel season tickets and how they convert these $100 deposits in Raiders tickets into personal seat licenses and season tickets,” he said.
John Restrepo, RCG Economics; Mike PeQueen, HighTower Advisors; Ken Evans, Urban Chamber of Commerce