Nevada will take a hit because of the coronavirus shutdown but the state could snap back quickly, according to a pair of economic observers.
Former state Controller Kim Wallin and economist Christopher Thornberg told State of Nevada that tax collections and its overall economy will limp through the second quarter but rebound when people start traveling again.
Wallin said in 2019 gaming tax revenue was about $954 million and sales tax was $1.5 billion.
“If you subtract one month out of those figures, about $204.5 million would be the hit for one month in lost revenue,” she said.
Thornberg, the founder of Beacon Economics in Los Angeles and frequent Las Vegas visitor, said he is ready to cheer on the Buffalo Bills when they play the Raiders in Allegiant Stadium this fall.
“I can’t wait,” he said, adding that he expects the Raiders “to create a whole new element to the Las Vegas region, the economy, and even the culture.”
Thornberg dismissed the economic doomsday talk that some people have been doing.
“Part of the issue out there is that this is something we’re not used to and when you’re dealing with an unusual situation or unique situation, people really have a tough time handling it,” he said.
A report just published by Thornberg’s firm says to expect near-term hits in travel, retail sales, manufacturing, real estate, and business creation. Still, the report says, “it is by no means fait accompli that the U.S. economy is about to fall into a recession of any scale, much less a major one.”
Thornberg believes when the threat of the virus has passed Las Vegas will see an influx of people.
“This is business delayed. It’s not business canceled," he said, "People are going to come back to Nevada. They’re going to go back to those casinos. In fact, my guess is when we’re done with the next couple of weeks of being home lockdown people are going to be really ready to go out and have some fun.”
He said it is not a good idea to compare the Great Recession and our current situation because they are two vastly different problems. The recession stripped the market of thousands of jobs permanently; however, the shutdown is only temporary.
“It’s a hiccup in the labor market not a permanent decline in various sorts of employment opportunities. That is all the difference in the world,” he said.
Wallin, who served as state controller during the Great Recession and now heads a CPA firm, agreed.
She pointed out another big difference: The amount of money in the state's rainy-day fund. The state has $400 million in that fund, which she said would get the state through about two months.
While both were optimistic about the state's ability to bounce back from the coronavirus shutdown, they did have words of caution. Thornberg noted that social distancing and business closures are designed to prevent a recession - but they only work if people obey them.
“In a very real sense, it’s short-run pain, long-run gain,” he said.
Kim Wallin, CPA, former Nevada controller; Christopher Thornberg, economist and founder, Beacon Economics
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