Inflation continues to hammer Nevadans. Where is the state's economy heading?
Soaring prices for gas, food, housing and construction supplies continue to hammer Nevadans.
Andrew Woods, of UNLV’s Center for Business and Economic Research, recently said “it feels in 24 months that the world is completely different in Vegas.”
How different? Are we back to where we were or where we want to be economically?
Now that the virus is on the wane, some people are asking if we really needed all that federal assistance. Did it help us? Did it make us too dependent? Where would businesses have been without it?
Andrew Woods, the director of UNLV's Center for Business and Economic Research, said they call our current economy an endemic economy. He noted in Clark County, one in three workers were unemployed, and now it’s one in 20. Over the last year, gasoline prices are up 48%, food is up 8.8% and new cars are up 12.5%.
“Consumers feel like they got their head snapped, you know, in terms of how quickly prices have changed in the last year,” he said.
Spending was also up, which gives Southern Nevada the feeling of a rebound, but things are more expensive. “For the last 30 to 40 years, we haven’t really had to worry about inflation. Now we do.”
He said they’re forecasting gasoline and food prices to come back down – not to pre-pandemic levels – but to settle in a “new normal.”
“We're always the first hit and last recover,” Woods said. But he wouldn’t call our current situation a bubble, but rather a “correction.”
“We are forecasting a correction of sometime in the first or second quarter of next year in our Southern Nevada forecast,” he said. “The reason why we're seeing that is interest rates. They should be at the federal funds rate at about 2% at the end this year, which means your average mortgage, 30-year mortgage rate, which is at 5%, should be up at around 6%. That's going to slow demand. What the Federal Reserve is trying to do right now is slow demand.”
Peter Guzman, the president of the Latin Chamber of Commerce in Nevada, disagreed.
“I think something worse is coming. I think there's way too much printing of money. I think there's way too much undisciplined folks doing things that I saw them doing in 2007,” Guzman said.
He said members working lower wage jobs are being hit harder by inflation.
Meanwhile, Guy Martin with Martin-Harris Construction, said he thinks the “entrepreneurial spirit” is missing at a level that can pull Las Vegas forward, due a “dependency on programmatic solutions that are creating this environment where people just feel like they don't have to work as hard anymore.”
“What I'm worried about right now is, I remember in recessionary times, or slow times through the 80s, that Las Vegas was the last group in and the first group out,” he said.
Reports from the federal government pointed at a 24% rise in paperwork filed for new businesses.
Last fall, Woods surveyed 150 recipients of unemployment, and 85% said pay was the more important factor in going back to work, followed closely by health and safety, then transparent pay scale, opportunities for promotion and work hour flexibility.
“They frame it as the great resignation. I think it's really the great reevaluation,” Woods said.
With federal assistance, Vegas Chamber leader Mary Beth Sewald said many businesses were saved, such as the Hydrant Club downtown.
“There are really two sides to the coin,” she said.
From the business owner’s perspective, Shaundell Newsome said “you’re worried about survival … you’re just basically looking at a day-to-day grind, payroll-to-payroll.”
He continues, “It's a different type of economy [in Las Vegas], in my opinion, where we want to grow family businesses to be become big businesses.”
Mary Beth Sewald, president, Las Vegas Chamber of Commerce; Andrew Woods, director, UNLV's Center for Business and Economic Research; Shaundell Newsome, founder, Sumnu Marketing; Peter Guzman, president, Latin Chamber of Commerce; Guy Martin, president, Martin-Harris Construction