If an economic downturn is near, as some national experts predict, Las Vegas could be positioned to offset its effects because the economy here is more diverse than it was a decade ago, according to one national analyst.
“The Las Vegas economy has become more of a destination for young job-seekers,” said Mark Vitner, a Wells Fargo economist based in North Carolina. “When I was in Las Vegas (in February) meeting with our bank customers, I’d say a quarter to one-third of the companies were in tech. Some were tied to the gaming industry, though most were not.”
Traditionally, of course, a large portion of the Las Vegas economy has revolved around gaming and tourism. The thought is that a more diversified local economy will help the valley cope if the national economy takes a turn for the worse.
An inversion in the so-called yield curve, which happens when short-term bond rates surpass long-term rates, has some economists worried that a downturn could be near.
“There’s a lot of concern that the global economy is slowing down,” Vitner said. “We’re hearing more talk about a (national) recession and a lot of that is because we’ve gone so long since the last recession. If we make it through June, which we expect will happen, we’ll have the longest economic expansion in U.S. history. A lot of folks feel that we’re due.”
Most of the worry, Vitner said, is based on factors outside of the U.S. In any case, he’s not convinced a U.S. recession is lurking around the corner.
“Domestically, things look pretty good,” Vitner said. “We’ve had strong job growth and incomes are rising, especially at the lower end of the spectrum. In Las Vegas, there were efforts to diversify the economy following the last recession, and that’s all paid off.”
Inroads made in the tech and health care sectors have aided the diversification effort, Vitner said.
Jeremy Aguero, an analyst and principal of local research firm Applied Analysis, said tech-touched businesses and jobs are so common now that many industries end up as tech industries by default.
“From my point of view, tech is the common denominator for all growth industries,” Aguero said. “Construction, government, hospitality, health care, manufacturing and transportation are all, or are rapidly becoming, tech industries. Southern Nevada is definitely benefiting from this trend.”
For now, it’s business as usual as Southern Nevada’s economy continues to hum along. There’s no way to predict how Southern Nevada will handle a downturn.
“We have made great strides over the past decade in terms of economic diversification,” Aguero said. “But we remain among the least diversified economies in the United States. That, in and of itself, is a vulnerability.”
Dan Pomfrett, a national economic researcher with project management cost consulting firm Cumming Corp., said things look solid in Las Vegas, especially on the construction side with a number of large projects — for instance, the Las Vegas Stadium and Las Vegas Convention Center expansion — being worked on.
“Las Vegas looks to have some healthy years, and certainly 2019 and 2020 are expecting to see some impressive construction volume growth,” Pomfrett said. “We are by no means expecting a ‘great recession,’ but we are expecting a slowdown, with all data points indicating that 2022 and 2023 will be the start of that period.”