41,824,418: the number of visitor’s CBER predicts will visit Las Vegas this year.
This past Wednesday, UNLV’S Center for Business and Economic Research (CBER) hosted its Spring Outlook. Since 1994, CBER has hosted Outlook as a public gathering to discuss the national and local economy, release our latest economic forecasts, and bring together thought leaders on important topics. At our Spring Outlook, CBER Director, Andrew Woods, released an updated version of CBER’s Roadmap 2040 project, an ongoing look at the Las Vegas economy by the year 2040. One of the major challenges, as highlighted by CBER’s director, Andrew Woods, is our workforce and the likelihood that without further intervention by community leaders, our labor force participation rate, and, thus, our chances for diversification are likely to continue to fall.
Nevada is the only state that since 1997, real gross domestic product per capita, a measure of output per person, has actually decreased (-0.1 percent). This is likely due to state and local spending and investment not keeping up with Nevada’s population growth. The pandemic only exacerbated the problem with a brain drain of skilled workers leaving Clark County and the state. Workers who left Nevada during the pandemic were more likely to work in healthcare, education, professional, and scientific services, and technical services, and to be younger and more educated. Those who moved to the state during the pandemic were more likely to be less likely to work and male. This concern was highlighted by our workforce panel, which brought together experts in healthcare, manufacturing, education, and policy.
CBER presented and discussed its forecasts of the national and local economies along with special guest, Sandip Bhagat of Whittier Trust. Speakers expressed confidence and skepticism in national conditions, agreeing that a cooling or slowdown of the economy was likely later this year, though to varying degrees. That is, everyone agreed that the level of uncertainty of all forecasts was extremely high, given current market conditions and Fed policy. How this will impact the local economy is a bit unclear, though all panelists seemed to agree that it would not be anywhere near the conditions from the past two major economic downturns. Assuming that business and international travel continue to improve, CBER’s model forecasts visitors to Las Vegas to increase to 2019 levels, above 41 million visitors, and near the record set in 2016 of 42,936,100 visitors.
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KTNV, Las Vegas Review-Journal, & Las Vegas Sun.
CBER’s latest Business Confidence index score for Southern Nevada.
UNLV’s Center for Business and Economic Research (CBER) surveys the business community once a quarter to better understand business sentiment in the region. Our latest index found that recent economic confidence levels increased past 100 for the first time in three consecutive quarters to 113, reflecting increasing optimism in the local economy. The increase comes from improved expectations on hiring, capital expenditures, sales, construction activity, and profits. Expectations for home prices decreased. Most notably, expectations for sales were the only index that scored greater than 100 last quarter at 122.9. Despite the increases in the confidence index, 58.3 percent of local business leaders believe that U.S. economic conditions will be somewhat worse during the second quarter of 2023. They also believe that the U.S. economy will slide into a recession sometime in 2023 or already experiences a recession. Nevada’s economic conditions expectations are split between 36.2 percent and 38.3 percent, believing the conditions will become somewhat worse and somewhat better, respectively.
CBER has been tracking local business sentiment since 2008. At the start of the pandemic three years ago, the index (2020Q1) experienced the second largest drop in its history from 137 to 72. In 2021, there was another strong decrease in confidence levels, with three consecutive quarters of low confidence levels, dropping the index from 137 to 69. During this time, local business leaders stated that their current biggest challenges were economic uncertainty, COVID-19, and decreasing sales. Since the full reopening of the economy, the biggest challenges remained a combination of economic uncertainty, decreasing sales, COVID-19, high operating and production costs, and finding qualified employees. After COVID-19 started to decline (2022Q2), local business leaders initially faced difficulty finding qualified employees, confronting economic uncertainty, and more recently addressing higher operating and production costs.
CBER and Business Confidence 2023 Q2.
The advance estimate of the annualized percent increase in U.S. real GDP for the first quarter of 2023.
Real GDP increased at an annual rate of 1.1 percent in the first quarter of 2023, as reported by the Bureau of Economic Analysis (BEA) in its advance estimate released on Thursday, April 27, 2023. In addition, the BEA’s real GDP estimate aligned with the Atlanta Federal Reserve’s GDPNow’s real-time running GDP growth forecast.
Furthermore, the BEA released its March 2023 edition of Personal Income and Outlays on Friday last week. This is an important report that the Federal Reserve monitors to get a better understanding of consumer spending. Personal outlays (a combination of personal consumption, interest payments, and transfers) increased by $21.5 billion in March, and personal savings reached $1.00 trillion. The personal saving rate, the percentage of personal savings to disposable personal income minus personal outlays and taxes, was 5.1 percent. Month over month, personal income increased by 0.3 percent, while disposable personal income (DPI) rose by 0.4 percent. Inflation remains a concern, with the Federal Reserve’s preferred gauge, personal consumption expenditures (PCE), posting a slight increase, less than 0.1 percent month-over-month, and a 4.2 percent increase from a year ago. PCE, excluding food and energy, increased by 0.3 percent and 4.6 percent year-over-year, a rate much higher than some had forecast.
The increase in PCE was driven by a $44.9 billion rise in spending on services, offset by a $36.7 billion decrease in spending on goods for an $8.2 billion net increase in consumer spending. The most significant contributors to the decrease in consumer spending came from the 13.9 percent and 10.3 percent decline in motor vehicles and parts, and gasoline and energy goods, respectively, led by gasoline. Within services, the most significant increases came from housing and utilities, and health care by 33.6 percent and 23.5 percent, respectively.
In response to these economic indicators, the Fed is expected, once again, to raise its benchmark interest rate by another quarter-percentage point during the upcoming meeting set for Wednesday, May 3, 2023, as they look to continue to combat the persistent inflationary pressures. Most predict that the Fed will pause any further rate hikes (or possible decreases) until after the summer. We will see…
Atlanta Fed, BEA, BEA 2, and The Wall Street Journal.