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June 3, 2015

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Report: Nevada won’t see full jobs recovery until after 2017

With the nation’s highest unemployment rate at 11.7 percent, it will take Nevada more than five years to gain back all the jobs lost here during the recession.

That’s according to economist Steven Frable at private forecasting and advisory firm IHS Global Insight.

In a newly published report, Frable says Nevada is one of three states hit so hard by the recession that it will be after 2017 — no one knows exactly what year — before they return to peak employment levels reached before the recession. The other two are Michigan and Rhode Island.

In contrast, four states benefiting from the energy boom have already surpassed pre-recession job numbers. They are Alaska, North Dakota, Texas and Louisiana.

Frable expects nearly half of the states to achieve peak employment either this year or in 2013 and most other states to recover between 2014 and 2017. These include hard-hit California, expected to recover in the 2014-2015 period, and struggling Arizona and Florida, expected to recover in the 2016-2017 time frame.

Data distributed by Frable show that when it comes to recovering lost jobs, Nevada has the biggest hole out of which to climb.

After losing some 170,000 jobs during the recession, Nevada leads the nation in a ranking of jobs lost — 13 percent — since its peak employment year of 2007.

Nevada’s 1decline compares with a decline nationwide of 3.8 percent and with declines in neighboring states — all with more diverse economies — of Arizona (down 9 percent), California (down 6.5 percent) Idaho (down 6.3 percent), Oregon (down 6.9 percent) and Utah (down 3 percent).

Stephen Brown, director of the Center for Business & Economic Research at UNLV, said in an interview Tuesday that data ''unfortunately'' confirm projections of a recovery in a post-2017 timeframe of all the jobs lost in Nevada during the downturn that got under way in 2008.

That’s because of several factors, including a weak national economic recovery and continued excess supply in Nevada of homes, commercial buildings and hotel rooms.

''We’re in a situation where the U.S. economy is still well below its potential'' and isn’t expected to return to pre-recession employment levels until 2014, Brown said.

The health of the U.S. economy is important to Nevada in part because as Americans become more confident about their economic futures, they're more likely to travel to Nevada and other tourist destinations.

Brown said that given Nevada’s No. 1 ranking in foreclosures, there’s little demand for new homes here compared to the boom years. New home closings in 2011 in the Las Vegas area totaled 3,894 versus 38,957 during the peak year of 2005.

Sales of new homes in the Las Vegas area picked up in the first three months of 2012, totaling 873, up 14.6 percent versus the same period in 2011, according to Home Builders Research Inc.

But new home sales and construction remain nowhere near the pace of the boom years.

Relatively low hotel occupancy rates and high commercial real estate vacancy rates mean no megaresorts will be built anytime soon while commercial construction will be limited, Brown said.

''We have a lot of excess housing and commercial space in town,'' Brown said.

That means the hard-hit construction industry won't be bouncing back anytime soon, Brown said.

In fact, state statistics show the industry lost 900 jobs in April statewide, pushing employment in the sector down to a new post-boom low of about 48,000 jobs. That's down from 52,600 jobs one year ago and brings job losses in the high-paying sector up to about 96,000 since 2006.

Despite Nevada’s last-in-the-nation status when it comes to employment, state officials point out the jobs picture here continues to brighten compared with the depths of the recession in October 2010, when the state unemployment rate topped out at 14 percent.

''Nevada has recorded year-over-year private sector job gains every month since early 2011, a clear sign that we are slowly but steadily working our way toward a stronger economy,'' Gov. Brian Sandoval said in the April state unemployment rate announcement.

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