LAS VEGAS/RENO, Nev., Sept 16 (Askume) – As the U.S. economy slumped, cracks in the labor market in Las Vegas and Nevada generally appeared early and widened rapidly, leaving the consumer-driven city and state an indicator of the rest of the country.
By that measure, Nevada business owners, labor leaders and economists see few clear signs of trouble as the Federal Reserve prepares to cut interest rates this week. In fact, in a country that is crucial to the outcome of November’s U.S. presidential election , those who may be concerned about pocketbooks see plenty of evidence that the economy is moving forward without high inflation and a job-crushing recession: long-term Federal Reserve policy.
At first glance, Nevada’s 5.4% unemployment rate is the highest among the 50 states and more than a percentage point higher than the national rate, which might call that belief into question. But the southwestern state’s unemployment rate has remained at the same level for nearly three years and shows no signs of rising further amid economic turmoil across the country.
Whether it’s a steady influx of guests looking to earn some discretionary income at the state’s more than 200 casinos or a recent surge in hiring in the construction industry, “the economy is doing well, visitor numbers are up and profits are up, and development is up,” said Ted Papageorge, secretary-treasurer of the influential Kitchen Workers Union, which represents 60,000 workers at casinos, hotels and restaurants in Las Vegas and Reno.
Over the past two years, he said, “we’ve been able to negotiate the best contracts we’ve ever had,” including the addition of the long-stagnant Venetian to the list of Las Vegas Strip casinos represented by a union that reflects the overall situation.
Cuts are coming
The two-day meeting of the Federal Reserve this week will prove to be a turning point in US monetary policy, after a sharp increase in interest rates, the overnight benchmark rate will rise to the maximum level of 5.25%-5.50%, and the Fed will begin to cut borrowing costs. Time.
Analysts expect the Federal Reserve to begin its easing cycle on Wednesday and cut interest rates by 25 percentage points, however, the Fed is likely to cut interest rates by 0.5 percentage points to prevent further weakness in the labor market.
The latest economic forecasts released with the Fed’s policy statement will reveal how much policymakers expect to cut interest rates this year and in 2025 as they try to move away from restrictive financial conditions and toward more neutral conditions. These projections will in turn affect how much consumers and businesses will have to pay to borrow money to buy a home or car, invest in a business or make credit card purchases.
Inflation is currently about half a percentage point above the Fed’s 2% target, so the pace and depth of rate cuts will depend on how officials assess job market risks, which the Fed would largely assume will lead to tighter rates, to be contained.
The developments in Nevada show why the Fed is having so much difficulty understanding the labor market and why the national unemployment rate , which rose from a half-century low of 3.4% to 4.2% last year, is actually falling.
Job creation has slowed month over month amid the rapid reopening following the COVID-19 pandemic, but recent data are in line with the Fed’s 2% inflation target — a “normalization,” as the Fed calls it. This is a rebound, not a crash. Other labor market indicators, such as continuing unemployment claims and layoff rates, have returned to pre-pandemic levels and have changed little in recent months.
Against this backdrop, the number of people looking for work is rising steadily, which is largely a healthy sign, but if hiring by businesses remains slow, unemployment could rise.
on top of the leaderboard
Nevada’s unemployment rate has been higher than the national unemployment rate for 17 consecutive years, and has been 1.8 percentage points higher in each of the past two years. But it has remained stable, and while its workforce has grown by more than 7% since the start of 2022, nearly double the national rate, the local economy is not only growing, said David Schmidt, chief economist at the Nevada Department of Employment, Training and Rehabilitation, job opportunities are expanding and diversifying in the process.
He said: “Our unemployed population is made up mostly of new entrants, re-entrants and quitters, of whom less than half are underemployed.”
While Nevada has been hit hard by pandemic-related restrictions, with the unemployment rate briefly rising to 30.6%, more than twice the national rate, and the state now earning roughly 10% more than it did before the health crisis, job creation growth ranks fourth among states. By comparison, national wages have risen by just over 4% since February 2020.
Earlier this year, Tesla Inc (TSLA.O) laid off hundreds of workers, disrupting the steady growth of manufacturing jobs and setting off alarm bells. But as has happened across the country as we recover from the pandemic, other industries such as construction have made up for the shortfall.
Schmidt said Nevada’s high unemployment rate is “due to people looking for work … not people being laid off.”
Nevada businesses say conditions remain strong, while workers say they’re mainly concerned about housing and other costs, not job security.
“It was like we were sailing,” said Krstic, a veteran bartender at the Circus Circus casino in Reno, who has fewer employees than before the pandemic, but the business flow is steady.
As president of the Reno Aces minor league baseball team, Eric Edelstein works in an industry that also relies on consumers taking money out of their budgets to buy non-essential items.
The money is still flowing.
“We have a bigger, louder, higher-spending fan base than we did before the pandemic,” he said, adding that corporate sponsorships and season-ticket renewals for next year’s baseball season are on par or slightly higher than this season.
“I’m waiting. Is the shoe going to come off? We’re not going to see it.”
