UNLV economists ease predictions on likelihood of recession

Economists at UNLV are loosening predictions of a recession in the next 12 months, while nationally many are expecting at least a mild recession beginning later this year — a sign that shows the uncertainty swirling around how the economy will perform.

UNLV’s Center for Business and Economic Research released its annual economic forecast for Southern Nevada Wednesday, as part of its Spring Outlook event. And researchers predict gross domestic product, a measure of the country’s economic health, will grow to 2 percent in 2023 and 2.5 percent in 2024, according to the report.

But the forecast is contingent on the labor market’s continued strength or only slightly weakening. Additionally, researchers say that changes in fiscal and monetary policy along with any global crises could change those predictions.

“As more time passes, more information will provide a better platform from which to make better forecasts, particularly over the short-term (1-6 months) where we at CBER have the greatest uncertainty about the direction of the economy,” according to the report.

The prediction is a slight change from six months ago, when CBER economists disagreed with each other on whether Nevadans can expect a recession in 2023. And CBER, led by economists Andrew Woods and Stephen Miller, cautioned throughout the report that the level of uncertainty is large. Several indicators, such as the Southern Nevada leading index that signals future paths of the economy, suggested a possible recession before the middle of 2024.

Several of CBER’s indexes for Southern Nevada reported that the region recovered from the effects of the pandemic-era recession. Its coincident index — measuring the economic cycles of the region’s economy with data from taxable sales, gross gaming revenue and nonfarm employment — was 11.6 percent higher than the peak in February 2020, and it nearly exceeded the more recent peak in May 2022.

Tourism indicators such as hotel occupancy, visitor volume and Harry Reid International Airport’s passenger volume were exceeding or within a percentage point of their pre-pandemic peaks. CBER predicted that visitor volume, hotel occupancy and employment in the region could increase by 7.7 percent, 6.1 percent and 2.8 percent, respectively, in 2023.

In 2024, the economists predicted smaller increases of 1.2 percent for visitor volume, no change for hotel occupancy and 2.8 percent for employment. But they predicted a decline in gross gaming revenue by 2.9 percent in 2023 and 2.8 percent in 2024, attributed to consumers’ savings and discretionary income returning to pre-pandemic levels while adjusting for inflation.

McKenna Ross is a corps member with Report for America, a national service program that places journalists into local newsrooms. Contact her at mross@reviewjournal.com. Follow @mckenna_ross_ on Twitter.