Experts: Silver State growing despite slump

Luring a deep pool of new residents came easily to Nevada two years ago, when job formation clocked in at 5 percent a year.

Today, with job growth flat and national headlines trumpeting collapsing local housing prices and delayed resort projects, the Silver State should experience tougher times attracting fresh blood.

But local experts say Nevada continues to lead much of the country in growth despite recent declines in in-migration. That sustained growth, they add, could pose wide-ranging implications for the state's economy, from a potential increase in unemployment to a boost in taxable sales.

Pinning down how many new citizens arrive in Nevada these days is tough, partly because official tabulations lag about a year behind actual expansion. Plus, determining population growth requires analyzing how many people leave each year, and area economists say they lack hard numbers on population outflow.

On the growth side, state Demographer Jeff Hardcastle reported 95,287 new Nevadans between July 1, 2006, and June 30, 2007, the latest period for which he has data. That's on par with the 100,000 or so new residents the state typically added annually in the late 1990s and early 2000s.

The U.S. Census Bureau in December named Nevada the nation's No. 1 state for growth in the year ending July 1, 2007. Nevada's growth rate of 2.9 percent placed the state in the top spot for expansion for the 20th time in 21 years.

But the state's economy has aged in dog years since summer 2007, with the business climate and fiscal outlook taking a sharp downturn in early 2008. Surely, this year's double-digit declines in home values, gaming win and taxable sales would repel opportunity seekers en masse, right?

Maybe not, according to recent indicators.

Statistics from the Nevada Department of Motor Vehicles show a 10.6 percent decline in the number of out-of-state driver's licenses surrendered from July 2007 to July 2008, said Brian Gordon, a principal in local economic research firm Applied Analysis. It's a sizeable drop, from 77,728 hand-overs between July 2006 and July 2007 to 69,495 turn-ins between July 2007 and July 2008, but that latest result isn't too shabby for a state suffering economically, Gordon said.

What's more, after several months of lagging behind year-over-year results, July's turn-ins actually matched surrenders from July 2007, with totals in both months coming in at just over 6,100 licenses.

Nailing down growth rates also means accounting for out-migration.

Local analysts don't maintain current, specific figures on the number of people leaving Nevada, but a glance at some area services hints at gains in out-migration.

Analysts at the Clark County School District predict a smaller enrollment increase than usual when the new academic year begins today. They expect 314,000 students, for a 2 percent increase over the 308,783 students who enrolled in the 2007-2008 session. That's roughly even with the 1.9 percent growth the district experienced a year earlier, but it's well below the 3.9 percent gain it posted in 2006-2007.

Because driver's license turn-ins have stayed high, Gordon said, the halving of enrollment growth likely comes from families leaving Southern Nevada.

New residential connections through electric utility Nevada Power Co. have slowed. The utility's officials expect all connections to increase 1.5 percent to 2 percent this year, down slightly from 2.7 percent in 2007 and off considerably from 4.9 percent in 2006.

But those weaker statistics still indicate growth, economists say.

Though the state demographer won't announce this year's population increase until January or February, Gordon said his company's indicators foretell expansion of between 70,000 and 80,000 new residents -- not the 100,000 or so the state grew accustomed to welcoming but still likely one of the country's best growth rates when all the numbers shake out.

"People are certainly still coming here," Gordon said. "Yes, it's off the pace we saw before, but it's certainly still healthy. We'll certainly remain at or near the top of the list when we talk about other major metropolitan areas, and we're expected to continue to hold the top spot going forward based on fundamentals in our market."

New residents persist in coming partly because things are worse where they live now.

Nevada continues to enjoy a lower cost of living than California, so the Silver State holds appeal to people relocating from there, Gordon said.

Plus, states that appear in the top 10 places of origin among driver's license turn-ins tend to have higher unemployment rates or tougher housing markets than Nevada. No. 6 Michigan's unemployment rate of 8.5 percent makes Nevada's 6.6 percent look positively vibrant, while No. 5 Illinois claims 7.3 percent joblessness. And California and Florida -- Nos. 1 and 2 -- represent the only states that generate more negative housing headlines than Nevada.

People also move for noneconomic benefits such as warmer weather, recreational and entertainment opportunities or proximity to family, said Keith Schwer, director of the Center for Business and Economic Research at the University of Nevada, Las Vegas.

Growth has its potential downsides. As people move here by the tens of thousands, the labor pool expands, and with job formation flat, new residents could force up unemployment rates temporarily.

But 70,000 to 80,000 new neighbors bring fresh sales prospects for retailers, restaurants and builders. That could lead to more tax revenue, especially as the housing market stabilizes and consumer confidence improves, Gordon said.

Contact reporter Jennifer Robison at jrobison@reviewjournal.com or 702-380-4512.