CBER Economic Indexes for Nevada and Southern Nevada

Published August 14, 2019

Stephen M. Miller, PhD, DirectorJimmy Vuong, Graduate Research Assistant

Coincident Index(May)

Leading Index(May)

Summary of CBER’s Nevada Indexes

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Taxable Sales Gross Gaming Revenue

NonfarmEmployment

1.6%↑ -3.6% ↓ 0.2%↑

3.1%

Taxable Sales Gross Gaming Revenue

NonfarmEmployment

7.7% ↑ -5.7% ↓ 3.7% ↑

InitialClaims*

10-Year Treasury*

Housing Permits

Commercial Permits**

Airline Passengers S&P 500

2.4%↑ 0.1%↑ 10.1% ↑ -20.1% ↓ 2.1% ↑ -1.3%↓

InitialClaims*

10-Year Treasury*

Housing Permits

Commercial Permits**

Airline Passengers S&P 500

3.6% ↑ -0.3% ↓ -17.8%↓ -28.3% ↓ 5.1% ↑ 5.8% ↑

Mo. to Mo.

Yr. to Yr.

0.3%

0.01% 0.1%

* Inverted ** Data are partly forecasted as Clark County Service’s permit reports have not been available since December 2017.

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CBER’s Indexes of Nevada Economic Activity

The CBER Nevada coincident and leading indexes use the Department of Commerce index construction method. The CBER Nevada coincident index measures the ups and downs of the Nevada economy, while the CBER Nevada leading index provides an indication for the future direction of the coincident index. The coincident index provides the benchmark series that defines the business cycle or reference cycle in Nevada. The leading index then tracks the economy relative to that reference cycle. The coincident index peaked in February 2007 and then fell dramatically through June 2010. Prior to the Great Recession, identified by the benchmark Nevada coincident index, the Nevada leading index peaked in November 2005, 14 months before the Nevada coincident index peaked. Then, the Nevada leading index troughed in May 2009, 13 months before the Nevada coincident index troughed. All series are seasonally adjusted (SA). A full description of the methodology used to construct the indexes can be found at: http://cber.unlv.edu/publications/nvindices.pdf.

Coincident Index Components

• Nevada Taxable Sales• Nevada Gross Gaming Revenue• Nevada Nonfarm Employment

Leading Index Components

• Nevada Initial Claims for Unemployment (inverted)

• Real 10-Year Treasury Rate (inverted)• Nevada Housing Permits• Nevada Commercial Permits• Nevada Airline Passengers• Standard & Poor’s Stock Market Index

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Nevada Coincident IndexThe CBER Nevada coincident index rose both month-over-month and year-over-year.

The CBER Nevada coincident index experienced both monthly and yearly increases in May. The coincident index increased slightly by 0.01 percent month-over-month. On the positive side, nonfarm employment and taxable sales rose by 0.2 and 1.6 percent, respectively, from the previous month. Gaming revenue, however, decreased by 3.6 percent month-over-month.

On a year-over-year basis, the Nevada coincidence index climbed higher, increasing by 3.1 percent. Taxable sales and nonfarm employment jumped up by 7.7 and 3.7 percent, respectively. Gaming revenue, the only component that experienced a loss, dropped by 5.7 percent from May 2018.

Series Date Latest Period Month-Over-Month Year-Over-Year

Taxable Sales (SA) May-19 5,391,258,628 1.6% 7.7%

Gaming Revenue (SA) May-19 953,472,045 -3.6% -5.7%

Nonfarm Employment (SA) May-19 1,430,062 0.2% 3.7%

Overall Index Change May-19 238.8 0.01% 3.1%

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Recession Coincident Index

Nevada Leading IndexThe CBER Nevada leading index increased both month-over-month and year-over-year.

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The CBER Nevada leading index increased slightly by 0.1 percent month-over-month. Initial claims for unemployment (inverted) experienced a gain for the month, increasing by 2.4 percent, from April 2019. The ten-year real Treasury yield, housing permits, and Nevada airline passengers increased by 0.1, 10.1, and 2.1 percent respectively, from the previous month. While S&P 500 and commercial permits decreased by 1.3 and 20.1 percent, respectively, from April 2019.

On a year-over-year basis, the index rose by 0.3 percent. The ten-year real Treasury yield, housing permits, and commercial permits fell by 0.3, 17.8 and 28.3 percent, respectively. Initial claims for unemployment (inverted), Nevada airline passengers, and the S&P 500 experienced growth of 3.6, 5.1, and 5.8, respectively, from May 2018.

Note: In March 2019, we corrected a coding error in calculating the Nevada leading index, which smooths the movement of the index without affecting its signal.

Date Index Month-over-Month Year-over-YearMay-18 108.7 0.3% 1.7%

Jun-18 108.7 -0.1% 1.3%

Jul-18 108.8 0.2% 1.2%

Aug-18 109.3 0.4% 1.6%

Sep-18 109.1 -0.2% 1.8%

Oct-18 109.1 0.0% 1.5%

Nov-18 108.8 -0.3% 0.7%

Dec-18 108.1 -0.6% -0.2%

Jan-19 108.9 0.7% 0.4%

Feb-19 108.4 -0.5% 0.0%

Mar-19 108.1 -0.2% -0.8%

Apr-19 109.0 0.8% 0.6%

May-19 109.1 0.1% 0.3%

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115

Recessions Leading Index

Coincident Index(May)

Leading Index(May)

Summary of CBER’s Southern Nevada Indexes - Coincident Index and Leading Index

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Taxable Sales Gross Gaming Revenue

NonfarmEmployment

2.0% ↑ -5.0% ↓ 3.0% ↑

2.6%

Taxable Sales Gross Gaming Revenue

NonfarmEmployment

10.2% ↑ -7.3% ↓ 2.6% ↑

Mo. to Mo.

Yr. to Yr.

0.6%

0.1%

* Inverted ** Data are partly forecasted as Clark County Service’s permit reports have not been available since December 2017.

InitialClaims*

10-Year Treasury*

Housing Permits

Commercial Permits**

McCarran Passengers S&P 500

2.6% ↑ 0.02% ↑ -0.03% ↓ -15.0% ↓ 2.4% ↑ -1.3%↓

InitialClaims*

10-Year Treasury*

Housing Permits

Commercial Permits**

McCarran Passengers S&P 500

3.9% ↑ -0.3% ↓ -26.5% ↓ 12.1% ↑ 5.4% ↑ 5.8%↑

0.1%

Construction Index(May)

Tourism Index(May)

Summary of CBER’s Southern Nevada Indexes - Construction Index and Tourism Index

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1.3%

Mo. to Mo.

Yr. to Yr.

-0.6%

* Inverted ** Data are partly forecasted as Clark County Service’s permit reports have not been available since December 2017.

ConstructionEmployment

HousingPermits

CommercialPermits**

-2.0% ↓ -0.03% ↓ -15.0% ↓

ConstructionEmployment

HousingPermits

CommercialPermits**

7.5% ↑ -26.5% ↓ 12.1% ↑

McCarranPassengers

Gross Gaming Revenue

LV Hotel/Motel Occupancy Rate

2.4% ↑ -5.0% ↓ 0.8% ↑

McCarranPassengers

Gross Gaming Revenue

LV Hotel/Motel Occupancy Rate

5.4% ↑ -7.3% ↓ 1.4% ↑

0.6%

0.2 %

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CBER’s Indexes of Southern Nevada Economic Activity

The CBER Southern Nevada coincident and leading indexes use the Department of Commerce index construction method. The coincidentindex measures the ups and downs of the Southern Nevada economy. The leading index provides a signal about the future direction of the coincident index. The coincident index peaked in February 2007 and then fell dramatically through June 2010. Prior to the Great Recession, identified by the benchmark Southern Nevada coincident index, the Southern Nevada leading index peaked in September 2005, 16 months before the Southern Nevada coincident index peaked. Then, the Southern Nevada leading index troughed in May 2009, 13 months before the Southern Nevada coincident indexed troughed. Finally, both the CBER Southern Nevada construction and tourism indexes also use the Department of Commerce index construction method. All series are SA.

Coincident Index

• CC Taxable Sales• CC Gross Gaming Revenue• CC Nonfarm Employment

Leading Index

• NV Initial Claims for Unemployment (inverted)

• Real 10-Year Treasury Rate (inverted)

• CC Housing Permits• CC Commercial Permits• McCarran Passengers• S&P 500

Construction Index

• CC Construction Employment• CC Housing Permits• CC Commercial Permits

Tourism Index

• McCarran Passengers• CC Gross Gaming Revenue• LV Hotel/Motel Occupancy

Rate

Note: CC = Clark County

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Southern Nevada Coincident IndexThe CBER Southern Nevada coincident index rose month-over-month and year-over-year.

The Southern Nevada coincident index increased marginally from April 2019. Seasonally adjusted taxable sales and nonfarm employment experienced 2.0 and 0.3 percent gains, respectively, from the previous month. Gaming revenue decreased by 5.0 percent, and this resulted in the index increasing by 0.1 percent month-over-month.

On a year-over-year basis, the index increased by 2.6 percent. Taxable sales exhibited a strong gain, up by 10.2 percent year-over-year. In addition, nonfarm employment increased, rising by 2.6 percent. Gaming revenue, however, dropped by 7.3 percent year-over-year. Thus, taxable sales and nonfarm employment contributed to the index’s annual upward movement.

Series Date Latest Period Month-over-Month Year-over-Year

Taxable Sales (SA) May-19 3,998,304,610 2.0% 10.2%

Gaming Revenue (SA) May-19 811,655,917 -5.0% -7.3%

Nonfarm Employment (SA) May-19 1,025,406 0.3% 2.6%

Overall Index Change May-19 275.0 0.1% 2.6%

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Recession Coincident Index

Southern Nevada Leading IndexThe CBER Southern Nevada leading index increased both month-over-month and year-over-year.

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The Southern Nevada leading index rose marginally by 0.1 percent from April 2019. The small increase in the leading index reflects increases in initial claims for unemployment (inverted), the ten-year real Treasury yield, and McCarran Airport passengers. These three components increased by 2.6, 0.02, and 2.4 percent, respectively, month-over-month. Housing permits, commercial permits, and the S&P fell by 0.03, 15.0, and 1.3 percent, respectively, from the previous month.

On a year-over-year basis, the index rose by 0.6 percent from May 2018. The ten-year real Treasury yield and housing permits decreased by 0.3 and 26.5 percent, respectively. Initial claims for unemployment (inverted), commercial permits, McCarran Airport passengers, and the S&P increased 3.9, 12.1, 5.4, and 5.8, respectively, year-over-year.

Date Index Month-over-Month Year-over-Year

May-18 108.9 0.4% 1.8%

Jun-18 108.9 0.0% 1.5%

Jul-18 109.3 0.4% 1.7%

Aug-18 109.5 0.1% 1.7%

Sep-18 108.9 -0.5% 0.7%

Oct-18 109.1 0.2% 1.3%

Nov-18 109.0 -0.1% 0.8%

Dec-18 108.2 -0.8% -0.1%

Jan-19 109.0 0.7% 0.3%

Feb-19 108.8 -0.2% 0.1%

Mar-19 108.2 -0.5% -0.7%

Apr-19 109.4 1.1% 0.9%

May-19 109.5 0.1% 0.6%70

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Recessions Leading Index

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Southern Nevada Construction IndexThe Southern Nevada construction index decreased month-over-month and increased year-over-year.

The Southern Nevada construction index decreased by 0.6 percent from April 2019. Housing permits, commercial permits, and construction employment fell by 0.03, 15.0, and 2.0 percent, respectively, from the previous month.

On a year-over-year basis, the construction index rose by 1.3 percent. Construction employment and commercial permits rose by 7.5 and 12.1 percent, respectively. On the negative side, housing permit dropped by 26.5 percent from the previous year. Despite the lower housing permits from a year ago, the CBER Southern Nevada Construction Index shows a positive increase in May 2019.

Series Date Latest Period Month-over-Month Year-over-Year

Construction Employment (SA) May-19 67,935 -2.0% 7.5%

Housing Permits (SA) May-19 918 -0.03% -26.5%

Commercial Permits (SA) May-19 45 -15.0% 12.1%

Overall Index Change May-19 114.3 -0.6% 1.3%

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Recession Construction Index

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Southern Nevada Tourism Index

The Southern Nevada tourism index increased by 0.2 percent from the previous month. McCarran passengers and the Las Vegas hotel/motel occupancy rate rose by 2.4 and 0.8 percent, respectively, from the previous month. Gaming Revenue fell by 5.0 percent from previous month.

On a year-over-year basis, the Southern Nevada tourism index ticked up by 0.6 percent from May 2018. Gaming revenue decreased by 7.3 percent, respectively, from May 2018. On the positive side, McCarran Airport passengers and the Las Vegas hotel/motel occupancy rate increased by 5.4 and 1.4 percent, respectively. The gain in McCarran Airport passengers and hotel/motel occupancy rate offset the losses in gross gaming revenue and contributed to the index’s annual upward movement.

Series Date Latest Period Month-over-Month Year-over-Year

McCarran Passengers (SA) May-19 4,349,627 2.4% 5.4%

Gaming Revenue (SA) May-19 811,655,917 -5.0% -7.3%

LV Hotel/Motel Occupancy Rate (SA) May-19 0.899 0.8% 1.4%

Overall Index Change May-19 128.2 0.2% 0.6%

The CBER Southern Nevada tourism index rose both month-over-month and year-over-year.

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Recession Tourism Index

Sources

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Nevada Indexes:

• Nevada Department of Taxation• Nevada Gaming Control Board• Nevada Department of Employment, Training

and Rehabilitation• U.S. Bureau of Labor Statistics• Various Permitting Agencies• Yahoo Finance• Board of Governors of the Federal Reserve

System• Reno-Tahoe International Airport• McCarran International Airport• Federal Reserve Bank of St. Louis• CBER, UNLV

Southern Nevada Indexes:

• Nevada Department of Taxation• Nevada Gaming Control Board• Nevada Department of Employment, Training

and Rehabilitation• U.S. Bureau of Labor Statistics• Various Permitting Agencies• Yahoo Finance• Board of Governors of the Federal Reserve

System• McCarran International Airport• Las Vegas Convention and Visitors Authority• Federal Reserve Bank of St. Louis• CBER, UNLV

The views expressed are those of the authors and do not necessarily express those of the University of Nevada, Las Vegas or the Nevada System of Higher Education.