Nevada continues along a robust expansion path, continuing to outdistance the U.S. economy. Job growth in the Silver State remains strong, up 5.8, 7.0 and 3.3 percent, respectively, for Nevada, Las Vegas and Reno on a year-over-year basis. This compares favorably to U.S. job-growth of 1.6 percent. Moreover, this record of superior Nevada job-growth performance has held since the 2001 recession – a reflection of good investment opportunities in Nevada and a weak labor market nationally.
During 2005, the national economy weathered sharp oil-price increases, energy supply disruptions and hurricane destruction. Meanwhile, Nevada’s economy fared better, even if fuel-price increases took a larger bite out of consumers’ pocketbooks. Because the Silver State’s economy is less dependent on fuel prices and manufacturing than other states, and also because disruptions were avoided, business conditions remain better than for the nation as a whole.
Looking ahead, we expect the U.S. economy to pick up. The economy has performed admirably despite the obstacles, and early indications point to better U.S. performance. Relatively warm winter weather has helped ensure adequate energy supplies, though they are only marginally below peak price levels. The Fed continues to predict some possible pricing concerns and output momentum, which could push inflation rates higher, so the outlook points to greater risks ahead, maintaining low and stable inflation.
Nevada’s outlook remains more optimistic than that of the U.S. economy. Business expansion continues at a strong rate. Investment and job growth, having been very strong for some time, may well show some slack in 2006, just as a long-distance runner with a large lead takes a more measured course of action to sustain his effort. Still, momentum should continue to create jobs, income and wealth in 2006.