-All right.

So the openings of these resort and casinos should be signs that the economy is strong, right?

But what about those fears of recession?

We bring in Andrew Woods now.

He's the Director of UNLV's Center for Business and Economic Research.

Andrew, welcome.

-Thanks, Amber.

-What do these openings indicate to you about Southern Nevada's economy and the economy overall?

(Andrew Woods) Well, I appreciate being on here, and thank you for the question.

I still think that it shows that Nevada is a good bet for the leisure and hospitality industry.

Seeing we have these openings, we have expansions going on at the same time, we've rebounded from the pandemic much better than we had initially anticipated at the Center for Business and Economic Research.

So it continues to show that the economy continues to grow.

Certainly, there are some scars that we see from both the Great Recession still to this day and from the pandemic.

And those certainly have us concerned, but still continues to show that leisure and hospitality is the main driver of our economy.

It counts for 1 in 4 jobs here in Southern Nevada.

It counts for 1 in $3 generated out of Southern Nevada is that industry.

So it's still very important for our economy and our prosperity.

-Which makes a potential recession even scarier, though, for Southern Nevada.

What are you hearing about that possibility?

You and I have been talking about that possibility for more than a year now.

-So CBER does not forecast recession in the near term at the moment.

We do update that forecast quarterly, so things can change very quickly.

We do have concerns that from the elevated spending levels at some point that will have to kind of cool down a bit as we see with higher interest rates.

So we see higher credit card interest rates, we see that the cost of living is still significant, and I would say that inflation is not done.

We're certainly better than we were a year, year and a half ago when it was 9%, and now we're at 3.1% headline inflation.

I do think that there are concerns that we will-- things will cool here in the coming months and that the record sales tax and record gaming revenue is probably going to cool down.

And we're seeing some of those early indicators.

That doesn't mean that we're forecasting recession, though, either at the moment.

-Okay.

So a cool down, if that does happen, we haven't seen it yet, though, as we discussed with Christmas shopping numbers, right?

-Yeah.

People love-- we all love to holiday shop.

They have come out much stronger than we realized or anticipated.

So I know just from Cyber Monday, Shop Small Saturday, Black Friday, it was about $12 billion spent, and they're estimating a record for the quarter of about 966 billion spent on holiday spending from Halloween all the way to New Year, which is still pretty incredible that the American consumer, I have to thank them for continuing to keep us all afloat and continue moving forward.

There are some interesting figures in that; for example, some of the excess spending tends to be coming from the top 20% of individuals from an income level.

So the bottom 80% have pulled back, are doing more substitution, in fact, aren't spending as much.

So it's coming more from the top at the moment.

It also seems to be coming from the baby boomers.

The baby boomers continue to also splurge, as we would say.

And to be fair, that's keeping the economy going.

But it does give us hesitation for the rest of us that were kind of pulling back at some point.

We'll all have to pull back, and what does that mean after the new year?

But we said that last year, and American consumer continue to truck along through 2023.

We'll just have to see how 2024 pans out.

-And we were talking about consumer spending habits off camera.

You brought up "buy now and pay later."

-Yes.

-It's become more prevalent.

-Yeah.

So we saw a 47% increase during the, kind of, Black Friday through Cyber Monday period of this trend where you're-- you buy the product now, and you pay later.

And if you don't pay for it later, they charge you interest.

So it instantly then turns into like essentially a loan, and you're paying much higher interest than you would be paying three years ago, because of higher interest rates.

And so we see the prevalence of that.

It makes us wonder, and especially the ease of access to those, if we're setting ourselves up for debt to kind of really pick up here.

We're already at a trillion dollars in credit card debt, which is a record.

And you have to imagine all those outstanding, outstanding debt has now a higher interest rate to it.

It's not just simply that consumers might have more debt.

They're going to pay more on that debt if they have an outstanding balance.

"Buy more, pay later" that might make sense for like large purchases that you pay off over time, and you can do some periodic payments.

But if you miss that payment, you're immediately going to be hit with a much higher interest rate than you've probably anticipated and what you were paying three years ago.

-Back to the Durango and the Fontainebleau openings.

What kind of impact do they have on the local economy?

-Well, several, right?

So again, mentioning that 1 in 4 jobs and 1 in $3 from Southern Nevada comes from leisure and hospitality, you're adding 3,644 rooms from the Durango-- I'm sorry, from the Fontainebleau.

Though I am curious if they're fully open in terms of all those rooms, but we know for every room out there, you're creating about 1.1 jobs in the economy.

So you're creating about 4,000 jobs, at least, from Fontainebleau and maybe even more than that.

And then with the Durango, they right now have 211 rooms.

But as you said, they have well over 1,000 workers they've hired, at least for their opening.

That has an impact, right?

Those are salaries.

Those are obviously also increasing and are inducing demand from visitors to come and spend.

That helps with sales tax collection, which for now is trending a bit downward compared to what we've seen as some of the economy cools off.

It's good to have these going on right now as the economy cools, because it's giving a bit of a boost as we go into the end of the year.

We want them to be successful, right?

Where their place is is really interesting, right?

These are not necessarily properties being placed right where we've typically talked about, like on Tropicana and Las Vegas Boulevard.

We're talking about north end of the Strip near the Sahara and the Las Vegas Convention Center, kind of having an anchor now that's a little more economically vibrant that can really spur maybe more economic development on that side of the town, but also the Durango where-- that's where a lot of population growth for the county is going on is in that southwest part.

You see a lot of development, and Stations has built this casino that seems to me to be more catered to locals.

And in doing so, it's really saying this part of town is economically flourishing right now.

-When do you think we see another big type of development like the Fontainebleau again?

-Well, the Fontainebleau, because it's just, it's so massive, right?

I mean, it's like building a Bellagio.

I think it's going to be at least a decade or more for a property of that size.

I could be wrong.

I would love to be wrong.

But at the same time, it takes, as we see, a long time now for these properties not just to-- it's not so much of an issue of building them, but getting kind of to a place where they are in the credit market able to get financed and that they're going to then pay off for the consumer or pay off for the investors and pay off for visitors and pay off for workers, and the economy kind of fits into that.

We're forecasting for 2024 right now about 40 million visitors, which is on par of what we had this year.

Our record is still above that at close to 43 million.

We would be curious of what kind of anchors in terms of events, but also, as a community, what infrastructure do we need to start thinking about after we went through F1 and we're going to go through Super Bowl here and New Years and NBA and all these other exciting things.

We think there probably needs to be a serious conversation on infrastructure development so that we can push that leisure and hospitality number, visitor number, above 43 million.

Because it seems like we're kind of maxing out right now.

You hear the numbers from the airport where they're feeling they're getting full with 55-plus million people going through the airport.

So if we want to get up to 43, 44, 45, maybe even 50 million visitors, what infrastructure?

I think we need to have a serious conversation about light rail, about the monorail, and about boring technology, all of it, and really think about moving both our people, our visitors, our workers, and for you and me if we take the kids to school or we want to go out to eat, be able to get around town and not have to sacrifice, our mobility just because we also have this industry that really powers our economy.

-On that note, how excited are you for the Brightline West high-speed rail line from California?

-Well, we're excited for them to get those shovels in the ground.

I know they were waiting on this, this announcement from the administration, which was very exciting and good for our economy.

-$3 billion toward that project.

-Right.

So if those shovels get in the ground and they start building, then it shows again that it's a good bet, leisure and hospitality in Southern Nevada.

We think it will help with some of the infrastructure needs of getting people to and from Las Vegas.

It also will be interesting to see the economic back and forth between people that live in Nevada and want to go to Southern California, either for business or for leisure, and vice versa, where there may be people doing now business in Nevada who maybe weren't necessarily doing so before, but living in California.

-Could you ever see the point where someone is living in LA, perhaps, and traveling daily to Las Vegas?

-I could see that.

I can see the opposite, right?

I could see not only weekend warrior, but, potentially, you know, commuting back and forth.

And it may help with some of the demand at the airport right now, which is there's still a dominance of flights that go to Burbank and Southern California.

But this might ease or ease some of that demand so we can then focus on other routes that maybe are longer.

But that's not actually my expertise, right?

-Okay.

-I certainly think it will induce demand in terms of people wanting to come to Southern Nevada over time, especially if it proves to be successful in terms of being just as efficient to get people from Southern California to Southern Nevada and back.

-I did want to add the Fontainebleau told us they've hired about 6,000 people.

-Oh, wow!

-In terms of what that does for the unemployment rate in Nevada, not much, right?

And the unemployment rate, so high compared to the rest of the country, here 5.4% compared to 3.9% nationally.

Will you remind our viewers why there's that discrepancy.

-Right.

So a reason why we still have a very high structural unemployment rate is there has been this structural shift in the labor market.

And essentially what that means is there's been a lot of people on the sidelines of the labor market, typically prime age workers, particularly so in Nevada, and we've done research on this.

And they particularly seem to be individuals of prime working age more here than, more so than across the country.

So meaning 21 to 54, typically if they are men, they aren't working as quite at high rates as they were as prepandemic and as they were prior to the pandemic-- or working where they were compared to the rest of the country.

In Nevada, we have an issue right now with about 53,000 workers missing from the labor force that we should have if the pandemic hadn't happened, especially those prime age workers, the 21 to 54.

And so that is keeping our unemployment rate a little bit unusually high, because even though we're getting new jobs, we're backfilling people looking for jobs, because people are starting to come off the sideline, residents here, looking forward now going back into the labor market.

We have a lot of work to get them back in the labor market.

But that kind of reflects that very dynamic nature and the higher unemployment rate, which also is mimicking the leisure and hospitality unemployment rate nationally.

If you look at Nevada's unemployment rate, it tends to mimic the leisure and hospitality rate across the country.

-Why aren't people wanting to work here?

-We're trying to dig into that.

We've surveyed, and what we found, typically, if they're unemployed, they're saying the number one issue they're having is transportation, of course pay, but also skill development.

We think there's a lot of friction in the state.

We see a little bit from the survey research that we're doing statewide on this issue is that they may feel-- they might have been working in leisure and hospitality before the pandemic.

They feel all they can do then to get back in the job market is leisure and hospitality.

And they would actually be interested in other jobs and other opportunities.

And particularly if they had a college degree, during the pandemic they probably left and it was backfilled by other people coming in who also had a college degree.

But they were only going into very specific industries like healthcare, government, which would be public education, etc., and so we need to think about the friction of our labor market and how maybe you can work in leisure and hospitality.

Say you don't want to do that anymore, you can work in healthcare.

You can work in education.

You can work in government.

And vice versa.

Maybe you do those things, and now you want to work on the Strip.

-I've got to stop you there.

We're out of time.

Andrew Woods, thank you.

-Thank you.