D.C. Download: Vibes vs. reality: How's Nevada's economy after 3 years of Biden?
It’s almost Super Bowl week, and the game line (the 49ers are favored by 2 points) is about as close as presidential polls at this point. (I’d personally parlay Usher to open the halftime show with “OMG,” Travis Kelce to score a touchdown and Donald Trump to win the Nevada Republican caucus, the latter of which I suspect would not move the line in the slightest.)
As many X users have pointed out, this Chiefs-49ers Super Bowl is reminiscent of 2020, when we had the same Super Bowl matchup and the same presidential candidates. That Super Bowl was also the month before COVID-19 hit the U.S. and the economy crashed. It had a massive impact on the 2020 election.
With Biden’s presidency recently hitting the three-year mark, I thought it would be a good time to talk to four experts who evaluated Nevada’s economic recovery over the last three years.
The News of the Week: Three years of the Biden economy
In parsing three years of a Biden economy, there are two simultaneous stories — there’s the data-driven, macroeconomic hard numbers economy, and then there’s the consumer sentiment-based sense of pessimism that I’ll call the “vibes” economy. Biden’s ability to get re-elected might depend on his ability to get people’s vibes to match the trends that have economists feeling warm and fuzzy.
When Biden took office in January 2021, the economy was still recovering from the shock of the COVID-19 pandemic and subsequent recession. Unemployment stood at 6.3 percent, gas cost $2.33 per gallon and Americans had $18.11 trillion in disposable income.
Over the last three years, unemployment has fallen to generational lows, while wage growth and especially job creation have taken off. But Biden has been dogged by high inflation, peaking at 9.1 percent in June 2022. Although the rate fell to 3.4 percent in December, lower inflation doesn’t mean prices are dropping back to 2019 levels — it just means they’re increasing at a lower rate.
Of those economic trends, what can Biden reasonably take credit for? What’s his fault? And what’s beyond his control? (Gas prices, for one.)
I talked to four Nevada-based economists to learn more.
The Nevada Angle
As we analyze the state of Nevada’s economy, let’s establish this:
- Unemployment, as of December: 5.4 percent (51st)
- Wage growth, from June 2022 to June 2023: 2.9 percent (37th)
- Jobs created: 3.8 percent annual growth rate (seasonally adjusted) from December 2022 to 2023 (1st)
As Jeremy Aguero, a principal analyst at economics research firm Applied Analysis, put it, “Never has the economy been so good, and we felt so bad about it.”
Even though Nevada’s figures lag the national economy and other states, economists said those metrics owe to the structure of Southern Nevada’s economy, with its dependence on hospitality and seasonal work.
Nevada is undergoing what UNLV economics professor Stephen Miller called a “structural adjustment” as its economy diversifies and becomes less dependent on leisure and hospitality.
“If you’re caught in the adjustment, it might be painful for you,” Miller said.
On unemployment, David Schmidt, the chief economist at the Department of Employment, Training and Rehabilitation, said the relatively high unemployment number also owes to an increase in labor participation — more people are looking to enter the labor force than before.
“It's not that we're not employing people,” he said. “It's just that as we're employing people, we have more people coming behind them in the queue to replace them.”
When the national economy catches a cold, Nevada gets a fever, as the saying goes. But Schmidt said Nevada’s recovery from the pandemic recession (including a 33 percent unemployment peak in April 2020) has been impressive. The economy has rebounded beyond pre-pandemic and pre-Biden metrics in terms of job growth — ranking first in the nation.
The job growth has also been concentrated in industries that grow the economy by bringing in investment from outside the state — manufacturing and mining, in particular. Nevada’s manufacturing sector has grown 7 percent in the last year, Schmidt said, the highest percentage increase in the nation.
“It's small, but it's growing pretty rapidly, and that's an exciting story for us to talk about,” he said.
It’s a story Biden and Nevada Democrats want to talk about as well. Biden’s two signature laws — the Bipartisan Infrastructure Law (BIL) and the Inflation Reduction Act (IRA) — have directed $3.3 billion in public spending to Nevada for infrastructure and clean energy, according to the White House. Private companies have announced $12 billion in investment in industries like electric vehicle battery manufacturing and recycling and clean power since the president took office.
Economists say the manufacturing boom in Nevada owes to a confluence of factors, from state tax abatements, Tesla’s Gigafactory opening in 2016 in Northern Nevada and the state’s natural resources, such as lithium, that drive investment.
Aguero said much of Nevada’s economic growth under Biden has owed to the influx of spending consumers undertook as the pandemic receded — partially spurred by federal relief — and preexisting growth of key industries in the state. But he added that the Biden administration’s federal programs have had a positive impact.
“The renewable energy-related infrastructure investments have been tremendous for us,” Aguero said.
And even though Nevada’s wage growth has been slower, it’s still significant — and may be more fully reflected in total compensation increases that factor in new or expanded benefits, given the relatively high degree of unionization in Nevada.
Aguero also said wage growth throughout the country is positive for Southern Nevada in particular, where people come to spend their money.
So with all that good economic news, why are the vibes in shambles?
Economists said it boils down to kitchen table issues — namely, continued high costs for food, gas and energy. There are myriad reasons for why inflation rose so sharply — it rose all over the world as nations came out of the pandemic with an economy flooded with federal stimulus, people who had been saving ready to spend, the Federal Reserve setting low interest rates at the time and snarled supply chains.
Las Vegas economist John Restrepo said the interest rate changes and federal stimulus that placed inflationary pressure on goods take time to work through the economy. But Biden may not have the luxury of time.
“That has had a dampening effect on support for President Biden,” he said.
Part of Biden’s problem is that the infrastructure investments the federal government is making in the state might not be realized immediately, to voters or in the economy.
“The benefits will probably be in the next presidential term,” Miller said. “So if Trump is elected, he'll get the credit.”
On the bright side for Democrats, there are signs that the vibes are improving. As inflation cools, a January survey from the University of Michigan reported that consumer sentiment rose 13 percentage points in January, hitting its highest level since the summer of 2021.
As Restrepo put it, “Biden's negatives are getting less bad … it takes time for [micro-indicators] to filter through the economy to make people feel better.”
Sen. Catherine Cortez Masto (D-NV), the only federal Nevada Democrat not running this cycle, said Biden will be able to tout infrastructure and renewable energy job growth. But she added that on the cost side, Democrats can point to their efforts to cut prescription drug costs by allowing Medicare to negotiate the price of certain drugs and capping annual out-of-pocket drug spending.
“Those are making a difference,” she said.
Around the Capitol
🏈Belles of the Bowl — Multiple members of the Nevada delegation told me they’ve been the envy of their colleagues this week over the upcoming Super Bowl in Las Vegas — including members approaching them on the floor to ask about it.
Sen. Jacky Rosen (D-NV) even hosted the National Football League at the Capitol to ‘educate’ members on the history and economic impact of the Super Bowl — and they brought the Lombardi trophy and all 57 Super Bowl rings with them. Sadly, the event was closed to the press. But NFL, if you’re reading this and want to come back, I specifically would like more education on Super Bowls XVII, XXII and XXVI! (#HailToTheCommanders)
🏛️Mayorkas impeachment moves — Republicans’ efforts to impeach Homeland Security Secretary Alejandro Mayorkas took a step forward Wednesday after the Homeland Security Committee voted to advance its impeachment resolution against him on party lines.
Rep. Dina Titus (D-NV), who sits on the committee, voted against it and has slammed the effort as a political stunt. But some Republican candidates are weighing in as well. Former state Treasurer Dan Schwartz, who is challenging Rep. Susie Lee (D-NV) in the 3rd District, issued a statement saying he supported the impeachment effort.
🏠Rosen homing in on housing — Rosen kept housing top-of-mind this week, weighing in on two big Hill topics with concerns over housing costs. Along with Sens. Elizabeth Warren (D-MA), John Hickenlooper (D-CO) and Sheldon Whitehouse (D-RI), Rosen sent a letter to Federal Reserve Chair Jerome Powell saying rising housing costs have been aggravated by the Fed’s interest rate hikes, and urging rate cuts.
Rosen, in her Tywin Lannister letter-writing era, also sent correspondence to Majority Leader Chuck Schumer (D-NY) urging him to bring the House-passed tax bill to the Senate floor, saying its expanded access to the Low-Income Housing Tax Credit will also bring some relief to Nevada’s affordable housing market.
⛏️Mining hearing in the House — The Mining Regulatory Clarity Act, introduced in both chambers by Rep. Mark Amodei (R-NV) and Cortez Masto, got a hearing this week in the House Natural Resources Committee, an important step in the legislative process. The bill was developed in response to the Rosemont decision, which invalidated mining companies’ claims to public land for mining support activities, like waste or processing, if that land does not contain economically valuable minerals.
The bill, which is supported by the mining industry, had a hearing in the Senate in December.
Notable and Quotable:
“The president wants to claim … that he's been in power when the economy's improved. But people are not saying the economy’s improved.”
— UNLV economist Stephen Miller
Vote of the Week
H.Amdt.845: An amendment to expand the bill to require that any alien who has been convicted of or admits to having committed a crime involving financial misconduct in regards to certain COVID-19 loans be inadmissible and deportable.
This amendment from Rep. Anthony D’Esposito (R-NY) makes undocumented immigrants subject to deportation if they are found guilty of pandemic aid fraud. Only 51 of 209 Democrats voted for it, including Nevada’s three Democrats.
None this week.
If you have a new position in Nevada politics, reach out and let me know!