In the depths of the downturn, most analysts agreed: Almost no state was hit harder than Nevada.

At its lowest point in 2010, the state had a “headline” unemployment rate nearing 14 percent — at the time, the highest nationwide — while Fernley, Las Vegas and Pahrump had the odious distinction of being ranked first, second and third for the highest foreclosure rates in the country.

By some measures, the state has recovered. Incoming governor Steve Sisolak takes office at a time when an economy once at the brink is largely back on track.  

Unemployment is down, jobs numbers are up and the state's industries — from hospitality to manufacturing to health care — are doing well. Nevada had the highest employment growth in 12 years in 2018, according to numbers released by the state's Department of Employment, Training and Rehabilitation in December, while housing indicators show prices, though still below pre-recession peaks, are continuing to rise statewide.  

But is the economy really humming again? The answer depends on who you ask — and what numbers you’re measuring.

Different metrics, different stories

On one hand, the Silver State boasts a wide range of positive economic indicators, many of which have only climbed upward since the depths of the recession. Data from the Bureau of Labor Statistics show unemployment fell to 4.4 percent in October — down more than nine points from its 2010 peak — and many other employment numbers have been trending positively for years.

The housing market, too, has rebounded significantly. The median price of a sold home in Nevada has grown from a low of $110,000 in 2011 to about $277,000 today, according to real estate database company Zillow, while in some Northern Nevada markets the median home prices are beginning to near pre-recession heights, when adjusted for inflation.

Even median household income — a notoriously stagnant economic indicator in the years since the 2008 crash — has swelled 12 percent since its 2012 low, growing from about $50,000 to $56,550 in 2017, adjusted for inflation, according to data from the U.S. Census Bureau

Combined with other positive indicators, the metrics make for a relatively good economic picture, said Stephen Miller, a UNLV economist and director of the Center for Business and Economic Research. He said the severity of the recession makes it somewhat difficult to judge progress, but even with that qualifier, “It's been pretty good."

"I pause only because we were hit worse than most states, and in particular, if you look at Southern Nevada, the metro area was hit worse than most metro areas," Miller added. "The recession was deeper and longer here than in most other areas. So in some sense, we're still catching up, but in some areas, we have caught up."

But not all economists see the recovery the same way. Elliott Parker, a professor of economics at UNR, said Nevada's trends have been "disappointing, if I had to choose a word."

"Per capita incomes are not growing very fast; that is basically because the economy is growing more or less at the rate of population growth, and particularly, the income of the median household is not rising,” Parker said. “In fact, if you adjust for inflation, in 2017 it fell, relative to 2016.

Per capita incomes, while not a complete indicator of economic health, can be a useful tool in determining how well off people are in a given economy, especially when there is a disparity between those at the top and bottom of the income curve, Parker said.

Adjusted for inflation, per capita incomes in Nevada sat just under $45,900 in 1998, when state-level data began being tracked. By 2017, they had risen to just $46,159, according to data from the U.S. Bureau of Economic Analysis. Though that’s above the per capita incomes in some other western states, including Arizona, New Mexico and Utah, it still trails the national average by about $5,000.

"Incomes are growing slower than the rate of inflation, and that inflation is for regular prices. It's not considering, say, housing prices, which have gone up much faster," Parker said. "So if you're income is relatively stagnant, and the price of housing is rising rapidly, many people don't feel better off."

There is also a question of the nature of employment. For instance, the government's official unemployment rate — called the U-3 or “headline” rate — isn't an all-encompassing measure. Instead, it quantifies the percentage of people who are available to work and who have actively looked for work in the last four weeks.

Following the 2008 recession, people left the labor force in droves. To measure the reasons for — and length of — unemployment, the government also reports the so-called U-6 rate, which not only includes those bundled in the U-3 rate but also people who are working part-time jobs but would prefer to be working full-time and those who are only marginally attached to the labor force (i.e people who aren't working, but have said they would like to work and have looked for a job in the last year).

When it comes to the Silver State's U-6 rate, as with other metrics, there is both good news and bad news. On one hand, the U-6 has been falling steadily since 2012, down about 10 points over the last six years. However, Nevada's U-6 rate is still roughly twice that of its U-3, and it had the nation's fourth-highest U-6 rate as of the end of 2018.

In real terms, what it means is that more than 70,000 Nevada residents would prefer to be working full-time but can’t find suitable employment.

John Restrepo, principal at RCG Economics, said there are a number of factors — such as the prevalence of part-time work in and among casino and food service jobs that dominate a city like Las Vegas or the growth of a surging gig economy fueled by ride-sharing and delivery services — that feed into the state's relatively high U-6 rate.

"It's all a combination, both the makeup of the economy combined with overall national trends and how the market is evolving," he said.  

Though Nevada is already at what economists call "full employment," an ideal unemployment rate that suggests virtually all people who want to work are working, Restrepo said there are still places where the state remains behind the mark.

"We not only look at the improvement in the rates, but we also like to compare to other states," Restrepo said. "We're doing a lot better than we were when we compare to ourselves, let's say 10 years ago, but we're still lagging in certain indicators when we compare ourselves to other states, particularly states in the west or states that have economies about the size of ours."

Of housing booms and busts

Many of the root causes of the financial crash lay in the intersection between banking and housing. Subprime mortgages with low down payment requirements stoked a home-buying frenzy, driving up already over-inflated values. It resulted in a bubble that, when it finally popped, savaged Nevada's housing market.

By 2012, home prices had fallen by 60 percent — more than twice the average drop in home prices nationwide — as foreclosure numbers skyrocketed.

Today, the state’s biggest housing markets have largely recovered, though prices still remain below their pre-recession peaks. Home price indexes show homes in Las Vegas have recovered about two-thirds of their peak value as of September 2018, the most recent month for which home price data is available, though mortgage balances — a key sign of a recovering housing market — have been slow to recover in states hit hardest by the recession, Nevada included.

In Reno, where home prices have long been higher than in Las Vegas, it's a different story. The region’s price increases have been far greater than those in Southern Nevada — the median Reno home price broke $400,000 for the first time in 2018 while average rents climbed above $1,300 during the busy season this past summer — and are being pushed up for vastly different reasons.

A population boom driven largely by a manufacturing renaissance at the nearby Tahoe-Reno Industrial Center (home to Tesla, Google and Switch, among others) has stressed a city with an already low housing supply. Surrounded by mountains, Reno-Sparks can do little to sprawl, and efforts to build homes on the outskirts of town or even in floodplains have been met with heavy resistance by existing homeowners.

Coupled with few incentives for developers to build affordable housing, let alone affordable multi-family units like apartments, the employment rush in Northern Nevada has led to what some locals call "being Tesla'd."

"There are a lot of people who have been forced out of homes into lower quality homes by landlords who have jacked their rents up in order to take advantage of people who have moved here for jobs," Parker said. "It's expensive to be poor, and if you don't have the income for a good apartment, you're often stuck renting on a weekly basis in a hotel."

While homes are still not as expensive as those in neighboring northern California, Reno housing is nonetheless becoming increasingly unaffordable for the city's poorest residents. In Las Vegas, though the effect is less pronounced, there are also mounting concerns that the gains in home prices are squeezing out a middle class that just isn't seeing its incomes rising to match.

The bright spot for the housing market is the relative health of the state's construction industry.

"You don't have to be in Las Vegas too long to hear all the big projects that are going on. I'd say we're seeing a lot of projects being proposed, and a lot of those big projects going online," said UNLV economist Miller.

He said those projects, including the MSG Sphere, Resorts World and the Las Vegas Ballpark, are good signs for an industry once devastated by the recession, even if things still aren't what they used to be.

"We're still way below the peak in terms of our construction activity. I recall, at that time, I was in New Orleans for a convention and happened to catch a piece on the local news saying that they had something like 47- 48,000 hotel rooms,” Miller said. “And at that point in time, [UNLV] was keeping track, and Las Vegas had nearly 150,000, and they had plans for another 50,000 rooms. Of course, those rooms never really materialized.”

Many state economists are still cautiously bullish about the future of the economy, in part because they don't see the same construction problems that plagued the industry in the run-up to the recession as growth became steadier and less speculative.

For example, in its preliminary forecast for the next two-year budget cycle, the Economic Forum — a panel of private-sector experts who make state-level economic predictions for legislators — noted seeing steady year-over-year growth of single family home completions, with increases averaging about 10 percent per year between 2012 and 2017.

"When we look at construction jobs as a percent of total jobs, we're just a little above the national average, which is good," Restrepo said. "During the boom period, from '04 to '06 and into '07, we were nearly double the national average."

But construction is still a cyclical business, he said, and a good run of construction projects and high demand for construction workers won't last forever.

"At some point, the wave slows," he said. "You never build multiple Raiders Stadiums, for example, or some of these other bigger projects. Construction always comes in waves; we go through these peaks and valleys. So we're just in a good wave right now that's been building up as a result of the recession."

The diversification problem

There are a number of reasons why the state's economy was so deeply wounded by the nationwide economic collapse, but one of the key factors was the impact of a nationwide economic crunch on a state with an economy driven largely by tourism.

The singularity of the state's gaming and tourism economies have been baked into budgets and economic forecasts for decades, and they were facts not lost on Gov. Brian Sandoval in one of the first reports released by his then newly created Governor's Office of Economic Development (GOED) in 2012.

Noting 150 years of "boom and bust" Nevada economies, the report called for a new flexibility of the state economy, heralding health care, aerospace, defense contracts and renewable energy as the "new frontiers that will beckon future generations of Nevadans."

In some ways, plans to expand those industries have started to bear fruit. Education, services, health care and manufacturing have all ticked up as a percentage of the state economy, while accommodation and food services (i.e. the hospitality industry) have fallen.

But those increases and decreases have been small, according to numbers from UNR: 3 percent gains for education and health and 1 percent for warehouses, while mining, manufacturing and retail have all remained even. Accommodation and food services lost 1 percent, while construction lost 5 percent of the total share.

"The momentum is taking us there, but we haven't reached a critical mass that means this is just going to roll by itself forever," said Paul Anderson, executive director of GOED. "We still rely heavily, especially if you look at the state's general fund, on a couple miles of the Strip to provide the sales and use tax and everything else that gets generated there."

Miller agreed, and said it's too soon to draw conclusions about what has and hasn't worked in terms of economic development.

"It's a slow process, you can't turn on a dime," he said. "To turn, we're talking about five, 10, 15 years. Leisure and hospitality is still the most important part of our economy in Nevada, Southern Nevada, and to a lesser extent in Reno. Since 1990, so that's almost 30 years, you can see a narrowing. But if I translate out into the future, we're talking about decades of movement," he said.

"It takes a long time to turn the Titanic," said Bob Potts, research director for GOED. "I think the most impressive thing is that it's starting to show up in these aggregate numbers so that you can visualize the change that we're seeing."

But even with that steady diversification, both Parker and Miller agree there is a singular roadblock on the path to greater diversification and higher incomes for more Nevadans: education.

"What we lack here in Nevada is the educated workforce that will support the diversification that will lead to higher wages," Miller said. "So we need efforts to improve education in the state, both K-12 and also higher education. But we also have, compared to other states, a low percentage of people with college degrees. Not a huge difference, but a significant difference."

There has long been a connection between education and incomes. Often called the "education wage premium," a 2017 report from the St. Louis Fed found incomes of college grads were nearly twice that of those with just a high school degree — the difference between $41,000 and $76,000 a year — and that the income gap between those groups is getting wider.

In Nevada, the struggles with both K-12 and higher education is no secret. The Nation's Report Card, part of the National Assessment on Education Progress (NAEP) which tracks proficiency in a number of school subjects, pegs Nevada students as some of the least proficient in the country in front of only Louisiana, New Mexico, Alaska and Washington, D.C.

Beyond the K-12 challenges, there are fewer students in Nevada institutions of higher education than in states with a similar population of roughly 3 million. For instance, while Nevada had a total college enrollment of about 108,000 in 2016, states like Iowa or Utah had enrollments topping 200,000 and 300,000, respectively, according to numbers from the National Student Clearinghouse.

There have been multiple monetary and policy changes geared toward improving the state's education system and outcomes since the Great Recession, but part of the equation, Anderson said, is creating technical skill or apprenticeship programs that will allow workers to get the necessary certification for jobs from manufacturing to nursing.

"Those skill sets have to be taught somewhere, and we'd much rather they be taught here, and those folks going through those programs be able to stay here and raise their families here," he said.

There is already a program in place between Panasonic and Truckee Meadows Community College in Reno which allows applicants with no experience in manufacturing to obtain necessary credentials. That's in addition to GOED programs like the Workforce Innovations for the New Nevada (WINN) fund, which provides money for workforce development programs at at several Nevada community colleges, and the Workforce Innovation and Opportunity Act passed on 2014 which aims to help workers who have been laid off or are reentering the workforce.

New money was also allocated late last year for graduate medical education residency programs in the state, part of a $10 million package from the 2017 legislature designed to boost funding in medical education more broadly.

But Anderson said getting workforce development programs in place at the high school level will become a more critical issue, especially as a lower joblessness-rate puts more pressure on workers themselves to have more skills.

Parker agrees — and says the kind of wide-scale, long-term investment by the state in education that would boost economic outcomes simply hasn't been there.

"It takes a long run plan, and we tend to operate on the two year plan, that is, until the next legislative elections,” he said. “We have this short little window for the Legislature to act. They're told how much money they can raise, given the situation, and then they're rearranging the chairs on the Titanic. A long-run strategy that invests in education, that'll pay off, but it'll take 10, 20 years to pay off, and that's not the way our politics works."