Undercurrent

Nowhere to go but up: About Nevada’s splashy GDP growth

By: - June 30, 2021 7:01 am
Our Town

A total of 74 cities, counties, and states are set to raise their minimum wages in 2021, many to $15 per hour or more. Nevada’s top minimum wage rose to $9.75 July 1. (Photo: Ronda Churchill)

Our Town
Remember, you can’t eat GDP. (Photo: Ronda Churchill)

“The new GDP data shows that we have merged into the fast lane of the road to recovery,” Michael Brown, the head of the Nevada Governor’s Office of Economic Development said Tuesday.

Brown was responding to preliminary Bureau of Labor Statistics data indicating Nevada’s gross domestic product grew 10.9% from the 1st quarter of 2020 to the first quarter of 2021, more than any other state’s GDP growth.

Reality check: That development has everything to do with time, vaccines, and other forces and conditions far beyond the control of Michael Brown and the Governor’s Office of Economic Development.

A statement from Gov. Steve Sisolak in the same press release was slightly less irrationally exuberant. But only slightly. “It’s no secret that Nevada’s economy took the hardest hit from the COVID-19 pandemic,” Sisolak noted.

After falling so far, Nevada had nowhere to go but up.

The year-over-year quarterly GDP growth also “proves we will recover stronger and build the Nevada our families deserve,” the governor added.

No it doesn’t.

A GDP comparison spanning this bizarre timeline “proves” very little, if anything. Instead, it reflects that in the first quarter of 2020 most of Nevada’s economy came to a screeching halt, and in the first quarter of 2020 it was reopening.

Meanwhile, the data reflects that the industrial sector accounting for by far the largest portion of GDP growth in the state was accommodation and food services. That sector, which all but evaporated in March 2020, accounted for roughly a quarter of the 10.9% growth.

The second largest contribution was from retail trade. Accommodation/food services and retail are also the one-two largest employment sectors in the state, and have been for the last several years (that I know of) and probably the last several decades (I’m guessing).

Those sectors were followed by durable goods manufacturing — Elon reportedly had a very good pandemic — and then arguably Nevada and the nation’s most sick and twisted exhibit in the annals of contemporary markets failing to deliver a basic necessity in a broadly affordable manner, “real estate and rental and leasing.”

While comparing the inert economy of early 2020 to the reawakening one of early 2021, the BLS reminds everyone to keep something else in mind: Increases in first quarter GDP reflect federal assistance plans passed by Congress. The impacts of the federal assistance measures, and “the full economic effects” of those programs “cannot be quantified in the GDP by state estimates for the first quarter of 2021, because the impacts are generally embedded in source data and cannot be separately identified.”

Now Democrats are crafting sweeping legislation to make child tax credits permanent, raise wages and improve working conditions in the the nation’s largest growing employment sector (home caregiving), provide paid family leave, expand affordable child care, and do many, many other nice and long overdue things.

The success of those measures in Congress, not a GDP blip (and certainly not the state economic development office), is what will determine whether Sisolak’s wish will come true and “we will recover stronger and build the Nevada our families deserve.”

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Hugh Jackson
Hugh Jackson

Hugh Jackson was editor of the Las Vegas Business Press, senior editor at the Las Vegas CityLife weekly newspaper, daily political commentator on the Las Vegas NBC affiliate, and author of the Las Vegas Gleaner political blog. Prior to moving to Las Vegas, he was a reporter and editor at the Casper (Wyoming) Star-Tribune.

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