A new year feels like a change, finishing one chapter and starting the next. Ordinarily there’s a narrative that pulls everyone along, because most situations, events and circumstances don’t change overnight. This time the change feels momentous. Individuals and industries want to predict what’s going to be familiar, and what’s going to be completely changed.
The Big Picture
“The overall fundamentals of Nevada remain relatively stable,” said Brian Gordon, principal, Applied Analysis. “The state continues to experience positive population growth, significant business investment, employment gains and increases in personal income. Real estate values have held their ground, and in many areas, increased their upward trajectory.”
“We definitely have some real good tailwinds,” said Brian Bonnenfant, director, UNR Center for Regional Studies. “All the fundamentals are there. [There are] great job reports. Clark County employment rate needs a little fixing, but across the U.S. 4.2 percent unemployment is basically full employment. That means we’re doing really well. Inflation is down a bit – 3 percent. Wages are up above 4 percent. All the fundamentals are green lights going into 2025. Of course, now we have a reset and who knows what that will bring.”
“At this point it’s uncertain what the economic outlook will be for Nevada, because, in large measure, we don’t know the actual extent of illegal immigrant deportation and tariffs that will be initiated by the Trump Administration,” said John Restrepo, principal, RCG Economics. “The Nevada economy is highly dependent on a diverse workforce (think hospitality workers) and free trade (think mining and agriculture).”
“Economists have been more optimistic on the economy because everything on our dashboards looks strong with the fact that other than inflation being high and coming down, and interest rates starting to ease,” said Andrew Woods, director, Center for Business and Economic Research, UNLV. “But for consumers, they’ve felt more of a struggle in terms of their financial situations, despite the fact that wages are finally outpacing inflation. Purchasing power may be going up, but we’ll see if those gains continue, and if they continue under tariffs.”
Inflation-wise, pricing remains elevated, relative to earnings. The rate of increase of inflation is slowing, but that doesn’t mean prices are necessarily coming down. It means prices are going up more slowly.
Northern Nevada has significantly diversified its economy, adding manufacturing, logistics and warehousing and other industries to its mix. Southern Nevada’s diversification efforts are slowly building and, in the meantime, the local economy still relies heavily on leisure and hospitality. Post-pandemic there has been a shift away from strictly gaming with more investments focused on entertainment-related activity or experiential retail and other forms of leisure activity. Visitor spending is up again after pandemic lows.
“With travel, tourism and visitor spending roaring back in recent years, any future shifts in the national economy have the potential to impact leisure activities and discretionary funding,” said Gordon. “To date, stability has prevailed, but broader trends will be important to monitor in the new year.”
In terms of an actual forecast for the U.S. economy? “We still see no recession in the immediate future,” said Woods. Things slowed over the summer but picked up in the fall, leading to optimism that 2025 will be another strong year.
Still, Woods added, “It’s going to present its own challenges that will be different than last year for businesses. Particularly we’re going to monitor the incoming administration, the result of tariffs and how those get passed down to consumers. At the same time, there’s the potential for further tax cuts. But, if you’re going to run the economy abnormally hot, if you’re going to keep us above the 2 percent long term average on U.S. GDP, does that mean that inflation comes back later in the year? And do interest rates stay higher for longer and don’t come down as much as many have anticipated? There’s a lot of wait-and-see here at the end of the year.”
The economy is strong. It’s just facing all new circumstances.
The One Certainty: Taxes
Campaign promises don’t always become reality, but proposals to change some tax laws and renew others have the potential to create positive change for individuals, and possibly negative economic changes.
“There has been significant discussion about extending existing cuts,” said Gordon. “Should further cuts prevail, continued investments in both capital expenditures and human resources are likely to become a reality barring any broader changes in the economy.” Proposed changes include eliminating taxes on tips and on Social Security benefits. Eliminating the tax on tips would be favorable for hospitality workers.
“The Trump Administration has sent strong signals that will renew and even enhance the tax cuts implemented in the 2018 Tax Cuts and Jobs Act (TCJA), many of which are set to expire in 2025. Economic experts across the political spectrum believe that expanding the cuts will increase inflation and hurt America’s budgetary trajectory,” said Restrepo.
“The Tax Act was actually approved during [Trump’s] first presidency, so that leads me to believe perhaps something will be done to either extend it or keep it in place, so it still has effects on individuals and businesses,” said Yolanda King, president, Nevada Taxpayers Association.
Another promise from the incoming administration is a 15 to 21 percent cut in corporate taxes. “These policies could affect Nevada’s economic diversification, particularly in advanced manufacturing and technology, since it relies on advantageous tax and regulatory conditions to attract enterprises,” said Restrepo.
At the state level, nothing is expected to change significantly. In the last legislative cycle, Governor Lombardo pledged no tax increases. If that policy is maintained into the 2025 legislative session, it will help that Nevada’s Senate and Assembly don’t have a super majority. That way the Governor maintains his veto power.
“I can only anticipate from what I have heard through some of the interim committees as well as some tax laws that did not get approved last legislative cycle,” said King. Some of the changes the legislative session is eyeing are an expansion of the sales tax base, particularly with a digital tax, which has been considered before.
Education
“A better educated workforce is critical to the performance of the state economy,” said Gordon. “The expansion of the talent pool at all levels increases economic development opportunities as businesses seek to relocate from high-burden jurisdictions like California. An increasingly educated workforce will help ensure the state can capture its fair share of future business investments.”
Nevada has made improvements to K-12 and post-secondary education. In 2024, high school graduation rates were up 0.2 percent from 81.4 in 2023. Partnerships between Nevada System of Higher Education (NSHE) and K-12 means dual enrollment (high school and college) and career technical education courses prepare students for higher education or workforce.
The Nevada Strategic Plan, a 5-year plan to improve Nevada education, anticipates 1.5 million workers will be needed here by 2031.
In the fall of 2024 NSHE enrolled more than 100,000 students statewide. “Notably there’s a lot of growth in community colleges and especially in workforce training programs, including apprenticeships and certificate programs,” said Amy Carvalho, chair, NSHE.
Enrollment in K-12, on the other hand, is significantly down and decreasing. Bonnenfant stated both Washoe and Clark County School Districts have their lowest enrollment since the early 2000s. During that 20-year span 150,000 people have moved into northern Nevada, in addition to the more than 500,000 that moved into the south. Possible causes for enrollment numbers include new residents who are seniors retiring to Nevada’s better tax environment as well as couples choosing not to have children.
Enrollment is down in higher education too. UNR hasn’t hit numbers anticipated before COVID made enrollment drop. Across the country institutions are eliminating programs, degrees, colleges and faculty where there’s not enough demand, especially in rural areas.
“Education is a bipartisan issue in the state with broad consensus on the importance of preparing students for a competitive economy,” said Carvalho. Regardless of political shifts, “NSHE continues to focus on initiatives that align education with Nevada’s economic needs, including STEM programs, enhancing workforce training and making sure we [are improving access] for under-represented groups.”
Housing, Land and Commercial Real Estate
Economic conditions, population growth, and market patterns over the past five years have caused Nevada’s housing market to fluctuate. After low interest rates and strong demand drove Nevada median home prices up during the pandemic, price stabilization began in 2023. As of Q2 2024, median house sales prices in Las Vegas was $479,000 and in Reno, $620,000. The regions were up 6 percent year-over-year as mortgage rates stabilized, according to Restrepo.
Single-family house sales dropped 13 percent in Reno between Q2 2023 and Q2 2024. During the same period prices in Las Vegas jumped by 19 percent.
Between 2019 and 2024, Vegas grew by 105,000 people; Reno added 88,000 new residents. Mortgage rates hit the highest level since 2000; buyer activity slowed, and the market stopped being seller-dominated. Limited inventories and steady demand mean prices won’t drop drastically.
In the last five years listing prices on houses in Vegas are up 52 percent and 49 percent in Reno overall. Woods explained that if inflation is factored in, listing prices are only up 22 percent. “The majority of this is just above and beyond just inflation,” he said. “There was an affordability burden before the pandemic. Now I would say it’s an affordability crisis.”
Nevada basically has two markets – individuals moving here who are less sensitive to housing prices, and locals who often can’t afford to buy.
There’s also the rental market, where 48 percent are paying more than 35 percent of their income to rent, making southern Nevada rents among the highest in the nation, second to Florida. That’s sustainable only if the job market remains healthy.
Multifamily projects are part of the solution. There’s a good supply in northern Nevada, and rents have stayed flat for a number of years. The average wage in Reno-Sparks is $37 an hour, making a class A 1-bedroom apartment at $1,600 affordable.
In southern Nevada multifamily demand remains stable despite moderation in overall rents. “The recent wave of new projects has largely been absorbed by the market, and fewer new projects are advancing forward. Overall housing constraints are likely to persist in the near term, ” said Gordon.
Commercial Real Estate
Many anticipated a bloodbath in commercial real estate (CRE) in 2024 with banks refinancing at 6 percent and properties being boarded up, flipped or put into receivership. Instead, there’s been negotiations between landlords and banks, because banks don’t want to own those assets.
One advantage in Nevada is that CRE is more heavily retail and industrial. Cities that depend on office product, and define their tax structure based on those uses, are struggling. The next challenge for Nevada in CRE is the rise of data centers, which are heavy users of land and water, two things Nevada is short on.
“But they’re the darling of local governments,” said Bonnenfant. “They don’t create a lot of costs for government. You just need infrastructure; that’s it. You don’t have fire, police or REMSA (Regional Emergency Medical Services Authority) costs to those places. [There is] very low employment and a lot of high sales tax that goes back to the government.”
Industrial CRE continues to expand statewide. Both northern and southern Nevada continue to see growth in logistics, and northern Nevada’s manufacturing industry is expanding.
Statewide, developable land is limited. Northern Nevada’s CRE and housing land will likely be used up by 2027, with long-term shortages by 2041, said Restrepo.
Clark County has less than 17,000 acres in 20+ acre lots that fit requirements for non-residential development. Land constraints may force creative use of existing, aging commercial properties.
Change is Coming
Changes in government administrations mean changes in policies and priorities. The upcoming change is expected to continue some policies from the president-elect’s first time in office, like extending TCJA past its expected sunset in 2025.
Energy policies may also shift. Decreases in electric vehicle (EV) subsidies would impact Tesla. Other lithium miners and manufacturers in Nevada could see investment slow due to diminished EV adoption incentives.
“The incoming administration seems to be very friendly toward extractive industries in particular, so that could mean it’s easier to procure mineral extraction license for Nevada mining operations,” said Geoffrey Lawrence, director of research, Nevada Policy Research Institute. Though since much of the president-elect’s focus on extractive industries is on oil, and Nevada isn’t an oil state, it’s not certain if that support will carry over into mining.”
Lawrence added, “Since Nevada’s economy is largely based on tourism, which is dependent on disposable income, to the extent people are confident in their purchasing power, that is always a grapevine for Southern Nevada in particular. I would say this election was in large part a reaction to a decline in purchasing power of the dollar. People are concerned about inflation eating away their household spending, so to the extent the new administration is successful at re-instilling that confidence, it should be a boon for major tourist locations like Las Vegas.”
Nevada’s economic growth relies on federally sponsored infrastructure projects. Cuts to federal departments like education could result in the state being unable to sustain important programs in areas like education and healthcare where Nevada policies and programs already struggle.
“Nevada’s economic trajectory depends on national policies and local initiatives, requiring state officials and federal agencies to work together to adapt to new challenges and possibilities,” said Restrepo.
Because Nevada is a marijuana state, it’s wait-and-see if Trump follows through on a campaign promise to pass the SAFE Banking Act (Secure and Fair Enforcement) which would provide cannabis businesses with traditional banking services.
The Trump Administration is poised to impose significant tariffs on a number of countries. While those tariffs are perhaps intended to encourage domestic manufacturing, it’s also likely tariffs on electronics, construction materials, and the additional 10 percent tariff on Chinese imports could hurt Nevada businesses and industries that rely on foreign manufacturing and supplies.
“While proponents of tariffs aim to boost American production, trade partners may retaliate, cutting demand for U.S. exports, especially agricultural items,” said Restrepo. “Trade battles might also affect Nevada’s agricultural business. Tariffs may raise prices, hinder economic activity, and diminish industry competitiveness in Nevada.”
Tariffs could easily increase the costs of doing business, even for gaming companies, since manufacturing is often done outside the U.S.. With the first Trump Administration the brunt of tariffs was on China. This time simply moving supply chain and manufacturing to Vietnam, Mexico or Canada may not be a solution, Woods said; it’s unpredictable what counties will be affected.
When it comes to proposed tax cuts, it looks impossible to cut to the extent suggested. “More tax cuts means more debt and that has implications,” said Bonnenfant. “I think most economists agree the tax cuts are going to add debt to the federal deficit.”
The third pillar of campaign promises is immigration reform/deportation, which will have an effect on the labor force. With fewer workers, wages will increase and put upward pressure on inflation.
“Once you increase debt, that puts upward pressure on treasury bill rates. You have to write those rates so people will buy those bonds and mortgage rates follow the T-bills—when those go up mortgage rates go up. So if they’re going to increase the federal deficit, expect higher mortgage rates, and basically that’s what we’re seeing in the discussions from the Trump camp, tax cuts.”
On the other hand, taking a scalpel to Medicare, Medicaid and Social Security, is also on the table, but Bonnenfant finds that unlikely to pass Congress. In two years the whole House and about a third of the Senate are up for re-election. “I don’t see things being pushed through Congress. There should be a good balance on these Trump policies.”
Judging individual aspects of the transition doesn’t tell the entire story. Tax cuts have benefits, but the result may be large deficits, meaning interest rates stay higher longer and costs go up. There’s a flipside to everything. It’s a wait-and-see year.
“It’s going to be complicated and it’s going to be messy,” said Woods. “As an individual business owner, you should look at a combination of things, not just one thing as each comes out. I don’t think [changes] will impact all at once.”
