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Your weekly 5-minute guide to the data and economic news shaping Southern Nevada and the world.
In this week's newsletter:
- Economic Definition of the Week
- Tourism from Canada
- Tariffs and Home Building
- Wildfire Exposure in Nevada
- Statistic of the Week
- What We Are Watching
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Economic Definition of the Week
Laffer Curve: the idea that posits there is an optimal rate which maximizes tax revenue and economic activity. The curve is named after economist Arthur Laffer who developed the bell-shaped Laffer Curve to display the relationship between tax rates and government revenue. The idea is that short-term benefits to corporations and wealthy individuals will stimulate the economy through increased investment, tax revenue, and job creation to a point where the standard of living improves for all individuals in the long run, but higher rates have a decreasing effect. Presidents Hoover, Reagan, and Trump each implemented tax cuts for higher income individuals in attempts to spur economic growth, though critics argue the magnitude of the benefits for the middle and lower classes has varied. Check out the Stat of the Week to discover which billionaires, according to this idea, should be supplying the trickle down benefits.
Investopedia
| | The estimated impact of Canadian visitors and tourists on the Southern Nevada economy in 2024 | | Graphic Source: UNLV Center for Business and Economic Research | | |
International tourism is an important part of Las Vegas’ leisure and hospitality industry. In 2024, over 5 million international tourists traveled to the region, accounting for 12 percent of total visitors. A majority (52.1 percent) of international visitors traveled from North America, with 28.3 percent coming from Canada and 23.7 percent from Mexico.
Growing frustrations, however, over the possible trade war are predicted to deter many international travelers from choosing the United States as a vacation destination this year. Recent studies project that international travel will decline by 9.4 percent this year, with a 20 percent reduction in Canadian travel alone. The U.S. Travel Association estimated that a reduction of 10 percent in Canadian travel would equate to 2 million fewer visitors, $2.1 billion in lost spending, and 14,000 jobs lost nationwide.
The ripple effects of national tensions could ripple through Southern Nevada. Utilizing data from the Las Vegas Convention and Visitors Authority (LVCVA), CBER estimates that Canadian tourism generated $6.2 billion in total economic output and contributed $3.6 billion value added (measured by contribution to GDP) to the Las Vegas economy in 2024. Moreover, Canadian tourism supported 43,200 jobs and increased real disposable income per capita for Southern Nevadans by $368. These effects do not include gaming revenue effects, which would make them significantly higher if they were included. To put this in perspective, the value added for Canadian tourism for Clark County ranked between the utilities industry ($2.4 billion) and the federal military presence ($4.1 billion). In regards to job creation, Canadian tourism exerted a larger effect than the manufacturing sector at 33,700 jobs and fell below the jobs created within the arts, entertainment, and recreation sector at 48,300 jobs, which includes both domestic and foreign spending. While the exact impact of reduced international travel remains uncertain, the potential losses will disrupt Las Vegas’ main industry and warrant close attention in the months ahead.
UNLV Center for Business and Economic Research, Time, LVCVA 1, LVCVA 2
| | The projected average increase in the cost per home due to tariffs | | |
Last week, President Trump implemented tariffs across dozens of countries. For example, China received a reciprocal tariff of 34 percent on Wednesday, in addition to an initial 10 percent tariff imposed in February and another 10 percent in March, bringing the overall effective rate to 54 percent. Tariffs will affect home building, a key sector, which the National Association of Home Builders estimated in March will experience an increase in the cost of each home by $9,200, on average, because of tariffs. In February 2025, the median sale price of new homes in the United States was $414,500, down from $420,900 in the prior year. In 2024, there were $204 billion worth of goods used in the new housing construction with imports comprising $14 billion of the total. Since December 2020, the cost of building materials has already risen by 34 percent.
A variety of raw materials and components used in construction are sourced from around the globe. For example, steel, aluminum, and home appliances are commonly imported from China. Note that steel and aluminum are exempted from the latest tariff announcement as they are already subject to a 25 percent tariff implemented in March. Additionally, a 25 percent tariff was also imposed on imports from Canada and Mexico in March. Two essential construction materials, softwood lumber and gypsum, are largely sourced from Canada and Mexico, respectively. There were $8.2 billion worth of sawmill and wood products imported in 2024, with around 72 percent of these imports coming from Canada. Furthermore, $481 million worth of lime and gypsum products were imported in 2024, with Mexico sourcing 74 percent of these imports. Note that Canada and Mexico were not included in the list of countries hit by the latest tariff announcement. Softwood lumber imports are also exempted from the new tariffs but were previously given a 14.5 percent tariff by the U.S. Department of Commerce, with plans for the rate to double later this year. If doubled, this would bring the overall tariff rate of Canadian softwood lumber to over 50 percent, furthering strains on construction costs and home prices.
NAHB, FRED, CBS News, The Wall Street Journal 1, The Wall Street Journal 2
| | The estimated economic damages as a result of the Southern California wildfires in January 2025 | | |
In the wake of the recent Southern California wildfires in January 2025, which burned over 50,000 acres and cost an estimated $50 billion according to Fortune, concerns over wildfire exposure have grown nationally, including in Nevada. Although California frequently dominates headlines with wildfire disaster news, a new report produced by the UNLV Lied Center for Real Estate that utilizes data from 1984 to 2004 reveals that states like Florida and Idaho had greater shares of their land affected by wildfires, each surpassing 34 percent while California had 24.9 percent. Nevada ranked fifth nationally, with 18.4 percent of its land burned over this time period. Within the state, wildfire damage is concentrated in the north: Elko County (41 percent of land affected), Humboldt County (39 percent) and Eureka County (28 percent). Among the urban counties, Washoe County (25 percent) has been more susceptible compared to Clark County at only 5 percent.
These wildfires have created significant economic and housing effects. Research suggests that regions that experienced wildfires typically see a five-year development slowdown due to the increased risk perceptions and difficulty of rebuilding. Nevada, notably, leads the nation in new homes built in natural landscapes that are prone to wildfires. As more homes rise in fire-prone zones, integrating new construction methods and overall more thoughtful land-use planning has become critical to avoid future losses and improve public safety. Nevada’s wildfire risk shows why it’s important to plan ahead and keep investing in fire protection efforts.
Adding to the existing pressure, recent California wildfires push displaced residents and homebuyers towards Nevada, especially to Las Vegas Valley. This migration could not only tighten the housing supply but also drive up home prices and rents, further complicating the region’s existing housing affordability and land challenges. As wildfire seasons continue to grow longer and more intense due to climate change, Nevada must balance economic development with environmental risk by reinforcing and implementing fire-safe policies and infrastructure, particularly in areas already affected by exposure.
UNLV Lied Center for Real Estate, Fortune, News 3 Las Vegas, Nevada Legislative Counsel Bureau, Las Vegas Review-Journal, This is Reno
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$16.1 trillion - the collective net worth of the 3,028 individuals on the 2024 Forbes Billionaire List. Billionaire wealth increased over $2 trillion compared to last year. Most billionaires reside in the United States (902), followed by China and Hong Kong (516) and India (205). The top 10 ranked billionaires include familiar names like Elon Musk of Tesla and SpaceX ($342 billion), Mark Zuckerberg of Facebook and Meta ($216 billion), Jeff Bezos of Amazon ($215 billion), Larry Ellison ($192 billion) of Oracle, and Bernard Arnault ($178 billion) of LVMH, a luxury goods conglomerate that owns brands like Louis Vuitton, Dior, and Tiffany and Co.
NPR
| | What We Are Watching This Week | | |
Monday
The Federal Reserve will release the Consumer Credit G.19 report for February 2025. These data are important indicators of consumer spending, tracking revolving (primarily credit cards) and nonrevolving credit (such as student or auto loans) taken on by individuals. In January, total consumer credit increased by 4.3 percent year-over-year (YoY), amounting to $18 billion. Revolving credit increased 8.2 percent to $9 billion and nonrevolving credit increased by 3.0 percent to $9 billion. These increases indicate strong consumer borrowing activity for early 2025, primarily driven by revolving credit.
Wednesday
The U.S. Bureau of Labor Statistics (BLS) will release the Metropolitan Area Employment and Unemployment data for February 2025. The labor force in Carson City soared 11.7 percent month-over-month (MoM) and 14.7 percent YoY in January, likely due to preparation for the biennial legislative session that began in early February. The unemployment rate in Carson City remained unchanged at 5.0 percent in January. Reno’s labor force increased 1.7 percent MoM and 4.6 percent YoY, while its unemployment rate increased 0.4 percentage points to 5.1 percent. In Las Vegas, the labor force increased by 1.2 percent MoM to 1.2 million and increased 2.7 percent YoY. The unemployment rate in Las Vegas rose 0.2 percentage points to 6.1 percent in January.
Thursday
The U.S. BLS will release the Consumer Price Index (CPI) and core CPI index for March 2025. The CPI increased 2.8 percent from February 2024 to February 2025, the first drop in YoY increases since September 2024. On a monthly basis, CPI rose 0.2 percent in February. Core CPI (excludes price changes for volatile items like food and energy) rose by 3.1 percent YoY in February, the lowest since April 2021. Core CPI dropped MoM to 0.2 percent compared to 0.4 percent in December. On the contrary, the trend in the three month moving average CPI index continues to remain above the Fed’s price target of 2.0 percent.
The U.S. BLS will release real earnings data for March 2025. Real earnings represent average hourly earnings adjusted for inflation using the CPI. Real earnings increased 0.1 percent from January 2025 to February 2025, with average hourly earnings increasing by 0.3 percent MoM and the CPI increasing 0.2 percent MoM. Real earnings grew 1.2 percent YoY and average weekly earnings in February were $1,225.
Friday
The U.S. BLS will release the Producer Price Index (PPI) and core PPI index for March 2025. The PPI measures the average price domestic producers receive for the sale of their products. In February, the PPI increased 3.2 percent YoY and was unchanged MoM. Core PPI was 3.4 percent YoY and -0.1 percent MoM, with both measures below market expectations. The PPI is currently a key economic indicator to watch because domestic producers often react to price changes of imported goods, which would be affected by the President’s proposed tariffs on China, Canada, Mexico, and others.
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