One month into 2023, it seems everyone has one issue or another with the nation’s economy.
“Me and my wife are seniors,” said Joseph Rosiner. “Our medical expenses are very high.”
For Don Hatcher, it’s inflation. “The increase in the food cost, cost of rent, just everyday things. They really add up.”
Susan Thom says she’s seeing energy costs go through the roof, all the way to her solar panels. “I don't see it getting any better. Everything is going up. My power bill, even with solar - and my power bill was over 200 bucks.”
Other factors putting more pressure on local families include inflation forcing many to dip into or drain any savings built up during the pandemic. Government stimulus checks have stopped. Rent moratoriums no longer exist. Rising interest rates are driving up car, credit card, and house payments.
“People are starting to, quote-unquote, freak out a little bit,” said economist Mike PeQueen of Hightower Las Vegas. And, in the process, suddenly realize they don’t have enough money left over at the end of the month to splurge on dinner at a restaurant or continue with their regular trip to Las Vegas.
“They begin to pull in their spending and then everybody does that at once. It makes a big difference in how well our economy is doing,” PeQueen said.
The end result can be a contraction of the economy, also known as a recession. PeQueen does believe the U.S. will see a mild recession in the next 12 to 18 months, but not deep enough to result in layoffs in our hospitality industry, especially like the large-scale job cuts being made right now in the tech industry.
However, it will likely mean our visitors will be spending less at local restaurants and shows, and less on gaming. They might also decide not to come here as often.
“If we do see fewer visitors coming, then we're going to see probably fewer people in the areas where they are most impacted, whether it's the dealers, or the housekeeping staff, or the restaurant workers,” PeQueen said. “If you have fewer tourists coming, you probably need fewer people to take care of them. We're not there yet.”
PeQueen is also optimistic the local economy won’t get there at all thanks to three aces in its hand that no other city can offer, and it could be enough to inoculate our economy.
“Las Vegas has some very big things helping in the next few months. It has the Formula One race. It has the opening of the MSG Sphere, and it has the lead-up to the Super Bowl in early 24,” PeQueen said. “Those are three things that could help Southern Nevada's economy withstand a national recession better than other cities.”
There’s also a fourth ace to help even further. “China is reopening,” PeQueen said. “That's a big deal. In a typical pre-pandemic year, about 20% of our visitors came from outside the United States.” Because they stay longer than domestic visitors, they generate more than 20% of the revenue.
According to PeQueen, “China is a big chunk of the spending that has been happening in the years prior to the pandemic. With China reopening, and if Las Vegas can regain Chinese tourism, that's going to be another tailwind.”