OPINION: For whom the bell tolls; not the economy

When the economy shifts no bells ring, smoke signals rise or, more contemporarily, smartphone alerts sound. You may not even notice, but economists do. So, when the Federal Reserve Open Market Committee, aka the lords of interest rates, cut rates by 50 basis points in September and another 25 basis points in November, economists and market analysts took notice.

Recall that the Federal Reserve Open Market Committee began rate hiking in March 2022, raising rates 11 times during the next 18 months. Then for another year, they held rates steady, hoping to stem the tide of rising prices. These interest rate hikes did the job of bringing inflation rates down — from a high of just under 9 percent in June 2022 to 2.5 percent in October 2024. But what many now understand is that lower inflation does not translate into lower prices.

For whom did the bells toll? In today's world, which may explain the recent presidential election outcome, the economy was issue number one. The average person does not view the economy as economists do. Consider this: The U.S. economy demonstrated consistently strong real gross domestic product growth readings in the second and third quarters of this year (3 percent and 2.7 percent, respectively) coupled with historically low unemployment rates and rising incomes.

Simultaneously, survey after survey reveals how individuals feel anxious about whether they can even afford everyday goods from gas to groceries to housing their families. So, despite slowing the rate of price increases, individuals felt that their costs skyrocketed. Between January 2019 to September 2024, in less than five years, the price of eggs rose 54 percent, car insurance increased 50 percent, it costs 35 percent more to fill up your car with gas, and family entertainment rose 22 percent. The average listing price for a home in Las Vegas and Reno rose 52 percent and 49 percent, respectively.

This past month, the UNLV Center for Business and Economic Research (CBER) hosted its 31st annual Economic Outlook, bringing together business, government and community leaders from a variety of backgrounds and industries to discuss relevant economic topics and release CBER's forecasts for the coming two years. If you missed our event, here are some takeaways:

Our latest forecast predicts that Las Vegas will reach 41.3 million visitors by the end of 2024, up from 40.8 million just last year. Clark County's population will continue to grow, CBER forecasts an additional 387,000 new residents by 2030 (about 106 new residents every day). How Southern Nevada keeps up with this growth will matter — CBER predicts home prices in Las Vegas will continue to increase by 4.9 percent with two or three interest rate cuts in 2025.

All of this could be welcome or concerning news depending on your financial situation.

According to research by the Federal Reserve, the least wealthy 50 percent of U.S. households, who hold 4 percent of the nation's wealth, have not fared as well as households in the top 10 percent who hold more than two-thirds.. That is, if you own a home and equities, you have done well on paper since the pandemic while reasonably weathering higher prices. Las Vegas is resilient to the political pendulum swings in Washington, D.C. But economists will be watching what is to come and the impacts they may have over time. For example, we will monitor what the potential combination of tax cuts and higher tariffs and stricter immigration policy will exert on businesses, consumers and workers. What interest rate policy will the Fed adopt going forward in this environment?

Our keynote speaker for CBER's Economic Outlook, Renu Khator, president and chancellor of the University of Houston and a PNC Bank board member, reflected on her 17 years of experience in Houston, which sounded similar to where Las Vegas and the state of Nevada are today. Khator shared how — in her nearly two decades in leadership — she's worked internally and externally to strengthen the link between. higher education with industry. This meant not only boosting Houston's competitive advantage in energy, but also spurring diversification in health care, financial services and manufacturing. She noted that pathways to a more resilient economy are built through collaborative partnerships, with higher education and workforce development playing a leading role.

CBER will ring in the new year continuing to do what we do best: driving understanding and decision making through data analysis and economic research because as the motto from this year's Outlook states: "Someday is today."

Andrew Woods is the director and Stephen Miller is a professor and research director for the UNLV Center for Business and Economic Research.

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