WSJ What’s News - Alternative Indicators: Can Nevada Employment Predict Where the Economy is Headed?

Episode Date: November 10, 2025

Since the early 2000s, a fall in employment in the state of Nevada has preceded a broader U.S. recession. It makes sense why—the economic fortunes of Las Vegas, which make up a big part of the state’s overall economy, are intimately tied to consumers’ comfort with spending. Host Alex Ossola speaks with Andrew Woods, director of the Center for Business and Economic Research at the University of Nevada, Las Vegas, about what the state data shows now, and what it says about the health of the U.S. economy. This is part one of our four-part series on alternative economic indicators. Sign up for the WSJ's free What's News newsletter. Learn more about your ad choices. Visit megaphone.fm/adchoices

If I met you at a cocktail party and I asked you how the U.S. economy is doing right now, what would you say? It's actually kind of a hard question to answer. There are signs that things are going well. Through the end of October, the S&P 500 was up more than 16% for the year. Credit card data shows that consumers just keep spending, and the latest GDP numbers were strong. But there are also signs of weakness. Prices keep rising.

Consumer sentiment recently fell near record lows. The jobs market has slowed. Manufacturing is lagging. Even the Fed doesn't know where the economy is going, fueling its debate over whether to keep cutting rates. Add to that, the government shutdown, which has made official data temporarily unavailable, it makes for a pretty confusing picture.

So some of those in the know are turning to alternative data to help them take the temperature of the economy. Here's WSJ Investing columnist Spencer Jacob. It really always does make sense to look at alternative indicators. Most economic indicators that you get from the government are pretty backward looking. It's old news already. And so it's hard to find things that really give you an indication of the future. That's what some private sector indicators have been used for that more.

And all of them, they can be signal or they can be noise. But there are all sorts of things in the economy from the private sector that are not necessarily packaged up and tied up with the bow, but they can be really, really useful. This is a special episode of What's News. I'm Alex O'Sullough for the Wall Street Journal. On this first episode of our four-part series on alternative economic indicators,

we're taking a look at employment data from the state of Nevada. And it's Nevada, not Nevada, right? Correct, yes, that's a pet pee for locals. That's Andrew Woods, the director of the Center for Business and Economic Research at the University of Nevada, Las Vegas. Over at least the past 25 years, there's been something interesting going on with Nevada's

employment rate. Dips in the data correlate to a broader economic pullback in the U.S. The 2001.com bubble, the 2008 financial crisis, the recession caused by the COVID-19 pandemic, you can see those downturns in the Nevada data, sometimes before the rest of the country. Of course, there are other factors that might be muddying that signal and are affecting Nevada's employment without changing the broader economic picture. But Woods says it's not a coincidence that there's a relationship between Nevada's jobs market and the greater U.S. economy. That's because so much of the state's economy is tied to consumers' discretionary spending.

One in five jobs across the entire state are tied to leisure and hospitality. And we entertain between 40 to 42 million visitors a year. About 54% of the state budget is influenced by consumer spending. And then you also think about our growth. domestic products. A third of that is tied to leisure and hospitality, travel and tourism. For August, which is the most recent month for which data is available because of the government shutdown, Nevada's employment stayed flat from the year prior and declined slightly from the month before. So what does that mean for the U.S. economy? I get into it with Woods and discuss other

factors that may make that relationship between Nevada's employment data and the broader economy a little murkier. So you're based in Las Vegas, right? Yes. What's the vibe lately? What do you see in when you go out of your house? It's a tale of two economies. On one hand, there is a lot of economic activity, it seems, in the areas of town that are growing.

So there are parts of this Vegas in Nevada that have been very strong through the last year. But it is noticeable that the strip has been quieter, that there hasn't been quite the same large groups. of individuals coming to town in the last, say, six months. We finished pretty strong last year with 41.6 million visitors. We, of course, hosted Super Bowl. We have F1. We have the National Rodeo's Final. We built the spear.

There's lots of things that we were giving reason for people come. But this year, it seems like that's kind of switched a bit. And that's been noticeable. Up until about mid-September, it was pretty quiet if you were walking around on the strip compared to years past. I'm glad you brought that up because the data that I was looking at before this call was about how year-over-year employment could be an economic indicator for possible future national recession. So the data that I had seen is from August showed that the year-over-year

employment for the state was staying flat. Is this news to you? Had you heard this before? So something that's really interesting about the state, and it wasn't always true of the state, but in the last 20 years, is that our economy seems to have come more synchronized with the U.S. economy in terms of how well the U.S. economy and consumer is doing is how well Nevada and our economy is doing. So going back to your original question about where we are now, it is a really odd jobs report we're getting here in the state because we see that there was a shedding of construction and leisure hospitality jobs, which is continued through the summer. But then there is an arise in unemployment rate. And some of that is that people left the workforce.

We do survey work among our workforce. They are saying it's harder to find a job. And we also survey our businesses, and they seem to be saying that they're having a hard time finding qualified employees. Yet when I ask them how their margins are doing, they still say they're busy and they're still making money. But they're being a lot more picky about who they're hiring and if they have the right set of skills. So this most recent employment data, what does flat mean? Given that there is this uncertainty, we're all anticipating price increases. It's more of a risk than it has in the past to hire people right now.

And it basically means we have a frozen job market. These jobs are very much tied to the discretionary side, leisure and hospitality, or to like a very much of business investment like construction, you're seeing a much more nuanced story emerging there, which is that businesses after the pandemic were in a rush to rehire a lot of those individuals. That has slowed a time. And I think that says that firms are really uncertain about where the American consumer is going to be three to six, nine months from now.

So I would rather keep what I have. So I'm not laying off people, but I'm not trying to grow either right now. I'm trying to build a moat and protect my business and protect my profit margin. Are you saying that it's an indicator of like literally where the economy is going? When it comes to Vegas, I think we are an indicator where the American consumer is, is the high end, the people that, you know, are more price and sensitive that have done well because they have a lot of assets. They have stocks and other equities. They're still coming to Vegas.

If you look at private jets coming to Vegas, it's even with last year. If you look more of the weekend warrior, kind of that impulsive traveler, the one that wants to come and have a great time. But they're planning last minute. They are still traveling according to surveys and according to data what we saw over the summer. But they're not necessarily coming to Vegas as they did in the past because there's a perception that's a little too expensive. I would argue that is very property dependence. But if we look at, say, earnings for like win resorts, they're doing much better than earnings. say, for other resorts on the strip because they're catering to the high end

while the ones that have to kind of give more value to the budget traveler or struggling to persuade the budget traveler that this is a good deal. This weird dichotomy in the economy right now, are we growing or are we slowing? Right? And you can pick your number and it feeds kind of whatever your narrative is, but we're getting both numbers and we're getting both narratives. Coming up, that relationship between Nevada's employment data and national recessions has existed for decades.

But could it fall apart? That's after the break. Back to the statewide employment numbers, could there be any other factors that could be affecting how good of a national indicator it is, like immigration? If you look at nationally and, here in Nevada, the labor force participation rate is shrinking. Now this is just a couple months

of data, so I wouldn't call it a trend. It's very noisy that indicator. But it makes me wonder if some of these individuals are leaving and some of this is an immigration story. You didn't ask me about technology. But Vegas has always been ground zero for automation. You see some of this already when you walk around the casino floor, greater use of technology to have labor force cost savings. And we already know there's some smaller casinos that are completely now advertising that they are all electronic gaming. So including like blackjack and roulette, not just the slot machines. But it's interesting. If you talk to the properties like higher-end properties, you don't see that as much. I mean, you'll have lots of slot machines, but you pay

for the in-person experience to talk to a dealer. And I think you're going to see more that segmentation and fragmentation where you essentially pay to hang out with a human being to be you're dealing. You already see it in bars. Nice bars will have really nice bartenders, but if you just want to drink on the floor, they still have a cocktail waitress, but like that drink isn't made by a bartender most of the time. It's made by a machine in the back. If we do like a Vegas style bet, are you betting that a recession is coming or not? Of course, I'm going to give you an economist's answer instead of the answer you want, which is like, is it black or red, right? Is it 21 or are we busting here? I think we're going to muddle.

through this. My thinking is that growth will be slow, that there will be parts of the economy that will experience some more shock as a result of all the change and uncertainty. I do think that Vegas itself will struggle for another year or two to meet what we met last year. That doesn't mean that we're decreasing. It just means we'll be stagnant. That was Andrew Woods, Director of the Center for Business and Economic Research at the University of Nevada, Las Vegas. Today's show is produced by Julie Chang with supervising producer Janah Heron. Next up in our Economic Indicators series, What Dr. Copper can and can't tell us about the state of the economy. That'll be in your what's news feed on Wednesday.

I'm Alex Osala, and we'll be back this evening with our regular show. Until then, thanks for listening.