Heading into the holiday season, the impact of increased shopping and other leisure spending has continued to bolster the economy despite broader headwinds and concerns about the sustainability of these trends. Inflation has remained elevated after peaking at 9.1 percent in June of this year, decreasing slightly month-over-month to 7.1 percent for the month of November. In an attempt to slow inflation, the Federal Reserve has significantly increased the federal funds effective rate, now standing at a target rate between 4.25 and 4.50 percent. This sharp increase in interest rates throughout the latter half of 2022 has played a role in slowing indicators that historically have served as key measures of economic change. Real Gross Domestic Product (GDP), which was down slightly during the second quarter, has rebounded to $20.0 trillion, just higher than the fourth quarter of 2021. Although most past recessions have been marked by two consecutive quarters of negative GDP growth, uncertainty surrounding expectations persists.
Southern Nevada has continued to grow and thrive the past few months, exhibiting an annual job growth rate of 4.7 percent. Overall employment has continued to increase at a slowing pace as the local economy reaches numbers higher than those witnessed in 2019. Leisure and hospitality, trade, transportation and utilities, and construction contributed the most towards employment growth in the past 12 months, increasing by 21,000, 8,400, and 6,400 respectively. These three industries contributed heavily to the total employment growth of 48,600 jobs for the Las Vegas area.
Despite the growing number of employees, unemployment has remained fairly steady, indicating that more potential workers have joined the labor force. After decreasing substantially over the summer, unemployment is slowly rising, although it remains 0.2 percent below one year prior. In contrast, the number of initial unemployment insurance claims is falling from a peak of 12,000 in early 2022, although it remains about 1,000 claims higher than last year, hitting 7,531 claims in September. The steady unemployment rate and decreasing number of initial unemployment insurance claims over the same period indicates that as the labor force grows, more jobseekers are being hired than fired.
Workers are also earning peak wages as the average weekly wage for Southern Nevada has only continued to increase, breaking $1,000 in September 2022, increasing to $1,010 in October. This represents a 21.7 percent increase compared to October 2019 and a 6.8 percent increase compared to one year ago.
As employers continue to navigate supply chain challenges and increase head counts, Southern Nevada has continued to prosper despite nationwide economic challenges. This comparative economic stability is also aided by the recovery of the Southern Nevadan tourism industry and meaningful gains in critical industries like manufacturing, which grew by 3,500 jobs over the past year. As macro factors, including inflation interest rates and housing performances, have the potential to slow economic activity more broadly, the Southern Nevada economy has managed to gain ground for the time being.