-We move now to the economy.

UNLV Center for Business and Economic Research, also known as CBER, held its annual Economic Outlook event at the Fontainebleau Las Vegas.

I had the honor of moderating its economics panel, a hot topic of which was whether a recession is looming.

(Stephen Miller) In the economy, we have a level of production which we call potential.

That's the economy is not overheating, the economy is not leaving resources idle.

It's at what we call the Goldilocks solution.

You can continue doing this year in year out without having a problem.

So we were-- we recovered from a pandemic recession that lasted two months, unbelievably short recession, and we've boomed back from that.

And we are-- we quickly went above potential because of the fiscal expansion and also the monetary expansion that was put in place to prevent a Great Depression.

And we're still above potential.

That's why the Fed has been trying to get rid of inflation, but not create a recession.

It's like they're walking a tightrope.

If they step to the right, oops!

If they step to the left, oh!

They're still on the tightrope.

And CBER has been predicting, quote, the soft landing, since almost the beginning in March of 2022 when the Fed started tightening.

-And do you stand by that?

Are you still predicting a soft landing?

-Yeah, we're still predicting a soft landing.

We might be wrong, but we've been right so far.

(Sandip A. Bhagat) So I'm actually going to disagree with Professor Miller on that soft landing comment.

So let me quickly define a couple of terms.

A recession is when you have negative growth in the economy.

A soft landing says you barely avoid that negative growth.

You flirt with something like zero, you end up with about 1 - 1 ½% and you move on.

That is below trend growth.

If you hit trend growth in the U.S., that is about 2%.

That is now being called a "no landing."

And I'm going to add to that lexicon, which is my view.

We are going to see above-trend growth.

So forget the soft landing; we're going to see a launch landing.

CBER Director Andrew Woods would go on to say that overall, the economy is strong.

He did identify what he thinks the biggest threat to it is.

You'll hear from him on that after he explains what CBER is forecasting for Southern Nevada in regards to visitor volume, migration from California, and the housing market.

(Andrew Wood) We're still forecasting more visitors this year than last year.

Last year was 40.8 million.

We're forecasting within the year roughly a little more than 41.

It's below the record, which was set in 2016, but we see that kind of consistently through next year.

And then 2026, maybe it will start to then really increase or take off.

This model changes every quarter, but I think right now it's as steady as she goes.

But in some sense, there is a softening in terms of what consumers-- how they're spending their money and where they're spending their money.

-And then we're running out of time, so let's get through a couple more slides.

California migration trends, Andrew, and then, how does this impact the housing market here?

-So we've been doing research on who's moving here from California.

What we're seeing is that we are, one, getting an older population moving here--and this is just from 2019 to 2022--but we are seeing also that the individuals that are prime working age tend to not have a bachelor's degree.

Compared-- the trend has kind of been a little bit better since the pandemic, but not quite as high as our peers.

And then also, their income is, again, a little bit higher than it was prepandemic, but much lower than compared to our peers or other states.

This is on a state level, these charts.

So essentially it's just showing that we are getting, the prime age workers that we're getting here, they are-- their incomes aren't quite as high as the ones moving from California to other states.

And their share-- you know, the share with a bachelor's degree is not as high as the others moving to other states.

We're also getting a larger share, though, of individuals that are 55 and older.

We also see that in our participation rates, where the individuals that are 55 and older are actually participating in the economy at higher levels.

So they're working at higher levels than other, than they were prepandemic.

-So how does this migration impact the local housing market?

-Well, it's, as we can kind of see some of the effect, you have individuals moving here that have a higher ability and income to pay than the, probably the local population, which is creating some haves and have-nots within the housing market.

But at the same time, we're also getting a lot of workers here that's a little questionable about how well are they going to be able to transition into the economy if they're a prime age worker, for example.

-What are your overall takeaways on the housing forecast that you have?

-Yeah, so here's our housing forecast.

We still think prices are going to rise.

Sorry for anyone trying to buy a home.

I'm in your camp, but you know, it is going to be, continue to be pretty sticky.

We see part of this is just in Southern Nevada, we have a land issue.

We have a zoning and just more of a proper plan about how we create more affordable housing and putting resources to it, and it's a long-term issue.

We had a bruise in economic views with our friends at the Lied Center for Real Estate and our friends at RTC in Southern Highlands, and all that came out.

But it really boils down to a long-term approach to kind of fixing this, because there's a lot of challenges.

So we see prices continuing to rise.

-Let's move now to the risks.

What do each of you see as the biggest risk to the economy as we move forward?

-I think housing and this affordability issue is going to continue to be a concern this coming year.

This here, this what you're looking at, is from, again, our partners at the Lied Center for Real Estate, and this just talks about excessive cost burden for renters by state, and Nevada is the second highest in the nation according to their research.

Basically 47.7% of renters are paying, they estimate, 35% or more of their income just to pay rent.

I think this is going to continue because of the shortage in housing in Southern Nevada.

I know that's not only in Southern Nevada.

It's also in Northern Nevada.

It's also in other states.

But I think we're going to see this, this narrative, continue through next year, because demand hasn't really abated, and supply hasn't necessarily increased.

-So it would have to be one of these black swan varieties.

I don't know.

This is not quite time for closing statements, but-- -It is.

We've reached that.

-Okay.

So here's where I believe you.

I'm going to use a three- or five-year horizon.

We have a new economic cycle, which began when the short COVID recession ended in 2020.

I don't see any disruption to this.

In other words, no recession, not next 12 months, which you asked, but not for the next two years, three, four, or five.

We have a new bull market in equities that began in October of 2022.

I don't see that being interrupted.

And finally, the fiscal deficit is not going to be a big issue.

So to me, the coast is relatively clear, and I'm hard-pressed to come up with something that will cause a bear market or a recession outside of an unexpected exogenous event, like a black swan event, which by definition is hard to predict beforehand.

-I think I disagree with Sandip in thinking that it's possible something wild-- and remember the wild and crazy guys on Saturday Night Live?

Something wild and crazy might happen in Congress that affects the fiscal status of our country, and that could tilt us in recession.

-My thanks to UNLV for having me.

And thank you for watching.