Nevada economist: It’s a fool’s errand trying to predict next recession
CARSON CITY, Nev. — When is the next recession coming?
“That’s the question everyone wants the answer to,” David Schmidt, chief economist with the Nevada Department of Employment, Training and Rehabilitation, told members of the Carson City Chamber of Commerce at its monthly luncheon Tuesday.
Schmidt said it’s a fool’s errand to try to predict the next economic downturn.
“In many ways each recession is unique,” he said, but there are common indicators.
One is the yield curve on interest rates, when 3-month interest rates move ahead of 10-year rates and the curve becomes inverted, as it did in June. Last week the rates moved and are now essentially equal.
“The curve tends to invert and recover before a recession,” said Schmidt. “Are we going into a recession next year? It looks like it from the charts.”
Other indexes, said Schmidt, are not as applicable to Nevada as they are to other parts of the nation.
“Housing is running pretty hot here,” he said. “If we’re seeing weaknesses in that area, it has more to do with costs and construction labor shortages.”
A trade war with China, too, has less impact in the state than elsewhere.
“In Nevada, our leading export is gold and our largest trading partner is Switzerland,” said Schmidt. “There are some reasons to think (a recession) would be more mild here.”
Schmidt said he’s paying attention to unemployment insurance benefits to see when people start staying on it longer, an indication it is increasingly hard to find a job.
“If that moves up is when I become concerned,” he said.
In the 12 months ending in August, Nevada added 12,900 jobs in professional and business services, 9,700 in construction, 6,400 in manufacturing, and 6,200 in leisure and hospitality.
Overall employment grew 3 percent in August; September data is expected to be released this week.
“Nevada has the fastest growing private sector,” in the country, said Schmidt. “We’re surrounded by fast-growing states. The West is a great spot to be and has been for awhile and Nevada is in the middle of it.”
“I point out many cases of where privately owned companies do just as bad a job as publicly owned companies,” says Reno resident and former teacher Robert (R.D.) Gardner.