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Nevada reached a pivotal point in its post-recession recovery by hitting an employment milestone in January but its recovery is also raising concerns about infrastructure and housing.

The state jobless rate fell to 5 percent for the first time since 2007 as Nevada saw all major sectors of its economy post job gains at the beginning of the year, according to the Nevada Department of Employment, Training and Rehabilitation.

The numbers mark a continuation of the improvement seen in the state’s unemployment numbers from last year.

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Construction, which saw steep declines in the recession, reported the biggest improvement in January with a 7.3 percent increase in jobs. The trend is good news for the state given what it saw during the downturn, said Mark Pingle, an economist at the University of Nevada, Reno.

“The Nevada economy was one of the worst-hit (by the recession) mainly because it was so construction dependent in the north and the south,” Pingle said. “Nevada has pretty much recovered from that now.”

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Nevada’s tourism sector, which was also hit hard by the recession, is factoring into the positive January numbers as well. Leisure and hospitality saw the biggest nominal growth in jobs, with an increase of 10,000 positions over the same month last year.

Only the mining and logging industry reported job growth below 1,000 jobs. The sector added 200 jobs year-over-year.

With job growth in Nevada exceeding the national average for 54 straight months, the state continues to close the gap with the rest of the nation. The U.S. unemployment rate in January was 4.8 percent.

“The gap between the national unemployment rate and the Nevada rate has nearly disappeared, down from 4.4 percentage points at the height of the recession, to a minimal 0.2 percentage point in January,” said Bill Anderson, DETR chief economist.

With the advantages that Nevada enjoyed prior to the recession still coming into play — mainly its proximity to California and more favorable business and tax climate — the state should see a return to the status quo in relation to the rest of the country, Pingle said. Nevada was the fastest-growing state in the nation for several years before the recession placed a speed bump on Nevada’s momentum.

“We should expect Nevada to go back to where it was, which is having lower unemployment than the U.S.,” Pingle said.

Another economist, Elliott Parker of the University of Nevada, Reno, gave a more muted assessment of the latest numbers. Parker noted that the report mentions how the area would normally see a drop of 17,000 private sector jobs and 5,000 public sector jobs from December to January. Private sector employment, however, dropped by 16,000 jobs instead, which was considered an increase of 1,000 jobs, Parker said.

Parker also pointed out that the report focuses on growth over the last year, in which employment grew by around 2.2 percent but the labor force grew by 0.9 percent, so the unemployment rate came down by the difference as well.

"I don’t disagree with seasonal adjustments, but this one does make it more difficult to be excited about it," Parker said. "There is nothing dramatic in the numbers that I see, not particularly good but certainly not bad."

Gov. Brian Sandoval, meanwhile, welcomed the January numbers, which are up by 44,000 jobs total over a year ago. Sandoval cautioned, however, that more work needs to be done for the state to continue its momentum. Nevada’s economy, for example, grew for 13 straight quarters and exceeded overall U.S. GDP growth in the last three quarters. Nevada’s seasonally adjusted GDP (in 2009 dollars) of $127 billion from the third quarter of 2016 is still below the state’s peak from 2007, according to the latest numbers available from the U.S. Bureau of Economic Analysis.

“This announcement is a major milestone in our state’s recovery,” Sandoval said. “But we must remain vigilant in our efforts to continue bringing high-wage, quality employment to the Silver State.”

With Nevada's population growth of 1.95 percent in 2016 second only to Utah, infrastructure and housing are also becoming an issue. An influx of new workers as well as new residents moving to the state — Nevada was the 9th most popular destination for movers in 2016 — is putting pressure on housing affordability and availability, including existing home prices as well as rising rents in Reno. Inventory for existing homes, for example, is at historic lows and expected to lead to a jump in median home price this spring in summer, according to the Reno/Sparks Association of Realtors.

Pingle, meanwhile, cautioned against certain changes in the state’s tax climate as the Nevada economy transforms. Back in the 1990s, for example, about 42 percent of state government revenue came from gaming taxes, according to Pingle.

“As the economy has diversified and the population has grown, that (gaming) tax base can no longer provide the level of government services that people want,” Pingle said. “What Nevada has done is move to various business taxes, which could make the state less business-friendly in the long term.”

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