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Will Nevada ever recover from the housing bust?

At this rate, probably not.Start with the state-level GDP figures, which show the real output of Nevada’s private sector is still more than 8 per cent below its previous peak:As hard as it is to believe, this understates the scale of the damage.Despite an undiversified economy stuck in the middle of the desert, Nevada continues to be one of the most popular places for Americans to move. It also has a relatively high birth rate.Adjusting for changes in population, Nevada’s real output is a staggering 21 per cent below its 2006 peak, and more than 10 per cent below its level from two decades ago — a performance only comparable to Greece:No wonder recent data from the Federal Reserve bank of New York shows that, unlike the rest of America, Nevadans are still cutting their debts ten years after the crisis:That’s even more remarkable considering the 70 per cent rebound in Las Vegas house prices since the trough in 2012. In the other states with the biggest booms and busts in housing — Arizona, California, and Florida — average household debt levels bottomed in mid-2013 and have since grown by as much as 10 per cent.Finally, consider Nevada’s employment. On the surface, things don’t look too bad. The unemployment rate has collapsed from 14 per cent to 5 per cent, while private employment has (finally) passed the pre-crisis peak.

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At this rate, probably not.

Start with the

Matthew C Klein
I write about the economy and financial markets for Bloomberg View. Before that I wrote for The Economist. I have worked at the world’s largest hedge fund and read every FOMC transcript since May, 1987

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