Nevada's Unemployment Rate Hit 14.2% in June
According to various media reports, Nevada's unemployment rate ticked up to 14.2% in June, up from May's rate of 14.0%.
Nevada now has the "distinction" of possessing the highest unemployment rate in the country. Last month, Nevada was able to catch and pass Michigan to take over the #1 spot on the list.
It's kind of mind-boggling to see how the unemployment numbers in Nevada have exploded higher over the past 2 1/2 years.
In January of 2007, Nevada posted an unemployment rate of 4.4%. Just 2 1/2 years later and this rate has increased by nearly 10%. That's an incredible number of people to be put out of work in less than three years.
3 years ago, Nevada was absolutely rolling. Tourists were pouring into the city, their pockets overflowing with real estate profits and/or access to easy credit generated by rising home prices. Many people were taking out HELOCs on their homes and heading straight to Vegas, certain that the real estate market wouldn't slow down anytime soon.
A number of mega-projects were also initiated in the city that were sure to keep people working for years. If you needed a job in construction, then all you needed to do was move to Las Vegas, as there was plenty of work to be had there. Multi-million and billion dollar projects were being initiated on an almost-daily basis, and this meant that money was flooding into the state.
Many people also decided that they were going to either a) move to Nevada or b) buy a second home in Nevada, which resulted in the Nevada real estate market going bananas. People who were already residents of the state were suddenly desperate to buy a home before being priced out of the market, and this resulted in an even frothier real estate market.
Nevada's population numbers were consistently trending higher. Unemployment numbers were at rock-bottom levels, as anybody who wanted a job could basically find one with no problem. The real estate market in the state was in a frenzy, and billions of dollars were pouring into the local casinos as Americans couldn't spend their newly-minted real estate profits fast enough.
Then in the second half of 2007, everything started to change.
Credit suddenly wasn't as easy to access anymore, and this resulted in a number of the big Las Vegas projects suddenly shutting down. The Las Vegas skyline would soon be dotted by a number of unfinished projects that were basically put on hold overnight.
Nevada would end up being one of the centers of the subprime mortgage crisis. Many homes in Nevada had been purchased using subprime mortgages, and when this market started to collapse, real estate values in the area disintegrated overnight. Many people had bought homes that they couldn't afford and really had no means to pay their mortgages - soon, many blocks would be lined with "For Sale Due to Foreclosure" signs. Nevada would eventually end up leading the country in foreclosures (as a % of homes), and their real estate market fell off of a cliff as a result.
This really didn't stop people from moving to the state though, which just resulted in an even higher number of unemployed people. Many of these people were of the opinion that the economic downturn would be a short one, and that these half-built projects would soon be given the green light to resume.
In addition, Americans were suddenly lighter in the wallet as real estate and equities markets basically took a swan dive at exactly the same time. This meant that the extravagant and frequent trips to Las Vegas would be dramatically scaled back, thanks to the fountain of real estate profits suddenly being turned off.
Nevada basically represented all of the problems that the entire country was going through, but on steroids.
It's pretty distressing that the unemployment rate in Nevada continues to trend higher, even though the national unemployment rate is starting to moderate and even drop a little. I'm not sure what the solution for Nevada is, other than closing their eyes and hoping that the rest of the country starts to recover, and fast.
Source: RGJ.com - Nevada Unemployment Rate 14.2%
Filed under: The Economic Meltdown