Fact Pack! This Lunar Rover Sponsored by…
By Hightower Las Vegas and RCG Economics on September 17, 2024
In today’s edition of your favorite newsletter, we’ll dig into details of the potentially lucrative lunar market, estimated by PwC analysts to reach a value of nearly $170 billion by 2040.
But first, our online reading yesterday included a Reuters story on how the Southern Nevada economy is considered a bellwether — and has positive post-inflation metrics that will benefit even more from an interest rate cut, serving as an example of the Fed’s hoped-for “soft landing.”
The cracks in the labor market in Las Vegas and across Nevada have typically appeared early and widened fast when the U.S. economy soured, making the consumer-driven city and state a bellwether of sorts for the rest of the country.
By that measure, as the Federal Reserve heads towards a momentous shift to interest rate cuts this week, business owners, labor leaders, and economists in Nevada see few obvious signs of trouble. Indeed, in a state critical to the outcome of a U.S. presidential election in November that may well turn on pocketbook issues, they see plenty of evidence of an economy moving beyond high inflation without an employment-crushing recession: The Fed’s longed-for “soft landing.”
Graph showing Nevada’s jobs rebound compared to the national average:
As of Q2 2024
A notable paragraph in the Reuters story:
Nevada’s unemployment rate has exceeded the nation’s for 17 years and has been as much as 1.8 percentage points above it over the past two years. But it has remained steady even as its labor force has grown by more than 7% since early 2022, about twice the national pace, with the local economy not only adding jobs but diversifying in the process, said David Schmidt, chief economist with the Nevada Department of Employment, Training and Rehabilitation.
Housing
The housing shortage in swing states and nationally is at issue in the presidential race, with both Trump and Harris offering proposals to ease the situation. The root problems, however, are mostly outside the federal purview.
As one analyst recently noted, localities that denied applications for new construction in deference to anti-development voters in part contributed to supply side lack — and helped drive prices out of reach for many Americans.
As of Q1 2024
Average monthly sales in Q2 were at the lowest level for that period since 2012, according to Redfin.
As of Q2 2024
As for the price of rental housing the real median gross cost of renting — rent plus the average monthly cost of utilities and fuels adjusted for inflation — grew faster annually (3.8%) than real median home values (1.8%) in 2023 for the first time in 10 years, according to the Census Bureau’s 2023 American Community Survey.
However, gross rent share of income did not rise nationally or in most states, likely due to an increase in higher-income households joining the population of renters. From 2022 to 2023, the number of renters grew (0.9%), and average median household income was not significantly different from one year to the next.
Cycle Comparisons
The Hamilton Project has posted new interactive graphs and analyses for key consumer economic indicators sorted by the eight business cycles between 1960 and today. The following graph shows the percent change in real personal consumption expenditures (PCE) over time after each cycle peak.
As of Q2 2024
Two years after the 2020 peak, growth in total consumer spending was better than in most previous cycles (note the position of the orange line at the eight-quarter mark), but then began to flatten.
Four years and two months into the present cycle, total PCE spending was only 12 percent higher than in late 2019 — roughly on par with the 1990 cycle (the light green line) which saw less growth than others except 2007 at the same point in the cycle.
To the Moon
The lunar economy will include transporting people and resources to and from the moon’s surface, mining and infrastructure projects, the sale or use of data gathered, and… selling space for sponsor logos on lunar vehicles.
Companies envisioned as potential advertisers by California-based startup Astrolab, which plans to send a rover to the moon in 2026, include Volvo, Nike (think footwear for anti-gravity environments) and Lego.
From Sea to Shining Sea
Here on Earth, the ocean economy (aka the blue economy) could double from $1.6 trillion to $3 trillion by 2030, creating as many as 40 million jobs, according to Panos Seretis, Head of Global Sustainability Research for the Euro-Mediterranean Economists Association.
AUM (assets under management) in global water-related investment funds has grown nearly four times in the past five years. Ocean-driven energy, sea freight and related technology, and aquaculture are all ripe for investment — and are tied to the global economy through the humans that stand to benefit.
For example, ocean energy technologies like wave energy converters could harness as much as 130,000 terawatt-hours of power annually, which could cover more than two times current global electricity demand.
The global wave and tidal energy market was estimated by Precedence Research at $544 million in 2023 and forecast to reach $1.4 trillion by 2034.
As of November 2023
As noted in a recent issue of Fact Pack, aquaculture already provides 50 percent of fish used for food globally, helping feed the 3 billion humans whose primary protein source is seafood.
There’s hope in the ocean for the world’s plastic problems, too. The 30 megatons of plastic estimated in oceans today and an expected five-fold increase by 2060, combined with consumer demand for goods made with recycled plastic, could drive an enormous plastics credit market and lead to more collection and recycling projects.
Blue Economy Sidebar
A potential cause for international disputes is the sharing of marine resources between nations. Governance of the oceans presently involves two main categories: Exclusive Economic Zones (EEZs), which include territorial waters, archipelagos, and the area that extends 200 nautical miles out from countries’ coastlines; and the “high seas” or open ocean, which account for 64 percent of the world’s oceans.
A number of international agreements related to the blue economy are on the books, and in March 2023, an agreement was reached at the UN to create a High Seas Treaty aimed at placing at least 30% of the world’s oceans into Marine Protection Areas to preserve wildlife and ensure equal access to marine genetic resources.
Homelessness
Nevada was among the states with the highest ratio of homeless people in 2023, ranking 9th with approximately 279 homeless persons for every 100,000 residents — 8,666 homeless people, with 8% under age 18 and 13% being veterans.
Vermont had the largest homeless ratio, with 512 homeless people per 100,000 residents.
Homeless population per 100,000 people – Top 10 ranking
Data Source: Office of Policy Development and Research
Analysis: https://luckygambler.com
Income and Poverty
Real median household pre-tax income increased by 4.0% between 2022 and 2023, according to the latest U.S. Census Bureau report. It was the first statistically significant annual increase in the metric since 2019.
- Real median household pre-tax income was $80,610 in 2023, up from the 2022 estimate of $77,540.
- Real median post-tax household income increased by 3.7% between 2022 and 2023, from $66,800 to $69,240.
- Household income rose throughout the income distribution, increasing 6.7% for the 10th percentile and 4.6% for the 90th percentile.
Percent change from 2022 to 2023 by assorted characteristics:
As of 2023
Percent change from 2022 to 2023 by income quintile:
In 2023, households in the lowest quintile had incomes of $33,000 or less. Households in the second quintile had incomes as high as $62,200; those in the third quintile had incomes as high as $101,000.
The fourth quintile had incomes as high as $165,300, and the highest quintile had incomes above $165,300. The top 5 percent of households in the income distribution had incomes of $316,100 or higher.
In 2023, the official national poverty rate fell 0.4 percentage points to 11.1 percent or 36.8 million people — statistically on par with the 2022 rate — according to the latest Census Bureau report on the metric. The Supplemental Poverty Measure (see below for a definition of that metric) in 2023 was 12.9 percent, an increase of 0.5 percentage points from 2022.
Trend since 1959:
As of 2023
Social Security continues to be the biggest and most effective anti-poverty program, moving 27.6 million individuals out of SPM poverty in 2023.
Note: The national poverty rate is determined by way of comparing pretax income to a national poverty threshold adjusted by family composition. The SPM extends that measure by accounting for several government assistance programs for low-income families, as well as factoring in geographic variation in housing expenses, federal and state taxes, work expenses, and medical expenses.
$2,800
That’s the base price of Huawei’s new Mate XT trifold phone, which is just 3.6mm wide even though it folds twice, will enable users to enjoy a 10.2-inch screen. The phone’s AI assistant offers text summary, translation and editing functions, as well as AI-boosted image editing functions. Reuters reported last Tuesday that there were more than 4 million pre-orders. Huawei’s announcement came shortly after Apple’s annual reveal of the new iPhone.
AI
Artificial intelligence added $2.4 trillion to the aggregate valuation of U.S. tech giants in 2023, and the share prices of big firms including Apple, Microsoft, Alphabet, Amazon and Nvidia rose by an average of 36 percent over 2022, according to a report from venture capital firm Accel.
Amazon in particular stands out as an AI success story because Amazon Web Services (AWS) already dominated the cloud services market going into 2023, bringing in more than 15 percent ($90 billion) of Amazon’s total revenue and likely to break $100 billion in 2024.
AWS held 32 percent of the global cloud services market share in Q2 2024. Microsoft Azure and Google Cloud followed with 23 percent and 12 percent, respectively.
Other cloud services firms had single-digit market share in Q2. Statista graph:
As of Q1 2024
Coffee Futures
The price of cup of coffee will continue to increase, thanks to Brazil’s drought-driven supply disruptions for arabica beans. Futures in New York recently rose 4.8% to a 13-year high of $2.718 a pound, and prices are up about 40% this year.
As of 9/16/24 Source: Bloomberg
What’s Walkable
One of our favorite infomaps this week is interactive and uses color to indicate the walk, bicycle or public transit time to nearby destinations from any location in the U.S. Geographer Nat Henry is the creator of Close, which started out as a research project aimed at finding out whether his neighborhood in Seattle was really as walkable as advertised.
Five Nevada cities have Close pages:
- Enterprise: close.city/enterprise
- Henderson: close.city/henderson
- Las Vegas: close.city/las-vegas
- North Las Vegas: close.city/north-las-vegas
- Reno: close.city/reno
The app’s list of selections is impressive:
This Bloomberg Q&A with Henry includes details on how the project came to be, its data sources, and the many ways Close is being used today.
Related: A site called Walk Score is searchable, sortable, and rates U.S. and Canadian cities for walkability. Here are the U.S. cities with the best walk-there scores:
As of September 2024
On the Horizon
Mike PeQueen: The biggest event by far on the economic calendar this week is Wednesday’s Fed meeting at which time they are expected to announce a one-quarter point rate cut in the Fed Funds rate, the first reduction in years. Jobless claims on Friday will also be of interest.
This week’s MarketWatch calendar:
