The rest of the country is beginning to recognize that Nevada is on the comeback trail. Noting the growth of the construction industry as well as the diversification of the state’s economy, the Wells Fargo Securities Economics Group observes that Nevada’s “economy is bouncing back, and the pace of recovery has accelerated.”

The Group’s Nevada Economic Outlook: April 2014, issued earlier this week, states,

Nevada is finally beginning to make some headway battling its way back from the epic housing slump and severe recession that accompanied it. From its pre-crisis low, the Silver State’s unemployment rate shot up 9.7 percentage points, reaching a staggering 13.9 percent in 2010 and remains well above the nation today at 8.5 percent. In February, Nevada posted the fastest year-to-year employment growth of any state in the nation, with nonfarm payrolls rising 3.8 percent. Increased business investment and growth at the University of Nevada Las Vegas (UNLV) should help sustain that momentum. Construction payrolls are finally perking up, although the 13.4 percent gain over the past year comes off a very depressed level. A broader economic recovery nationally is also fueling demand for the state’s tourism and convention trade, while improved employment conditions are helping revive the housing sector. The state should continue to see relatively strong growth as it begins to make up for lost time.

A chart accompanying the report reflects the double-digit growth in construction employment, year-over-year in the state. The Group predicts a continuing recovery in the housing market, though admits some factors still exist that will hold back new construction for a time.

[W]e believe Nevada’s housing market has turned the corner and conditions should steadily improve, thanks to rising employment, higher incomes and a rapidly increasing population. Home vacancy rates are trending low but remain well above the national average. Inventories will have to come down further before residential construction can really take off.

The Group says the state has had some success in diversifying its economy. The report admits that Nevada is still overly-reliant on leisure and hospitality but notes the presence of Zappos in downtown Las Vegas and the company CEO’s investment in revitalizing downtown, Apple’s expansion in Reno, additions of a medical school and drone program at UNLV, the FAA’s selection of Nevada as a UAV development center and the growth of the mining industry.

In addition, Reno is mentioned as the front-runner for Tesla’s new $5 billion “Giga Battery Factory” due to its direct rail link to the Tesla factory as well as the presence of lithium mines near the area.

Overall, the report reveals a positive outlook for the future, though noting that rapid recent growth could be due more to the depth of the recession and weakness of the recovery until just recently as it was to effects that could produce ongoing growth.

Nevada’s economy is growing once again and should continue to post solid gains during the coming year. The state’s turnaround is being led by an improvement in the all-important leisure and hospitality sector. Construction activity has also improved, as some stalled projects were restarted and new attractions, including the world’s largest Ferris wheel, were built. Nongaming related venues have recovered much faster than the gaming business has, which means the tourist and convention trade still has considerable upside once the U.S. and global economies gain speed.

Sustaining the recent pace of improvement, at least on a percentage basis, may prove difficult. The strong percentage job gains reported over the past year are partially due to base effects, reflecting the deep recession and slow initial recovery. The pace should moderate going forward. The state’s economy is diversifying, however, which should help sustain positive momentum. Expansions at the state’s major universities will also help strengthen the state’s workforce by adding important skills desired by businesses. This should prove to be especially valuable for Las Vegas as it expands into industries outside of gaming and tourism.