MGM: Don't worry, be happy

Yahoo

01-05-2025

Trump on the economic convulsions of the Great Recession and the pandemic: "Hold my beer." (Photo by)
Yesterday will probably turn out to be the day the recession was formally introduced to the nation.
We can't know for sure. But the shorthand definition of a recession is the economy shrinking for two consecutive quarters. And the U.S. Department of Commerce announced Wednesday that in the first three months of 2025, the economy shrank.
Maybe economic stability and rising consumer sentiment will break out all over and prices won't rise very much and the economy won't shrink again in the second quarter and the U.S. economy will escape a recession.
And maybe Donald Trump will suddenly seem someone with a stable personality who bases decisions on evidence and facts instead of denying them.
Probably not, though.
Nevada tends to enter recessions early and exit them late.
The Great Recession technically occurred in late 2008 and early 2009. But the economic carnage was already hitting Nevada hard in 2007, and the hardships continued well into the next decade.
By some measures, especially household income, Nevada's economy still hadn't fully recovered when it was hit by the next economic convulsion, delivered by the pandemic at the start of the current decade.
The economic upheaval from covid hit Nevada harder than any other state. Nevada still has the highest unemployment rate in the nation.
Now we have the economic fruits of Trump's first 100 days: A wildly bizarre steaming pile of mayhem created by nothing but the crackpot obsessions of one 78-year-old man, and yet so disturbing it prompts comparisons to the Great Recession and the pandemic. Local exhibit A: Just as during those two prior economic calamities, the price of gold, which goes up when the economy goes south, is setting records.
But Barrick, Newmont, and lesser transnational corporations that mine Nevada's gold and lesser minerals aren't the only area firms that intend to weather a Trumpcession with nary a care.
A few hours after the Department of Commerce announced the economy shrank in the first quarter of the year, MGM Resorts International heartily assured its shareholders that its first three months of 2025 were just swell.
MGM CEO Bill Hornbuckle, during an earnings call Wednesday, touted the corporation's global geographic diversity (China!) as positioning the company's bottom line to stand firm in 'these times of volatility.'
And MGM officials also raved about the enormous success of the corporation's massive effort to get people addicted to gambling on their phones (except MGM phrases it differently).
BetMGM, a partnership between MGM and Entain (and starring Jamie Foxx), earlier this week announced very healthy earnings for the first quarter. 'What we're seeing is really rude health,' said BetMGM CEO Adam Greengblatt, in what seems a horribly candid and apt description. After all, what could be a more fitting accompaniment to Trump's self-inflicted economic carnage than people losing everything by gambling through an app on their phones? That is one rude product.
And it just screams 2025.
MGM also has super high hopes for the economic performance of a separate online crack, er, gambling platform internationally, MGM Digital.
'The equity market volatility' — a polite way to say to say Trump's a catastrophe — 'has provided MGM Resorts with the opportunity to repurchase shares at very attractive valuations in the first quarter,' gushed Jonathan Halkyard, MGM's chief financial officer, in a statement accompanying Wednesday's earnings report.
But ah, you say, the first three months of the year don't include April 2, that historic-folkloric 'Liberation Day,' and its accompanying wipeout of retirement funds.
No worries. MGM has taken advantage of the harshly intensified 'market volatility' brought on by Liberation Day to spend another $215 million on stock buybacks already in the second quarter. When you have lemons, etc.
And the corporation's board has signed off on the company spending yet another $2 billion on buybacks.
When a corporation repurchases its own stock, it takes shares off the market, which (usually) puffs up the stock price, benefiting heavy-hitting shareholders and enriching top corporate executives who are pretty heavy stockholders themselves and whose compensation packages are almost always tied to the share price.
And the money spent to enrich shareholders (even and especially when prices are rising for consumers) is money that isn't spent on creating new jobs or improving pay and conditions for people who have jobs now.
MGM spent $1.4 billion on buybacks in 2024, which followed a whopping $8.2 billion on buybacks between 2019 and 2023.
The more than $700 million spent on buybacks already this year, along with the new authorization for $2 billion more, assures that MGM Resorts will continue to do what it has been doing for years: spending more on stock buybacks than Nevada's entire gaming and mining industries pay in gaming and mining taxes combined.
As if smashing the world's largest economy wasn't enough, Trump and his enablers are also attempting to curtail or kill multiple programs and services in Nevada, from parts of Medicaid to mental health care to assistance with utility bills to food banks to tribal infrastructure and so much more, while also compromising the federal government's ability to competently and effectively carry out fundamental and crucial tasks, like administering Social Security.
Some states will be better equipped than others to protect their residents as federal assistance and funding is withdrawn. Nevada, always a notoriously cheap state when it comes to providing public programs and services, falls in the 'others' category. And Trump's economy is already forcing state lawmakers and the governor to look for places to cut the state budget.
As Nevada has shown in prior economic crises, it is incapable of saving public services and programs by itself. For a state that likes to think it sports a libertarian streak, Nevada sure does rely on the federal government a lot.
Yes, it's possible things won't be that bad. Maybe somehow Trump, contradicting every bit of his behavior for the last, oh, 20 years, will somehow demonstrate that he is not in point of fact a scatterbrain madman whose chief talent is crowd conning. Maybe industries will decide its safe to invest in the U.S. Maybe prices won't skyrocket. Maybe the economy will stop shrinking and start growing, and everything will be fine.
Meanwhile, in the timeline we actually live in, the opposite of all that is more likely.
The rosy scenario presented to shareholders by Nevada's most powerful corporation notwithstanding, all signs indicate Nevada is taking another economic nosedive, and state and local governments aren't going to be able to fill the void in basic public services left by Trump's hissy fits masquerading as policy proposals. Nevada, and Nevadans, are going to need some help.
Nevada's most widely known motto is 'battle born.'
But a far more trenchant if slightly lesser known Nevada motto is 'Now, clearly, is no time to raise the gaming tax.'
It's almost as if MGM begs to differ.