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Forecast has glimmer

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State’s economy really is improving - a little

By Harold Morgan

The New Mexico economy is not “rocketing” to recovery, claims by headlines in Albuquerque notwithstanding. Nor is any explosive takeoff expected.
Growing some is what the state is doing. That is expected to continue, though getting back to 2 percent annual job growth isn’t even in the intermediate-term cards, much less being a near-term prospect.
This modest assessment of the state comes from the Federal Reserve Bank of Kansas City, the Department of Workforce Solutions and from the state’s consensus revenue estimate, released Oct. 19 by the Legislative Finance Committee.
Mark Snead, Denver-based vice president and branch executive for the Kansas City Fed, has the happy situation of not being bound by other guys’ numbers.
Due to “systematic errors” in job numbers from the federal Bureau of Labor Statistics, Snead thinks the reported job numbers are low for 2011.
For a firmer feel of New Mexico’s situation, the Kansas City Fed internally models 30 variables of economic conditions.
Fed staffers also talk to people and to advisory board members from key businesses.
Putting it all together, Snead estimates New Mexico’s job growth at around 1 percent annually.
That’s about the national job growth rate.
Agriculture is one sector that gets little credit for its contributions in New Mexico.
Nationally, Snead says, the Department of Agriculture is still projecting strong cattle prices and continued strength in major crop prices.
Farm income has softened, mostly in the drought areas, but is still strong historically.
The southeast third of New Mexico mostly has an exceptional drought with a wide band of extreme drought running from around Tucumcari to the Boot Heel in the southwest.
Through September, New Mexico added 1,700 wage jobs year-over-year for a rocking 0.2 percent growth rate.
Still, DWS says, September was the fourth month of job growth after 32 months of losses.
There were 1,800 new jobs from August to September.
Among the sectors, professional and business services remains the loss leader, down 7,400 for the September-to-September year and 1,600 for the month.
Retail surprised me with a 4,000 job, or 4.5 percent, year-over-year increase.
The surprise comes because retail businesses respond to other sectors, one way or the other.
Retailers must see a brighter present and future around the state.
Year-over-year, the four metro areas lost 1,300 jobs, led by Albuquerque, which was down 2,200. The year-over-year arithmetic means rural areas added 3,000 jobs.
Farmington was the only metro area with job growth both for the year and from August to September.
Now, back to the future. For the fiscal year ending June 30, 2011, state forecasters found no job growth.
For the current fiscal year, FY 12, ending June 30, 2012, forecasters see wage jobs increasing one half of one percent.
This estimate, released Oct. 19 by the LFC, was down from the 1.3 percent job growth estimated in July.
Summer was when national forecasters got nervous and reduced forecast growth rates.
National forecasts drive New Mexico forecasts. In the last week or so, national growth estimates have been raised. Maybe our prospects will improve, too. Job growth in the lower 1 percent range is the outlook for the next three years.
Recurring revenue to state government appears up 12.3 percent for FY 11.
A third of the increase came from tax increases (aka “revenue enhancements”) passed in 2010.
For the first time in two years, taxable gross receipts grew in FY 11 on a year-over-year basis for all four quarters of the year.
Mining provided a third of the gross receipts increase.
While our state’s economy may be poised for a rebound, Mark Snead reminds us that everything is relative.
The “rebound” looks quite modest and starts from the low base of a three-year recession.

Harold Morgan
© 2011 New Mexico
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