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A “new normal” of lower national economic growth appears ahead. That’s bad news here because our economy, nearly always a mediocre performer, depends substantially on what happens nationally.
This bit of gloom came from Tom Siems, senior economist with the Federal Reserve Bank of Dallas. Siems and other Dallas Fed wizards came to New Mexico State University Oct. 18 for a forecasting event led by the Fed’s El Paso branch.
Gross domestic product growth has averaged 1.9 percent since around 2000, Siems said. Previous average growth rates were 3.2 percent for about 30 years and 4.2 percent for the 20 years after World War II.
For New Mexico, the Dallas Fed’s Crossroads publication observed a year ago, the state’s “economic fate is subject to much larger external forces, such as the influence of emerging markets on commodity prices; oil and natural gas markets and the U.S. economy.”
Yet another state performance ranking provides further context, with New Mexico performs pitifully. On the recently released 16-factor “Opportunity Index,” we beat only Mississippi and Nevada. (opportunityindex.org.) The index, which seeks to measure economic mobility, was released Oct. 21 by Opportunity Nation, a network of about 250 nonprofit, business and other organizations.
I gained a new appreciation for agriculture from the presentation by Emily Kerr, a bank associate economist.
Agriculture gets little appreciation, it seems, due to 80 percent of the $4.1 billion (in 2011) business, as measured by cash receipts, coming from livestock with just over half of the livestock receipts being from cattle growing (meat animals in the jargon). Dairies are the rest of the livestock business.
Cattle are necessarily outside the urban boundaries that get nearly all the state’s economic development discussion. You know the line, “high technology, high-paying jobs.”
While agriculture itself is only about 2 percent of the state’s gross domestic product, adding the linkages takes the total impact to around 9 percent, Kerr said. The upstream linkages include farm machinery and fertilizer. Downstream means what happens after leaving the field — transportation (trucks leaving Hatch piled with bags of chile), food processing and turning cotton into clothing.
With chile being less than pocket change economically — cash receipts of $46.7 million in 2011 — identifying those linkages to understand the full chile impact becomes more important. Maybe chile is a $200 million economic sector. It would be good to know.
High corn prices are bad for New Mexico, Kerr said, because much of our corn goes to feed cattle. Higher corn prices pressure ranchers.
Jim Peach, New Mexico State University economics professor, provided the more detailed New Mexico view with a southern focus. He began with the generally forgotten point that for more than 50 years, New Mexican’s per capita income has ranged between 76 and 82 percent of the national per capita income. In other words, relative to the nation, nothing much has happened here for a half century.
Southern New Mexico is doing a bit better than the state, except for Luna County. Much of the reason is the oil boom in Lea and Eddy Counties. Doña Ana County is flat-lined with essentially no change in employment since 2007.
A modest good thing is that Mexicans now can shop as far as 55 miles from the border. The change, a 30-mile extension of what is called the Border Commercial Zone, has produced perhaps 350 jobs, Peach estimates.
The large solar power generating facilities bring headlines, some construction employment, but few permanent jobs, Peach said. Performance is monitored remotely.
“We need to do a lot of things different in New Mexico,” Peach said.