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Not much happening for a while. That’s the outlook for the New Mexico economy from the annual economic outlook conference presented last week by New Mexico State University and Wells Fargo Bank.
Eugenio Aleman, Wells Fargo senior economist, offered the national outlook, beginning with a tautology.
“We’re closer to a recovery today than we were yesterday,” he said. Aleman sees gross domestic product growth at 1.7 percent this year, about in the middle of projections from other groups.
Not so much for New Mexico.
Jim Peach, NMSU Regents Professor of Economics, estimates the state’s 2013 job growth at between zero and one percent.
That is, if the federal sequestration problem — the across the board spending cuts — gets fixed. Then number of wage jobs in the state might — just might — return to pre-recession levels by 2018.
At the Federal Reserve Bank of Philadelphia, Peach found support for his view.
The bank tracks the business cycle in each state and also groups statistics with behavior, suggesting state economic performance six months in the future.
For New Mexico these leading indictors show no improvement in the economy and perhaps a decline. Since dropping in 2008, the state’s business cycle has flat lined.
In a way, the outlook is very old news. New Mexican’s per capita income has floated around 80 percent of the national per capita income for decades, Peach said.
He didn’t get into problems of counting incomes here, such as people officially not working (the technical term is “labor force participation”) or working for cash or working in family-owned small businesses but not getting paid separately.
The broader point is that while New Mexicans have tagged along with national growth and enjoyed the associated improvement in quality of life, any improvement relative to the nation simply hasn’t happened.
Historians talk about the state’s poverty and isolation back to Spanish days. In today’s world of instant communication, out situation is about the same.
Nor is change anticipated. Of the four big general issues Peach listed, one is the absence of a growth plan or strategy.
Whether anything real would come from a plan or strategy is another matter. But lacking a strategy places the state in the position of someone who fails to ask a question; if there is no question, there is no answer.
The other three general issues are the national economy, oil and gas, and federal spending.
While federal employment here is “only” 16 percent of overall government employment, which in turn provides 24 percent of all wage jobs, the impact is more.
The federal job numbers exclude military personnel. National laboratory employees are counted in the private sector.
Overall, Peach said, 36 percent of our gross domestic product is attributable to the federal government.
The federal situation will also hit state and local governments through the changes, whatever they are, in all those federal grants that pay for stuff deemed “essential” by someone, such as a county manager or city council member.
As a modest example of federal spending in New Mexico, the feds support research at NMSU to the tune of $150 million annually, Peach said.
Operations at the state’s four large military installations employ about 6,000 civilians, though not all work for the Department of Defense. Furloughs — the government word for layoffs — are coming.
We heard the gloomy news in Las Cruces, 41 miles north of a place where, “It’s really happening.” That place is Santa Teresa, which appears to have joined Eddy and Lea Counties as a massive exception to the economic ickiness of the rest of the state.
Reports follow the next two weeks.