Some economic good news

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Recovery may resemble tomato crops - small and slow

By Harold Morgan

Years of writing negative things about the New Mexico economy have gotten tedious.
Maybe I’m hallucinating, but I see a few items suggesting some economic green shoots.
I’m sure that our eventual recovery will resemble my tomatoes this year — small and slow. That’s because we’ve been so far down so long and because the creaky national economy is our biggest economic driver.
State jobs figures, due today, could place all my optimism in the delusion file. (Seewww.dws.state.nm.us .)
Still … Some people want to be optimistic about the reported Albuquerque appearance, set for next year, of Dick’s Sporting Goods, the nation’s largest such firm.
When entering a market, a firm feels good about the overall economy, optimists presume. Not so fast, cautions a commercial real estate broker. While New Mexico’s sunny, outdoorsy climate certainly is a lure, Dick’s hasn’t hurried here.
 Besides, Dick’s may have gotten a good (low) price on its space.
Many factors, including price, will explain another business expansion, the decision of the Albuquerque Planet Fitness franchisee to buy the former J.C. Penney call center for a seventh Albuquerque location.
The 370 call center jobs become perhaps 20 gym jobs. Still, jobs are jobs.
Price   is a key, the broker says.
Owners unwilling to drop their prices get ignored by firms seeking locations.
Lower prices probably helped drive the August increase of sales of single family detached homes in Albuquerque.
Both the median price ($163,808) and the average price ($197,671) hit the second lowest level of the year and dropped more than 10 percent from August 2010.
The August median price dropped eight percent from July. The average was down six percent.
The news surprised me. I expected August sales to drop from July because pending sales during July dropped from June.
Pending sales provide a rough leading indicator of sales closed the following month.
However, proportionally more July sales pending became closed sales during August. Sales closed during August represented 79 percent of July’s pending sales.
Sales closed during July were 67 percent of June pending sales.
Bad banking news is Bank of America cutting 30,000 jobs nationally.
Few will come from here because New Mexico is a tiny portion of the bank’s territory. Probably we will never notice the reduction.
Good news comes from U.S. Bank getting active. U.S. Bank took over the failed First Community Bank. One move was naming Craig Buchanan “market president” for Las Cruces.
A senior vice president for First Community, Buchanan is an alumnus of the old Sunwest Bank and one of the professionals who dispersed after Sunwest become part of Bank of America.
Competition from U.S. Bank will benefit us all.
Industrial sector good news is Union Pacific beginning to building its $400 million rail facility at Santa Teresa.
After four years of construction, UP will employ about 600.
A political sidelight is that Gov. Susana Martinez continuously claims she was largely (if not totally) responsible for the project.
That just isn’t true. For an extended discussion, see my Sept. 5 post at http://capitolreportnm.blogspot.com.
Albuquerque’s economy will recover, believes Brookings, a Washington, D.C. think tank. By extension, I believe, that means the state will recover.
Brookings’ finds that Albuquerque has a relatively low “education gap.”
That means the shortage of educated workers is lower relative to employer demand.
Employers, when they need people, will find it easier to fill the positions. Other Brookings analysis puts Albuquerque’s prospects about in the middle among the top 100 metro areas.  
So while Albuquerque and New Mexico are better positioned for recovery than others, the recovery looks to resemble my tomatoes — slow in coming.

Harold Morgan
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