New Mexico Economy: Recent Developments and Outlook · University of New Mexico Bureau of Business and Economic Research New Mexico Economy: Recent Developments and Outlook ... Other

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University of New MexicoBureau of Business and Economic Research

New Mexico Economy: Recent Developments and OutlookRecent Developments and Outlook

Annual NM Economic Outlook Conference

January 16, 2014

Dr. Lee A. Reynis, [email protected]

UNIVERSITY OF NEW MEXICOBUREAU OF BUSINESS AND ECONOMIC RESEARCH303 Girard Blvd. NEMSC06 3510Albuquerque, New Mexico 87131

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New Mexico and US Nonfarm EmploymentMonthly, Seasonally Adjusted, Indexed to Peak

1 00

1.02

51,700

0.92

0.94

0.96

0.98

1.00

New Mexico

US

Source: US Bureau of Labor Statistics, Current Employment Statistics

UNM Bureau of Business and Economic Research

0.86

0.88

0.90

03 04 05 06 07 08 09 10 11 12 13

US

NM and US Unemployment Rates(%) monthly, SA

BLS Labor Force and Unemployment Estimates

9 0

10.0

11.0

3.0

4.0

5.0

6.0

7.0

8.0

9.0

New Mexico

US


0.0

1.0

2.0

03 04 05 06 07 08 09 10 11 12 13

US


3

Demographics Behind NM Unemployment Rate

10.0

12.0

14.0

Men

White, men

Hispanic/Latino men10.0

12.0

14.0

Women

White, women

Hispanic/Latino women

% of Women % of Men

0.0

2.0

4.0

6.0

8.0

2003 2004 2005 2006 2007 2008 2009 2010 2011 20120.0

2.0

4.0

6.0

8.0

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

25 0

30.0Total, 16 to 19

% by Age Group12.0

Married men, spouse present

% by Marital Status

0.0

5.0

10.0

15.0

20.0

25.0

2003 2005 2007 2009 2011

Total, 20 to 24

Total, 25 to 34

Total, 35 to 44

Total, 45 to 54

Total, 55 to 64

Total, 65 + 0.0

2.0

4.0

6.0

8.0

10.0

2003 2004 2005 2006 2007 2008 2009 2010 2011

Married women, spouse present

Women who maintain families

US Bureau of Labor Statistics, Geographic Profile (CPS) UNM Bureau of Business and Economic Research

A person is considered

% Workers Marginally Attached To The Labor Force, 2011

New JerseyHawaii

WashingtonFloridaGeorgia

LouisianaNew YorkAlabamaCalifornia

South CarolinaMichigan

District Of ColumbiaNew Mexico

Nevada

considered marginally attached if they are not in the labor force, but looked for work in the past 12 months, want a job, and are Texas

South DakotaIdaho

IndianaWest Virginia

IllinoisDelaware

TennesseeNorth CarolinaMassachusetts

MontanaAlaska

ConnecticutMississippi

MaineRhode IslandPennsylvania

MarylandOregonArizona

Oklahomay

j ,available to work.

0.0 0.5 1.0 1.5 2.0 2.5

North DakotaNebraskaWyomingVermont

IowaNew Hampshire

MinnesotaMissouriKansas

ColoradoOhio

VirginiaUtah

WisconsinKentuckyArkansas

Texas

Source: BLS WPFP PRB analysis of 2011 Basic Monthly CPS.


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Alternative Measures of NM Unemployment indicate many more New Mexicans marginally attached or working part-time involuntarily

All counts in thousands 2007 2012

U‐3: Official Unemployment Rate1

36 68

Unemployment Rate 3.7% 7.1%

Labor Force 947 952

Unemployed

U‐4: Unemployed include discouraged workers

Discouraged Workers 1 4

36 71


Labor Force 947 956

U‐5: Unemployed include all marginally attached

All Marginally Attached 8 17

43 85


Unemployed

Unemployed

p y

Labor Force 954 969

U‐6: Unemployed include involuntary part‐time

Marginally + Involuntary Part time 27 51

70 137


Labor Force 954 969

1

Unemployed

Unemployed, as % of the civilian labor force. Counted if able and willing to work, have actively sought

work within past 4 weeks.

Data: BLS website, Geographic Profile of Employment and Unemployment (GP)


1.6

1.8

NM Population Growth Has Slowed Dramatically

Estimated % Annual Population Growth, 2001-2013

0.6

0.8

1.0

1.2

1.4

0.0

0.2

0.4

01 02 03 04 05 06 07 08 09 10 11 12 13

Source of data: US Census Bureau, Annual Estimates of Population, States


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Perhaps because job prospects are better elsewhere, folks aren’t coming, New Mexicans are leaving…

NM Population Estimated Components of Change, 2010 ‐ 2012

Time PeriodTotal Population

ChangeNatural Increase

Vital Events Net Migration

Births Deaths Total Internat'l Domestic

April 2010 to July 2012

26,358 27,475 63,673 36,198 ‐1,069 4,229 ‐5,298

July 2011 to July 2012

6,864 12,114 28,306 16,192 ‐5,229 2,348 ‐7,577

Source: US Bureau of the Census


Given further slowing in population growth, 2013 likely to have larger net out-migration.

Other Measures of Performance


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Evidence of Improvement in NM’s Economy

l h lMining

Accomodation & Food

Change in New Mexico Employment, 2011-2012From Quarterly Census of Employment and Wages

I f tiUtilities

Arts, Entertain, RecFinance & Insur

Real Estate, Rent, LeasWhsl Trade

Trans & WhsgState Govt

Retail TradeLocal Govt

ConstructionAdmin & Waste ServicesHealth Care & Socl Assist


‐2000 ‐1500 ‐1000 ‐500 0 500 1000 1500 2000

Federal GovtProfessional & Technical

ManufacturingOth Services, Unclass.

Ag, For, Fish, HuntMgt Comp & Enter

Educational ServicesInformation

Total Change 8,012

Private Change 7,541


2010 Q1 2012 Q1 2013 Q1

Evidence of Improvement in NM’s Economy

QCEW County Job Growth Over Year AgoDarker red = steeper decline; Darker Blue = more rapid growth.

Maps prepared by Michael O’Donnell UNM Bureau of Business and Economic Research

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1.05

New Mexico Metro Nonfarm EmploymentMonthly, SA, Indexed to Peak

What Happened to Albuquerque?

0.90

0.95

1.00


0.80

0.85

03 04 05 06 07 08 09 10 11 12 13

New MexicoLas CrucesSanta FeAlbuquerque


2 2

Employment Growth in Major MSAs across the RegionNonfarm Employment (CES) Indexed Back to 1990

Albuquerque MSA Lagging. Why?

1.4

1.6

1.8

2.0

2.2

Albuquerque

Tucson

Denver

Austin

El Paso

0.8

1.0

1.2

1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012

Salt Lake City

Phoenix


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Things are different in NM this time…New Mexico among the top 15 states in terms of job growth in each of the past 4 decades. In Nov. 2013, NM ranked 48th among the states. Albq MSA, which has out-g qperformed NM & US for decades, seriously lagging.

The employment to population ratio, after slowly climbing from 54.9% in 1976 to 61.0% in 08Q2, has been almost in freefall since then and is now 53.8%.

I h d i l k d


In the good years growing employment masked many serious problems: NM’s extremely high poverty rate, low per capita income & wages,the racial and ethnic disparities in employment and income…

NM did not face up to challenges…

Persistent Low Per Capita Income & Wages

95%

100%

70%

75%

80%

85%

90%

Average Wage

60%

65%

70%

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

Per Capita Income


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Dependence on Government


Thin Labor Markets; Underprepared Workforce

MiNew York

New HampshireVermontVirginia

ColoradoMaryland

New JerseyConnecticut

MassachusettsDistrict of Columbia

Percent of Population with a Bachelors or More, 2012

South DakotaAlaska

MissouriMaineIowa

North CarolinaWisconsinGeorgia

MontanaPennsylvania

OregonDelaware

UtahNorth Dakota

HawaiiCaliforniaNebraska

WashingtonKansas

Rhode IslandIllinois

Minnesota

0% 10% 20% 30% 40% 50% 60%

ArkansasLouisianaKentuckyAlabama

OklahomaIndiana

WyomingNew MexicoTennessee

IdahoSouth Carolina

OhioTexas

ArizonaMichiganFlorida

South Dakota

Source: American Community Survey, 2012

Yet #4 in PhDs


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Inequality, Disappearing Middle Class

Pulling Apart: A State-by-State Analysis of Income Trends, Center on Budget and Policy Priorities & Economic Policy Institute, p. 11

The importance of Critical Mass

Challenges of distance & low population densitity in NM -- the 5th largest state in the US

The importance of Critical Mass

The difficulties of Raising capital now that many NM banks

have disappeared The critical roles of Angel Investors

Incubators

have disappeared. The critical roles of Angel Investors

and VENTURE CAPITAL,…

The crucial roles of ENTREPRENEURS

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The Economic Forecast for New Mexico


% Growth in Nonfarm Employment, NM and US4.8 4.6

6.0

Employment Forecast

1.0

2.9

4.1

0.8

1.81.5

1.1

2.31.8

1.1 1.2

1.92.3

3.7

1.8

0.5

‐1.2

‐0.1

0.51.0

1.4 1.6 1.6 1.51.2

‐2.0

0.0

2.0

4.0

91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18

IHS Global Insight and UNM BBER Forecast 11/13

‐4.1

‐6.0

‐4.0

2.0

New Mexico

US


12

8Alb MSA

% Growth in Nonfarm Employment, AnnualAlbuquerque, NM and US

What about Albuquerque?

0

2

4

6

91 93 95 97 99 01 03 05 07 09 11 13 15 17

Albuquerque MSA

New Mexico

US

‐6

‐4

‐291 93 95 97 99 01 03 05 07 09 11 13 15 17



Personal Income Forecast

7.0

% Growth in Personal Income, NM and US

5.95.6

3.5

5.6

2.9

1.8

4.34.7

5.1 5.1 4.9

0.0

1.0

2.0

3.0

4.0

5.0

6.0

‐1.5

‐4.0

‐3.0

‐2.0

‐1.0 07 08 09 10 11 12 13 14 15 16 17 18

New Mexico

US



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Developments Holding NM Back

• Capital, financing

• Construction

• Federal Government

• Professional & Technical Services

• Manufacturing


Urban Land Institute,Emerging Trends in e dReal Estate 2014


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A lackluster construction recoveryNew Mexico Construction Employment

Forecast

50 000

55,000

60,000

65,000

% Growth, Construction EmployAlbuquerque, NM, US

UNM BBER Forecast 11/13

25,000

30,000

35,000

40,000

45,000

50,000

90 92 94 96 98 00 02 04 06 08 10 12 14 16 18

10

15

‐20

‐15

‐10

‐5

0

5

03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18

New Mexico

Albuquerque MSA

US


5,000

5,500

6,000

New Mexico $ Value of Construction Awards

Residential & non-residential have slowed

1 500

2,000

2,500

3,000

3,500

4,000

4,500 Non-Building

Non-Residential

Residential

0

500

1,000

1,500

818283848586878889909192939495969798990001020304 050607080910 11 12139SOURCE: FW DODGE 9mos


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Four‐Quarter % Change in FHFA Housing Price Indexes (Purchase only), 2013 Q2)

Housing Prices are Crawling Back Up

30

40

‐10

0

10

20

30

04 05 06 07 08 09 10 11 12 13

New Mexico

Source: Federal Housing Finance Agency

‐30

‐20 Colorado

Arizona


6 000

7.000

Multi Family

City of Albuquerque Housing Units Permitted

City of Albuquerque HousingExtreme vulnerability to housing collapse, but so did many major MSAs

2 000

3.000

4.000

5.000

6.000Single Family

0.000

1.000

2.000

90 92 94 96 98 00 02 04 06 08 10 12 14 16 18

Rio Rancho units peaked at 3,247 in 2005 and were 421 in 2012UNM Bureau of Business and Economic Research

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Government Employment in New MexicoAll Levels Indexed to 1990

Dependence on Goverment

1.80

1.00

1.20

1.40

1.60

Local

State

Federal

Military


0.60

0.80

90 92 94 96 98 00 02 04 06 08 10 12 14 16 18


New Mexico Human Services Dept Caseloads

17

6

8

10

12

14

Federal civilian and military employment was still 4.8% of total NM total employment in 2010 The comparable figure

Dependence on Federal Goverment

0

2

4

69 71 73 75 77 79 81 83 85 87 89 91 93 95 97 99 01 03 05 07 09

2010. The comparable figure for the US was 3.0%.

Source of data: US Bureau of Economic Analysis

Federal expenditures in NM in 2010 were $28 billion, or $13,578 per capita. NM ranked 6th among the states in the per capita flow of federal dollars and #1 in federal expenditures per dollar of federal tax paid. Procurement has been huge -- 27% vs 16% in US --, and 64% of that is with the DOE, primarily for LANL & Sandia NL.

BBER had estimated that sequestration would result in a permanent loss of employment of roughly 20,000.


Employment in Professional & Technical ServicesNew Mexico and Albuquerque MSA

Professional, Scientific & Technical Services

NM Albq MSA

35,000

40,000

45,000

50,000

55,000

60,000

NM Albq MSA

Los Alamos Private Contractor


Why is Albq lagging? Higher dependence of this sector hit by federal govt cuts & const.

20,000

25,000

30,000

90 92 94 96 98 00 02 04 06 08 10 12 14 16 18


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50,000

60,000Other

QCEW Employment in NM Prof, Scientific & Technical Services: Behind the aggregates…

20 000

30,000

40,000

,Scientific R&D

Mgt & Techl Consulting

Computer Systems

Specialized Design

0

10,000

20,000

01 02 03 04 05 06 07 08 09 10 11 12

p g

Architects & engineers

Lawyers & accountants& PR

UNM Bureau of Business and Economic ResearchSource of data: US Bureau of Labor Statistics, QCEW

Manufacturing, an important sector…

Albuquerque & NM Manufacturing Employment

10 00015,00020,00025,00030,00035,00040,00045,000

Why is Albuquerque lagging?Albuquerque has lost some key

l lik Philli M t ll

But an industry subject to

% Change in Manufacturing EmploymentAlbuquerque, NM, US

5.0

10.0

‐5,00010,000

90 92 94 96 98 00 02 04 06 08 10 12 14 16

players, like Phillips, Motorolla, Eclipse (until reborn), GE, Schott, and Intel has been cutting.

subject to considerablevolatility – and Albq has been losing share since 01


‐20.0

‐15.0

‐10.0

‐5.0

0.0

96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17

New Mexico

Albuquerque

US

Source: BLS QCEW, FOR-UNM, IHS Global Insight

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Areas of Strength


20

New Mexico Mining EmploymentForecast

25,000

30,000

Mining and Extractive Industries

10,000

15,000

20,000

With new technologies and continued relatively high prices for oil and other commodities…UNM BBER Forecast 11/13

0

5,000

90 92 94 96 98 00 02 04 06 08 10 12 14 16 18


New Mexico Oil and Gas ProductionQuarterly, % Changes Year Over Year

30.0

40.0

Crude Oil

0.0

10.0

20.0

Natural Gas

Source: NM ONGARD database

‐20.0

‐10.0

04 05 06 07 08 09 10 11 12 13


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Shale oil is the game now, but…

Source: Department of Energy, Energy Information Agency, Annual Energy Outlook, 2013, p. 82 UNM Bureau of Business and Economic Research

Health Care & Social Assistance in NM NM Private Employment in Health Care & Social Assistance, % Growth

8

9

10

100 000

110,000

120,000

1

2

3

4

5

6

7

40,000

50,000

60,000

70,000

80,000

90,000

100,000

Percent Growth

0

1

30,000

40,000

91 93 95 97 99 01 03 05 07 09 11 13 15 17

New Mexico will participate in the Medicaid expansion and has an exchange for small businesses up and running. Major issue will be access, particularly in rural areas which are underserved. Albq as a medical center should be helped by ACA.


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Technology Because of the labs, universities and existing industry, & drawn by amenities. But what can NM continue to attract and keep those businesses? Big positive here is Innovate Albuquerque.

Other Positives – the 3 T’s

TourismA growth area. Tourists are returning, helping to boost hospitality industry employment and earnings as well as retail trade…

Transportation• Union Pacific’s new terminal at Santa Theresa – 800 new jobs

• Expansion of the Port at Santa Teresa

• Burlington Northern’s track investments, vision for Belen

Also renewables are making strides: Solar and wind energy, algae and other biofuels, Mesa del Sol smart grid, Tres Amigas Super Station with Albq headqtrs… UNM Bureau of Business and Economic Research

Transportation: Union Pacific Project


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Renewable Energy and Energy TransmissionWestern Governor’s Assoc identified 27 gigawatts ofrenewable generating capacity (solar, wind, geothermal & biomass) in NM – the largest capacity among the included states and western Canada. And, with Renewable Portfolio Standard and incentives,

capacity is being developed‐ capacity is being developed‐ investments are being madein transmission infrastructure

Photos: NM RETAUNM Bureau of Business and Economic Research

Jobs for construction, limited operating jobs, nevertheless…


State Government Finances

Consensus Revenue Estimates, Dec. 2013 UNM Bureau of Business and Economic Research

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The New Mexico Economy:

Finally Recoveringfrom the Great Recession in NM style…


New Mexico and lagging Albuquerque MSA continue to pull out of the deepest and longest recession since the 1930’s. The expansion has broadened and deepened, but there is a growing list of casualties – businesses that failed because they couldn’t hang on any longer, families who have left the state, businesses that have pulled up stakes to try their fortune elsewhere. NM is not attracting the interest nor the investment that it once did.

B i h h b i i i i d i Bright spots have been toursim, transportation, mining and extractive industries, and renewables. NM stands to be a big winner from the Medicaid expansion and ACA. Our technology is attracting interest with initiatives like Innovate Albuquerque holding great promise. However,…

• Sectors which have traditionally cushioned the impacts of national recessions on NM – federal, state and local government, professional services – have been less able to play a stabilizing role this time around.

• The NM economy is feeling the pain from federal government cut-backs and stands vulnerable to future cuts.

• NM needs to protect its water resources, to deal with income inequality and deep and persistent poverty, to address the inadequacy of its public education system…NM needs to create a compelling vision for the future that will excite and that can attract, grow & retain businesses while encouraging New Mexicans to realize their full potential.


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New Mexico Economy: Recent Developments and Outlook · University of New Mexico Bureau of Business and Economic Research New Mexico Economy: Recent Developments and Outlook ... Other