2009 new mexico economic outlook conference 7 january 2009 dr. lawrence a. waldman the new mexico...
TRANSCRIPT
2009 New Mexico Economic Outlook Conference7 January 2009
Dr. Lawrence A. Waldman
The New Mexico Economy: Recent Developments
and Outlook
BBERBureau of Business &Economic Research
New Mexico employment growth has been consistently slowing since the second quarter of 2006, with only a single exception.
IIIIIIIVIIIIIIIVIIIIII200820072006
4.0
3.5
3.0
2.5
2.0
1.5
1.0
0.5
0.0
Percent change,year over year
NM EMPLOYMENT GROWTH2006:1 - 2008:3
0.6
1.1
0.6
1.0
1.21.3
1.8
2.5
2.8
3.13.2
Even so, New Mexico employment growth has outpaced the national economy.
IIIIIIIVIIIIIIIVIIIIII200820072006
4.0
3.5
3.0
2.5
2.0
1.5
1.0
0.5
0.0
-0.5
-1.0
Percent change,year over year
EMPLOYMENT GROWTHUNITED STATES AND NEW MEXICO
2006:1 - 2008:3
UNITED STATESNEW MEXICO
New Mexico personal income growth has kept up with the rest of the country, and has recently exceeded it.
IIIIIIIVIIIIIIIVIIIIII200820072006
9
8
7
6
5
4
3
2
Percent change,year over year
PERSONAL INCOME GROWTHUNITED STATES AND NEW MEXICO
2006:1 - 2008:3
UNITED STATESNEW MEXICO
The unemployment rate has remained very low for much of the time, but is now on the rise
IIIIIIIVIIIIIIIVIIIIII200820072006
7.0
6.5
6.0
5.5
5.0
4.5
4.0
3.5
3.0
2.5
2.0
1.5
1.0
0.5
0.0
Percent
UNEMPLOYMENT RATEUNITED STATES AND NEW MEXICO
2006:1 - 2008:3
UNITED STATESNEW MEXICO
Why has New Mexico economic growth slowed?
CONSTRUCTION •Housing: double-digit
declines in new housing permits in each of the last ten quarters. Total permits peaked at 5,076 units in the second quarter of 2005, but reached only 1,958 units in the second quarter of 2008, and 1,216 units in the third quarter of 2008.
•Rising prices of construction materials.
•Credit crunch.
•Rising unemployment.
•Consumer sentiment at recessionary levels.
IIIIIIIVIIIIIIIVIIIIII200820072006
14131211109876543210
-1-2-3
Percent change,year over year
NM CONSTRUCTIONEMPLOYMENT GROWTH
2006:1 - 2008:3
Why has New Mexico economic growth slowed?
MANUFACTURING
LAYOFFSIntel
EclipseEmcore
CLOSURESDFA Cheese Plant
Sparton ElectronicsMillennium Transit
Windsor Foods
IIIIIIIVIIIIIIIVIIIIII200820072006
6543210
-1-2-3-4-5-6-7-8
Percent change,year over year
NM MANUFACTURINGEMPLOYMENT GROWTH
2006:1 - 2008:3
Why has New Mexico economic growth slowed?
MINING
Mining employment began to grow vigorously in early 2006 as oil prices eclipsed $70/barrel, and copper prices reached $3.50/lb. Most of the new jobs were in oil & gas exploration, drilling, and productivity enhancement, but several hundred came at the copper operation in Grant County. Employment growth later slowed, because it takes not just high but increasing oil & gas prices to continue to stimulate exploration, and there is also evidence that there was some difficulty in finding qualified oil field workers. In addition, employment in copper mining has ceased growing, and in fact is facing a layoff of at least 600 miners in early 2009.
IIIIIIIVIIIIIIIVIIIIII200820072006
1514131211109876543210
Percent change,year over year
NM MININGEMPLOYMENT GROWTH
2006:1 - 2008:3
2.9
0.71.4
1.9
3.5
4.7
6.5
8.18.8
13.012.5
Where have the jobs come recently?
New Mexico Net Job Gains2008:3
Total net new jobs = 4,967(Net job gain = 9,466)(Net job loss = 4,499)
5.0
4.0
3.0
2.0
1.0
0.0
-1.0
-2.0
-3.0
-4.0
Thousands
NEW MEXICO NET JOB GAIN/ LOSSBY SECTOR
2008:3
0.567
-0.100
-2.333
0.467
1.267
0.433 0.267
-0.733
CONST MANF W TRADENAT RES& MINING R TRADE T W & U INFO
FINANCIALACTIVITIES
5.0
4.0
3.0
2.0
1.0
0.0
-1.0
-2.0
-3.0
-4.0
Thousands
NEW MEXICO NET JOB GAIN/ LOSSBY SECTOR
2008:3
-0.900
0.200
3.633
-0.100 -0.333
0.133
2.500
EDU SVSHLTH CARE& SOC ASST
ARTS, ENT& REC
ACCOMD &FOOD SVS
GOVERNMENTOTHERSERVICES
PROFESSIONAL &BUSINESS SERVICES
How have New Mexico’s Metros Fared?
ALBUQUERQUE MSATHE STORY
Weaknesses•Housing•Construction employment growth negative, last seven quarters•Manufacturing employment growth negative last six quarters.•Professional & business services growth slowing rapidly, last four quarters, negative in 2008:3.•Financial activities employment growth negative, last two quarters
Strengths
•Health care growth near 3.0%•Local government employment growth at 3.0% in third quarter, reflecting expansion at Native American enterprises (casinos, resorts, hotels).
IIIIIIIVIIIIIIIVIIIIII200820072006
5.0
4.0
3.0
2.0
1.0
0.0
-1.0
Percent change,year over year
ALBUQUERQUE MSAEMPLOYMENT GROWTH
2006:1 - 2008:3
-0.2
0.40.40.3
0.91.3
1.7
3.13.5
3.84.1
How have New Mexico’s Metros Fared?
LAS CRUCES MSA
THE STORY
Weaknesses•Manufacturing•Information•Construction•Government
Strengths•Health care•Professional and business services•Leisure & hospitality
IIIIIIIVIIIIIIIVIIIIII200820072006
5.0
4.0
3.0
2.0
1.0
0.0
Percent change,year over year
LAS CRUCES MSAEMPLOYMENT GROWTH
2006:1 - 2008:3
How have New Mexico’s Metros Fared?
SANTA FE MSA
THE STORY
Weaknesses•Manufacturing•Construction•Leisure and hospitality•Professional & business services•Government (local and federal)
Strengths•Health Care
IIIIIIIVIIIIIIIVIIIIII200820072006
4.0
3.0
2.0
1.0
0.0
-1.0
Percent change,year over year
SANTA FE MSAEMPLOYMENT GROWTH
2006:1 - 2008:3
How have New Mexico’s Metros Fared?
FARMINGTON MSA
THE STORY
•Mining (Natural gas)
•Construction
IIIIIIIVIIIIIIIVIIIIII200820072006
5.0
4.0
3.0
2.0
1.0
0.0
Percent change,year over year
FARMINGTON MSAEMPLOYMENT GROWTH
2006:1 - 2008:3
The shape of things to come
For the next two years
IVIIIIIIIVIIIIIIIV201020092008
2.0
1.5
1.0
0.5
0.0
-0.5
-1.0
2.0
1.5
1.0
0.5
0.0
-0.5
-1.0
Percent change,year over year
Percent change,year over year
NM EMPLOYMENT GROWTH2008:4 - 2010:4
The shape of things to come
For the longer term
2.0
1.5
1.0
0.5
0.0
-0.5
-1.0
2.0
1.5
1.0
0.5
0.0
-0.5
-1.0
Percent Percent
NM EMPLOYMENT GROWTH2008 - 2013
20132008 2009 2010 2011 2012
Sources of Strength
20132012201120102009200820072006
10
5
0
-5
-10
Percent
HEALTH CARE &SOCIAL ASSISTANCE
3.22.92.42.83.03.63.33.0
20132012201120102009200820072006
10
5
0
-5
-10
Percent
CONSTRUCTION
2.92.61.61.6
-1.9-0.7-0.3
8.6
20132012201120102009200820072006
10
5
0
-5
-10
Percent
EDUCATIONAL SERVICES
3.33.12.82.4
-0.1
1.82.21.9
20132012201120102009200820072006
10
5
0
-5
-10
Percent
PROFESSIONAL &BUSINESS SERVICES
2.62.43.01.6
-0.8-0.4
6.0
10.5
Additional Sources
20132012201120102009200820072006
10
5
0
-5
-10
Percent
WHOLESALE TRADE
2.82.72.21.7
-1.1
2.02.02.5
20132012201120102009200820072006
10
5
0
-5
-10
Percent
MANUFACTURING
1.94.03.2
-3.1
-7.6-6.4
-1.5
4.3
20132012201120102009200820072006
10
5
0
-5
-10
Percent
TRANSPORTATION, WAREHOUSING& UTILITIES
1.71.91.70.90.52.83.63.3
20132012201120102009200820072006
10
5
0
-5
-10
Percent
GOVERNMENT
1.91.71.31.10.61.0
-1.4-1.8
THE OUTLOOK FOR THE METROS
IVIIIIIIIVIIIIIIIV201020092008
2.0
1.5
1.0
0.5
0.0
-0.5
-1.0
-1.5
-2.0
2.0
1.5
1.0
0.5
0.0
-0.5
-1.0
-1.5
-2.0
Percent change,year over year
Percent change,year over year
ALBUQUERQUE MSA EMPLOYMENT GROWTH
2008:4 - 2010:4
THE OUTLOOK FOR THE METROS
IVIIIIIIIVIIIIIIIV201020092008
2.5
2.0
1.5
1.0
0.5
0.0
2.5
2.0
1.5
1.0
0.5
0.0
Percent change,year over year
Percent change,year over year
LAS CRUCES MSA EMPLOYMENT GROWTH
2008:4 - 2010:4
THE OUTLOOK FOR THE METROS
IVIIIIIIIVIIIIIIIV201020092008
2.0
1.5
1.0
0.5
0.0
-0.5
-1.0
-1.5
-2.0
2.0
1.5
1.0
0.5
0.0
-0.5
-1.0
-1.5
-2.0
Percent change,year over year
Percent change,year over year
SANTA FE MSA EMPLOYMENT GROWTH
2008:4 - 2010:4
THE OUTLOOK FOR THE METROS
IVIIIIIIIVIIIIIIIV201020092008
2.0
1.5
1.0
0.5
0.0
2.0
1.5
1.0
0.5
0.0
Percent change,year over year
Percent change,year over year
FARMINGTON MSA EMPLOYMENT GROWTH
2008:4 - 2010:4
Summary
The pace of economic expansion in New Mexico has been on the decline for the last two-and-a-half years (2006:2 – 2008:3). Still, New Mexico economic performance was better than in the nation as a whole during that period.
The causes of the continuing slowdown and slide into recession for New Mexico can be traced in major part to several sectors: construction, mining, and manufacturing.
The New Mexico economy is slated for a mild recession in 2009, with a slow recovery beginning at the end of the year. Employment growth will increase slowly for the next few year, reaching 1.9 percent by 2013.
Strength during the recovery period will come from the health care sector throughout, and from construction, manufacturing, and professional and business services in the later years.