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New Mexico's Economy: Recent Developments and Outlook
New Mexico Data Users ConferenceAlbuquerque NM
November 13, 2014
Jeffrey MitchellDirector, BBER
Bureau of Business & Economic ResearchUNM
UNM Bureau of Business & Economic Research 2
Recent economic news from New Mexico
o Governor Martinez re-elected, in office through 2018; State House moves from Democrat to Republican (1st time since 1956).
o Union Pacific railroad –completion of $400 million hub facility in southern NM in May 2014. Border connection?
o Tesla – NM was one of five southwestern states competing for 6,500 job ‘Giga-factory’; NV received commitment in September.
o Emcore (successful tech firm) relocating HQ to California.
o State permanent funds – strong performance (value ~$20 Bn ~$1.15 Bn in new revenues in 2014). Ranks 3rd after Texas & Alaska. WY: 4th $5.6 Bn.
o Oil prices drop sharply – from $107 (June) to $79/barrel.
UNM Bureau of Business & Economic Research 3
Recent economic data from New Mexico
o Almost non-existent recovery from the Great Recession – employment remains 4% below pre-recession levels (2008).
o With exception of mining, employment growth mainly low wage sectors (e.g. administrative, hospitality).
o Health care – 2013-2014Q1 lowest rate of employment growth since at least 1990.
o Residential construction – currently 30% of pre-recession peak; improvement in 2012 & early-2013 but renewed slump in late-2013 & 2014.
o Mining/oil & gas – a bright spot (oil production & mining employment up 15%/year since 2010) but little impact on rest of the state economy.
UNM Bureau of Business & Economic Research 4
2002Q3
2003Q2
2004Q1
2004Q4
2005Q3
2006Q2
2007Q1
2007Q4
2008Q3
2009Q2
2010Q1
2010Q4
2011Q3
2012Q2
2013Q1
2013Q4
-6.0%
-4.0%
-2.0%
0.0%
2.0%
4.0%
6.0%
New Mexico United States
New Mexico & US employment growth: history
Sources: New Mexico – FOR-UNM; US – IHS Global Insight
UNM Bureau of Business & Economic Research 5
2009 2010 2011 2012 201395
97
99
101
103
105
107
109
111
USAZCONVNM
Employment growth: NM and Neighboring States, (2009=100)
Source: BLS Quarterly Census of Employment and Wages
UNM Bureau of Business & Economic Research 6
Employment growth: ABQ MSA and nearby MSAs
2007 2008 2009 2010 2011 2012 2013 2014
-12.0%
-10.0%
-8.0%
-6.0%
-4.0%
-2.0%
0.0%
2.0%
4.0%
6.0%
8.0%
Albuquerque Phoenix Denver Austin Salt Lake Las Vegas
Source: BLS Quarterly Census of Employment and Wages
UNM Bureau of Business & Economic Research 7
US & NM residential construction, 2001-2014Q3
20012002
20022003
20042005
20052006
20072008
20082009
20102011
20112012
20132014-0.5
0.5
1.5
2.5
3.5
4.5
5.5
0.0
0.5
1.0
1.5
2.0
2.5
NM Permits (Thousands, Left Axis) US Starts (Millions, Right Axis)
UNM Bureau of Business & Economic Research 8
Why is New Mexico’s recovery so weak?
oLoss of federal money – o Growth of federal spending is slower, and New Mexico is in a
weaker bargaining positon (Domenici/Bingaman effects).o Growth employment, procurements and transfers (including
income support programs) slower.
o No lead sector – Oil & Gas has minimal impacts. No growth in historically leading sectors (e.g. construction; professional & technical services, including national labs; government).
o Change in global & national patterns of economic growth – toward higher skill industries & occupations (e.g. Prof & Tech Services).
o Decline of local and regional banks and limited access to capital.
o Changing demographic patterns – cause or effect?
UNM Bureau of Business & Economic Research 9
Impacts of Oil & Gas development in New Mexico
Lubbock, TX
Las Cruces
Santa Fe
Midland-Odessa, TX
ABQ MSA has 44% of all jobs in NM.
Employment impact:100 jobs in oil & gas exploration and related services (NAICS 211 & 213) in the 3 NM counties in Permian Basin.
Source: IMPLAN
Fiscal impact:Taxes collect from oil & gas royalties contribute substantially to state financing, especially education, but contributions do not change automatically.
Region Jobs
SW NM 160 Rest of NM 31 Rest of US 121 Total 313
UNM Bureau of Business & Economic Research 10
New Mexico employment: rate of growth and state ranking by industry sector
Source: BLS Quarterly Census of Employment and Wages
%/yr Rank %/yr Rank Private 4.3% 8 0.7% 44
Natural resources and mining 1.5% 17 8.0% 4 Oil and gas extraction 4.2% 12 4.9% 16 Construction 3.8% 11 -1.2% 46 Manufacturing -1.7% 18 0.1% 40 Trade, transportation, and utilities 1.1% 10 0.8% 38 Information -1.1% 10 -2.9% 41 Financial activities 1.0% 27 -0.1% 41 Professional and business services 3.4% 6 -0.4% 50 Education and health services 4.6% 5 1.9% 23 Leisure and hospitality 1.9% 25 1.9% 41 Other services 1.8% 7 -1.0% 44
Public 1.6% 6 -1.3% 41 Total 2.0% 7 0.4% 49
2001-2007 2010-2014
UNM Bureau of Business & Economic Research 11
Job Growth in Prof & Tech Services: NM and Neighboring States (2009=100)
2009 2010 2011 2012 201390
95
100
105
110
115
120
125
USAZCONVNM
Source: BLS Quarterly Census of Employment and Wages
UNM Bureau of Business & Economic Research 12
New Mexico private employment: rate of growth and state ranking by establishment size
Source: BLS Quarterly Census of Employment and WagesNote: Data include only first quarter of each year.
%/yr Rank %/yr Rank
Private 3.4% 8 0.9% 47 Fewer than 5 employees per establishment 2.3% 19 -0.3% 48 5 to 9 employees per establishment 1.7% 18 0.6% 20 10 to 19 employees per establishment 2.8% 11 1.4% 19 20 to 49 employees per establishment 2.6% 19 2.6% 12 50 to 99 employees per establishment 2.4% 24 0.9% 48 More than 100 employees per establishment 5.2% 4 0.0% 50 Public 1.4% 15 -1.1% 40 All Establishments 2.9% 10 0.4% 49
2001-2007 2010-2014
UNM Bureau of Business & Economic Research 13
New Mexico: components of population change
Source: Census Bureau, 2000 and 2010 Decennial; 2012 and 2013 Population estimates.
Births Deaths Int'l Domestic
1990-1999 143,072 254,934 111,862 80,606 38,267 42,339 223,6782000-2009 129,591 265,766 136,175 70,558 47,343 23,215 200,149
2010-2013 36,121 88,993 52,872 (9,750) 5,837 (15,587) 26,3712012-2013 10,674 27,146 16,472 (8,809) 1,717 (10,526) 1,865
Total Population
Change
Natural Increase Net Migration
UNM Bureau of Business & Economic Research 14
New Mexico’s economic outlook
UNM Bureau of Business & Economic Research 15
New Mexico & US employment growth: forecast
Sources: New Mexico – FOR-UNM; US – IHS Global Insight
2010
2010
2011
2011
2011
2011
2012
2012
2012
2012
2013
2013
2013
2013
2014
2014
2014
2014
2015
2015
2015
2015
2016
2016
2016
2016
2017
2017
2017
2017
2018
2018
2018
2018
2019
2019
2019
2019
-1.5%
-1.0%
-0.5%
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
New Mexico United States
UNM Bureau of Business & Economic Research 16
New Mexico & US income growth: forecast
Sources: New Mexico – FOR-UNM; US – IHS Global Insight
2010
2010
2011
2011
2011
2011
2012
2012
2012
2012
2013
2013
2013
2013
2014
2014
2014
2014
2015
2015
2015
2015
2016
2016
2016
2016
2017
2017
2017
2017
2018
2018
2018
2018
2019
2019
2019
2019
-1%
0%
1%
2%
3%
4%
5%
6%
7%
8%
New Mexico United States
UNM Bureau of Business & Economic Research 17
Western Blue Chip: forecasted employment and income growth, 2015
US New Mexico Arizona Colorado Nevada Texas Utah 0%
1%
2%
3%
4%
5%
6%
7%
1.8%
1.2%
2.8% 2.8% 2.8% 2.6%3.1%
4.6%4.1%
5.3% 5.3%
3.6%
6.2%
5.1%
Employment Personal Income
UNM Bureau of Business & Economic Research 18
New Mexico employment growth forecast: 2014-2018 (average annual rates)
Mining
Constructi
on
Manufactu
ring
Wholesa
le Trade
Retail Tra
de
Transp
ort. &
Ware
hsng.
Information
Finance
& In
sura
nce
Real Esta
te & Le
asing
Prof.&
Tech. S
vs.
Admin. & W
aste M
gmt.
Healthca
re &
Soc.
Asst.
Arts &
Recreation
Accom. &
Food Sv
s.
Other Servi
ces
Govern
ment
L
ocal G
ovt.
S
tate Govt.
F
ed. Govt.
NM M
ilitary
-3%
-2%
-1%
0%
1%
2%
3%
4%
Source: FOR-UNM
UNM Bureau of Business & Economic Research 19
New Mexico employment growth forecast, 2014-2018 (Number of Jobs)
Mining
Constructi
on
Manufactu
ring
Wholesa
le Trade
Retail Tra
de
Transp
ort. &
Ware
hsng.
Information
Finance
& In
sura
nce
Real Esta
te & Le
asing
Prof.&
Tech. S
vs.
Admin. & W
aste M
gmt.
Healthca
re &
Soc.
Asst.
Arts &
Recreation
Accom. &
Food Sv
s.
Other Servi
ces
Govern
ment
L
ocal G
ovt.
S
tate Govt.
F
ed. Govt.
NM M
ilitary
-4,000
-2,000
0
2,000
4,000
6,000
8,000
10,000
12,000
Source: FOR-UNM
UNM Bureau of Business & Economic Research 20
New Mexico Housing Permits: Single & Multi-Family Units, 2014-2018
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 20190.000
2.000
4.000
6.000
8.000
10.000
12.000
14.000
16.000
-50%
-40%
-30%
-20%
-10%
0%
10%
20%
30%
40%
NM Housing Permits (Multi Family) NM Housing Permits (Single Family) Growth (Total)
Source: FOR-UNM
UNM Bureau of Business & Economic Research 21
Employment growth by region, 2014-2018
Source: FOR-UNM
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019-2.5%
-2.0%
-1.5%
-1.0%
-0.5%
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
Albuquerque Las Cruces Santa Fe Non-Metro
UNM Bureau of Business & Economic Research 22
Employment gain/loss by region, 2014-2018
-6-4-202468
10Albuquerque MSA
-2
-1
0
1
2Las Cruces MSA
-2
-1
0
1
2Santa Fe MSA
-6
-4
-2
0
2
4
6
8
10Non-Metro
UNM Bureau of Business & Economic Research 23
New Mexico employment growth forecast: alternative scenarios
2013
2013
2013
2013
2014
2014
2014
2014
2015
2015
2015
2015
2016
2016
2016
2016
2017
2017
2017
2017
2019
2019
2019
2019
0.0%
0.2%
0.4%
0.6%
0.8%
1.0%
1.2%
1.4%
1.6%
1.8%
2.0%
Baseline Scenario Pessimistic Scenario Optimistic ScenarioSource: FOR-UNM
New Mexico's Economy: Recent Developments and Outlook
New Mexico Data Users ConferenceAlbuquerque NM
November 13, 2014
Jeffrey MitchellDirector, BBER
Bureau of Business & Economic ResearchUNM
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