1. New Mexico's Economy: Recent Developments and Outlook New Mexico Data Users Conference Albuquerque NM November 13, 2014 Jeffrey Mitchell Director, BBER Bureau of Business & Economic Research UNM

2. 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.

3. 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.

4. UNM Bureau of Business & Economic Research 4 New Mexico & US employment growth: history Sources: New Mexico – FOR-UNM; US – IHS Global Insight

5. UNM Bureau of Business & Economic Research 5 Employment growth: NM and Neighboring States, (2009=100) Source: BLS Quarterly Census of Employment and Wages

6. UNM Bureau of Business & Economic Research 6 Employment growth: ABQ MSA and nearby MSAs Source: BLS Quarterly Census of Employment and Wages

7. UNM Bureau of Business & Economic Research 7 US & NM residential construction, 2001-2014Q3

8. UNM Bureau of Business & Economic Research 8 Why is New Mexico’s recovery so weak? o Loss 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?

9. 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.

10. 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

11. UNM Bureau of Business & Economic Research 11 Job Growth in Prof & Tech Services: NM and Neighboring States (2009=100) Source: BLS Quarterly Census of Employment and Wages

12. 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 Wages Note: Data include only first quarter of each year.

13. 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.

14. UNM Bureau of Business & Economic Research 14 New Mexico’s economic outlook

15. UNM Bureau of Business & Economic Research 15 New Mexico & US employment growth: forecast Sources: New Mexico – FOR-UNM; US – IHS Global Insight

16. UNM Bureau of Business & Economic Research 16 New Mexico & US income growth: forecast Sources: New Mexico – FOR-UNM; US – IHS Global Insight

17. UNM Bureau of Business & Economic Research 17 Western Blue Chip: forecasted employment and income growth, 2015

18. UNM Bureau of Business & Economic Research 18 New Mexico employment growth forecast: 2014-2018 (average annual rates) Source: FOR-UNM

19. UNM Bureau of Business & Economic Research 19 New Mexico employment growth forecast, 2014-2018 (Number of Jobs) Source: FOR-UNM

20. UNM Bureau of Business & Economic Research 20 New Mexico Housing Permits: Single & Multi-Family Units, 2014-2018 Source: FOR-UNM

21. UNM Bureau of Business & Economic Research 21 Employment growth by region, 2014-2018 Source: FOR-UNM

22. UNM Bureau of Business & Economic Research 22 Employment gain/loss by region, 2014-2018

23. UNM Bureau of Business & Economic Research 23 New Mexico employment growth forecast: alternative scenarios Source: FOR-UNM

24. New Mexico's Economy: Recent Developments and Outlook New Mexico Data Users Conference Albuquerque NM November 13, 2014 Jeffrey Mitchell Director, BBER Bureau of Business & Economic Research UNM