Wednesday, September 26, 2007

New Mexico Economic Outlook

For the Governor's Summit on Economic Development, now in session at the Hyatt Regency in Albuquerque, the University of New Mexico's Bureau of Business and Economic Research has provided a three-page plus summary of its extensive and detailed economic forecast that is issued a number of times each year.
Here is the summary paragraph of the summary. "The outlook for the New Mexico economy calls for moderate but slowing expansion. Following a robust increase of 3.0 percent in 2005, New Mexico nonfarm employment growth will slip to 2.0 percent in 2007 and 1.9 percent in 2008, and then to near 1.5 percent each year through 2012. New Mexico personal income growth will follow a similar pattern, with gains of 6.7 percent next year. Following that, growth will ease into the neighborhood of 5.5 percent through the forecast horizon. The unemployment rate will hold at just over 4.0 percent."
Sector Job Growth:
Construction - a modest recovery in the second half of 2008, job losses in 2009.
Mining - virtually zero growth after 2007.
Manufacturing - growth around one percent through 2012.
Information - growth dropping to around 3.0 percent starting in 2009, less than half the current rate.
Health Care - 2.5 percent in 2008 and 2009, then less.
Professional and business services - "a very good showing," which means mostly less than 3.0 percent.
Trade - 1 percent or less.
Arts, entertainment and recreation - around 1.0 percent through 2010, then dropping.
Accommodation and food services (the big tourism sector) - 1.6 percent in 2008, then dropping.
Other services - half a percent or less.
Government - employment decline of 0.6 percent in 2007, then increases of around 1.5 percent.
BBER has much, much, much more, including whether the government job decline is in state, local or federal employment. The report provided conference attendees contains more sector details than we've seen BBER release in a long time. That is why it is provided here. Though nearly all the forecast service's financing come from the public sector, BBER standardly refuses to share with the public any information beyond modest and varying summaries. It's a long story and a bureaucratic battle long since lost.

Uranium Notes

The National Enrichment Facility, now under construction east of Eunice by Louisiana Energy Services, offers the model for redevelopment of the uranium industry in New Mexico, Juan Velasquez of Strathmore Resources Ltd. told the New Mexico Mining Association yesterday. Velasquez spoke as Strathmore announced a joint venture with Nu-Mex Uranium Corp. to explore and develop Strathmore's Nose Rock properties northeast of Crownpoint in the Grants mineral belt. The agreement calls for $44.5 million in work commitment expenditures on the 5,000 acres.
Louisiana Energy Services worked closely with people in the Eunice area, Velasquez said. "They developed credibility," he said. "Grassroots support is crucial to our success. Stakeholder involvement is a must." Communication must come ealy and often.
The regulatory situation is quite different from the 1970s, Velasquez said. Then permit requirements were minimal. Now permits are required for even the slight impact work of gathering data.
As the association met, NRG Energy Inc. of New Jersey filed the first two of what is an expect "flood" of applications for new nuclear reactors, the Wall Street Journal reported. NRG wants to add two units to its existing station near Bay City, Texas.
State Sen. David Ulibarri of Grants participated in two panels at the association meeting.

Monday, September 24, 2007

Housing in New Mexico

New Mexico had 850,095 housing units in mid-2006, the Census Bureau estimates. The numbers were released September 12. The 2006 figure was a 12,045 unit, or 1.4 percent, increase from 2005. New Mexico is 37th in the number of housing units, about the same place as the state's population rank. The 05-06 performance was 33rd in the number of units added and 19th in percentage increase.
Arizona was second in percentage increase for the 05-06 year behind Nevada and sixth in the number of new units. Arizona and Nevada are two of the states driving the increase nationally in the number of foreclosures, a situation that began developing in a big way as these stellar housing unit increases were being posted. Florida and Georgia, two other states driving the foreclosure wave, were fourth and sixth in percentage increase of housing units for the period.
Think bubble for those states.
A housing unit can be an apartment, a townhouse or condominium or a single family detached home.

Friday, September 21, 2007

Intel and IRBs

Intel Corporation has made extensive use of industrial revenue bonds as its Rio Rancho facility grew from small to be, at one time, the company's largest single manufacturing site. IRB's, one of New Mexico's two most important economic development incentives, exempt users from paying property tax on investments made with the bond money. New employment typically is the main standard for getting a government entity to bless issuance of the bond. Note that the company borrows and owes the money, but the government blessing is required.
Intel won't be adding jobs in Rio Rancho. The recent layoff "affected" 1,150 people. But Intel, as is necessary in the semiconductor business, will be constantly investing large amounts of money in Rio Rancho. The company has some billions left on its most recent IRB. That will run out eventually.
So Intel New Mexico Government Affairs Manager Jami Grindatto posed a question at yesterday's Albuquerque Economic Development Investor's Luncheon. How about changing the economic development incentive criteria to allow IRB's for firms in Intel's situation: Investment required to maintain employment.

Thursday, September 20, 2007

Albuquerque Economic Development

The metro's leading economic development organization held its quarterly investor's luncheon today. The event at the Sandia Resort and Casino attracted 667 registrations, a record, said Gary Tonjes, AED president. The resort catering staff responded capably to the challenge with pretty decent food for a banquet and prompt service complete with refilled ice tea glasses.
Speakers included technology executives Doug Cayne of Aspen Avionics and Robert Harbour of Lumidigm.
Avionics are the instruments than run an airplane. Aspen's niche is to make avionics that will allow retrofitting the dials and switches on existing low-priced aircraft with computer-based gear and sell at an affordable price. Avionics for the masses, one might say. Aspen is sold out through the first half of 2008, Cayne said.
Lumidigm calls itself "an identity solutions company" that makes "biometric security products." One Lumidigm device quickly and cleanly records the fingerprints both on the surface of the finger and on the subsurface. Yes, there are such things as a subsurface fingerprint.
For AED, Tonjes said, there is the potential that the fourth quarter of 2007 will be a record in terms of new companies and jobs or merely be "very impressive." AED's top six location prospects would add 6,500 jobs to the metro area and need 3.2 million square feet of space.
Blue Cross Blue Shield of New Mexico and Public Service Company sponsored the luncheon.

Wednesday, September 19, 2007

Conservation Perfection

Such a thing is possible when voting on legislation. Sandy Buffet, executive dircector of Conservatin Voters of New Mexico writes:
"Thank you for including a mention of our CVNM Scorecard in your most recent issue of the Capitol Report! We’re pleased to be highlighted.
"Unfortunately, it missed some critical info—you reported that our highest score was Jeff Steinborn at 95%. While we’re proud of Jeff, somehow the writer missed the full page of our scorecard where we highlight all of our 100% champions. These include: Rep. Elias Barela, Rep Miguel Garcia, Rep Joni Gutierrez, Rep Antonio Lujan, Rep Rick Miera, Rep Mimi Stewart, and Rep Peter Wirth. All of these House Legislators scored 100%, a perfect pro-conservation vote.
"I hope you can note this as a correction in your next edition. Feel free to call with questions.
"Thanks,
"Sandy Buffett"
And indeed, there they are on page 20 of the Conservation Voters' report. We messed up. Sorry about that and thanks for writing.

Tuesday, September 18, 2007

Abq to Hit 1 Million

A September 17 story Albuquerque Tribune story somewhat breathlessly proclaimed that the metro Albuquerque population will hit one million by 2021. The story was briefly mentioned by a television station which is how I learned of it. That it took much Internet digging before the thought occurred to check the Tribune reflects both the Tribune's obscurity as a journalistic enterprise and the searcher's obtuseness. The source of the projection—the University of New Mexico's Bureau of Business and Economic Research—doesn't appear until the 11th paragraph. Nor does the projection obviously appear on BBER's Web site. BBER's propensity for not sharing projections, specifically those of the taxpayer funded FOR-UNM Economic Forecasting Service, is an old and separate issue.
The Tribune story misses the point in its effort to pitch the need to manage this implicitly out-of-control growth. This is the old journalistic thing about hooking a policy position—managing growth, as if it isn't being "managed" now—on a number—the incipient 1 million metro population.
The point is that if one lifts the mind from the false boundaries of metro areas, namely county lines, the metro, the real metro, has passed one million.
Call this real metro the North Central Urban Area. It runs from Belen to Velarde in Rio Arriba County. That means the four-county metro Albuquerque and metro Santa Fe (Santa Fe County) with southern Rio Arriba County and Los Alamos for good measure. The combine population passed one million, according to Census Bureau estimates for July 2006.
That Albuquerque and Santa Fe had come together appeared a dozen years ago when viewing the two equal streams of 7 a.m. commuters on I-25. A little later, Rio Rancho started marketing homes to Santa Fe workers. Then there is the bumper-to-bumper traffic from Santa Fe to Espanola and beyond.

Saturday, September 15, 2007

Job Losses

Not only has the state's job growth dropped back to what the state Department of Labor (er, Workforce Solutions) calls "more normal," i.e., the lower two percent range, new claims for unemployment compensation have increased all year. Why this hasn't turned into a bigger jump in unemployment is a good question, one beyond the scope of this note.
The numbers are that weekly new claims went on a run of 21 consecutive year over year increases from the week ending March 17 through the week ending August 4. In the following four weeks, claims were up twice and down twice. For the first ten weeks of 2007, claims dropped during five weeks and increased in five weeks.
When claims do increase, the percentage increase commonly seems around 25 percent. The week of April 28 was typical. The 970 new claims were a 270 claim, or 27.7 percent, increase from a year earlier.
One has to go to the feds to get these numbers. See http://www.workforcesecurity.doleta.gov/unemploy/claims_arch.asp. The Department of Workforce Solutions does not post the new claims numbers. The Department of Labor did.

Wednesday, September 12, 2007

The (Coming) Lab Layoffs

Here's a guess—a pure guess—about what happens when the forecast layoffs come to Los Alamos National Laboratory and Sandia National Laboratories.
First, the world won't end.
The suspicion is that there will be buy-outs—people will be offered money to go away. This is what Bank of America did with me in 1997. I took the money. A good many people taking the laboratory (read: taxpayers) money will be Baby Boomers who have been there a long time. If these people are on the technical side, they earn good salaries, well over $100,000.
By the way, the reason Los Alamos has a high proportion of millionaires is not because of entrepreneurial activity, but because of well paid scientists chunking money into pension plans.
The bulging pension plans will mean slight loss of income for those leaving the labs. Some of those leaving will be rehired as consultants and maybe even net out with increased compensation. Others, just a few, might even do something entrepreneurial. Over time, some of those dear departed ones will be replaced by young Ph.Ds who will be very well paid for their age and who will spend the money on houses, babies, expensive hiking gear and Priuses.
in sum, then, the guess here is that the ripple in Albuquerque won't be noticed and the ripple in Los Alamos will be modest.

Tuesday, September 11, 2007

Abq Job Growth

Bizjournals.com (www.bizjournals.com), the online arm of American City Business Journals, owner of New Mexico Business Weekly, has a new report ranking job growth in the nation's top 100 job markets. Albuquerque ranks 25th, between Sarasota, FL, and Oklahoma City. Albuquerque's "employment score" is 3.94.
Each market was rated for nine job related categories, most covering differing numbers of years.
Phoenix leads the rankings by a big margin. Salt Lake City was in second place. The break between a positive and negative rank came between 45th place (Harrisburg, PA) and 46th (Indianapolis).
Other regional cities ahead of Albuquerque are Dallas (6), Austin (8), Tucson (10) and Wichita, KN (20).

Monday, September 10, 2007

New Task Force

The Governor's Task Force on Mortgage Lending is the latest of the many such forces. The charge is to evaluate the potential impact of the national subprime lending crisis.
Our guess as to that impact is: Some, but not a whole lot. Nationally, the problem is one of moving out the risk horizon on morgage lending and then trouble developing at the risk boundary. Moving out the risk horizon meant figuring out ways for lower income and/or funky credit history people to get mortgages. Statewide, foreclosures declined 30 percent during the first half of 2007, as compared to a 58 percent increase nationwide, according to RealtyTrac, a research firm. In metro Albuquerque, sales have declined, but prices continue to increase. Construction employment has dropped a little in Albuquerque over the past year and has held steady statewide.
The national delinquency and foreclosure rates are being driven by events in four states—California, Florida, Nevada and Arizona, reports the Mortgage Bankers Association. These four have more than one-third of the nation’s subprime adjustable rate mortgages, more than one-third of the foreclosure starts on subprime ARMs, and are responsible for most of the nationwide increase in foreclosure actions. The subprime market brought 12 million households to home ownership, said the late Edward Gramlich, a member of the Federal Reserve Board of Governors. A large majority of these households would not have qualified for mortgages 15 years ago.
Task Force chairs are Michael Loftin of Homewise and Tomasita Duran of the Ohkay Owingeh Housing Authority.

Sunday, September 9, 2007

Rural Voters

The Sunday, September 9, Denver Post had a lead feature arguing that "there is a sense in many rural communities across the country, that they are invisible - at least politically." The headline said, "Rural America: Invisible Voters."
Clayton got considerable play in the story. Here are a couple of excerpts.
"Many rural residents resent interference by the federal government, but their towns' existence often depends on grants and funding for infrastructure.
"It's our lifeblood," said Garth Boyce, mayor of Clayton, N.M......
"Boyce counts his town of Clayton, tucked into the northeastern corner of New Mexico, lucky in getting a prison. At one point, it looked as if it might get a meatpacking plant.
""Those are dirty, dangerous jobs. We were willing to take it, but thank God we didn't get it," he said.
"The prison, which the smiling, gray-mustachioed Boyce prefers to call a "detention center," will bring 200 jobs and pay $12.50 an hour - more than twice the minimum wage.
"Not only could that make a difference in a cattle-ranching community where most of the 2,500 people hold low-paying jobs on the land or in service industries, but Boyce hopes it will fill some empty shops on Main Street.
"Government jobs also mean medical insurance, a luxury in this area. Chrystal Jonas, 23, is a home health care worker - but isn't covered herself.
""My kids get Medicaid, but there's no cheap insurance I can afford," said Jonas, dressed in multicolored medical scrubs and flanked by her 6-year-old son and her daughter, 5."
For the entire story see: http://www.denverpost.com.

Friday, September 7, 2007

Transportation & Money

The Transportation Technical Committee has a long list of potential sources for new money for transportation projects. What does not seem to be on the committee's topic list is sunk cost. Our accounting book defines sunk cost as "as cost which has already been incurred and which, therefore, is irrelevant to the decision making process." Sunk cost is waved aside when someone says: We've already spent $xxx, so we have to finish the project. Well, no. If the initial spending has been wasted, then no reason exists for spending more.
The Governor's commuter railroad would seem an appropriate target for consideration in light of sunk cost. But in our brief time at the comittee's September 6 meeting, the only topics were sources of more money. Sources mentioned include:
- Allocating some part of severance tax bonding capacity, perhaps 25%, to transportation. (Lawrence Rael of the Albuquerque-based Mid-Region Councail of Governments liked this. So did Sen. Diane Snyder of Albuquerque who said she is "willing to run {a bill} so we talk about it.)
- Creating local options for raising gross receipts taxes. (Rael said gross receipts tax increases "generate the most bang for the buck. At the local level, that's the only mechanism" to raise big money. David Abbey of the Legislative Finance Committee cautioned about raising gross receipts taxes, citing pyramiding and the broad base of the gross receipts tax.)
- Hitting new money from gaming compacts.
- Raising vehicle registration fees and indexing to inflation.
- Impact on road users.
- Railroads, a container tax, perhaps, said Johnny Cope of Hobbs.
Overall, said Rep Dan Silva, "the solution is new revenue."

Tuesday, September 4, 2007

Liberal Arts and PR

Unless I have missed one, we have three private, liberal arts colleges in New Mexico—St. John's College in Santa Fe, College of the Southwest in Hobbs, and College of Santa Fe in, yes, Santa Fe. They are quite different. St. John's, approaching the 40th anniversary of the graduation of its first class, got some gratuitous PR last week from Paul Greenberg, nationally syndicated columnist and editorial page editor of the Arkansas Democrat-Gazette.(Disclosure: I was part of that first class, but did not graduate.) Gail Griffith, St. John's director of communications, said the College didn't know of Greenberg's writing plans until the column appeared.
Greenberg hiked (his word) from downtown to the St. John's campus, a non-trivial jaunt, especially for those from lower altitudes. He called the College "a school dedicated to classical education and the study of the Great Books in general." The program "offers perspective," he said, and "learning." All true. All three liberal arts colleges are also multi-million dollar operations that occupy important places in the local economy. St. John's, by the unique nature of its program, brings yet another national perspective to Santa Fe.(www.stjohnscollege.edu).

Monday, September 3, 2007

Job Situation

Job growth is the primary way to measure the performance of any economy smaller than the nation. Gross state product is emerging as a supplement, but small states such as New Mexico provide limited data, making the figure uncertain for the state.
The most recent numbers were released August 30 by the Department of Workforce Solutions, formerly known as the Department of Labor. New Mexico has settled comfortably back into the mediocre performance that characterized the state for many years. That means job growth under 2% and less than our neighboring states.
Wage jobs grew 1.8% between July 2006 and July 2007, the department reported August 30, half the annual growth rate of a year ago. That's a year over year increase of 14,900 jobs. The department says the current performance is "a level that is
closer to the state's long-term average." That means mediocre, the accepted description for job growth between 1% and 2%. The other descriptions are, roughly: Under 1%: Not much at all. Between 2% and 3%: Good. Between 3% and 4%: very good. Over 4%: Booming.
Here is the jog growth performance of the surrounding state:
Utah - 4.8% (Number one in the nation)
Arizona - 2.8%
Texas - 2.7%
Colorado - 2%.
Nevada - 1.7% (This is a big change. For a long time, Nevada led the nation in job growth.)
Oklahoma - 1.6%

Sunday, September 2, 2007

Tranportation & Birds

Birds as in Roadrunners. The Inevitable financial crunch seems to have come to roost on Gov. Richardson's Rail Runner commuter railroad, reports the Albuquerque journal September 2. The report says Rail Runner operating costs "could rise to $20 million a year, up from $9.5 million currently. Note, there is no mention of revenue. The railroad is part of an overall financial squeeze on money to spend for transportation infrastructure. A task force has been formed to address the situation. We will work to bring you the group's report.
We have asked the administration for a list of task forces. Twice. To no avail.
The most interesting new aspect of the railroad's fortunes comes in Socorro where legislators have their eye on the bird and the pork that it might bring. According to the Mountain Mail, the group spoke at a luncheon sponsored by the Socorro Chamber of Commerce and the Association of Commerce and Industry. According to the newspaper, "State Sen. David Ulibarri, Sen. Ben Altamirano, and Rep. Don Tripp each spoke about the importance of extending the Railrunner passenger train service to Socorro. 'The RailRunner will never be able to make any money,” Tripp said. “But the economic benefits to Socorro and the surrounding area would be far reaching.'"