Friday, October 3, 2008

Economy: New Mexico

Manufacturing is the weakest sector of the New Mexico economy and, as manufacturing sectors go, among the weakest in the nation. In August, manufacturing jobs accounted for 4.16% of New Mexico's nonfarm employment, as compared to 9.85% nationally. Nor do current surveys "indicate a near-term rebound." For perspective, in 1993, manufacturing claimed 6.8% of the state's wage jobs.
The report came last night from Alison Felix, an economist with the Federal Reserve Bank of Kansas City. Felix joined her boss, Tom Hoenig, for the KC Fed's periodic New Mexico Economic Forum. I will report Hoenig's remarks tomorrow. One highlight was that Hoenig doesn't want to dump mark-to-market valuation rules. He says the "chaos" of such a change would be worse than what we have now.
"Overall," Felix said, "the New Mexico economy is outperforming the nation, but has weakened during the past year."
To summarize:
Real personal income is growing nicely in new Mexico, up around 4% for the second quarter of 2008, about double the national rate. Felix didn't mention the huge growth in transfer payments. See September 18 post.
Comparing sector employment to the nation, New Mexico has:
* Four times the employment in Natural Resources and Mining: 2.37% vs. 0.6%.
* Two thirds the employment in financial activities: 4.1% vs. 6%. No surprise here, we're a long way from mega-large population major metros. Finance is the weakest New Mexico service sector with a 2% job drop between August 2007 and August 2008.
* Five percentage points more in state and local government: 18.75% vs. 13.5%. Hmmmm....
Our percentage decline in existing home sales is more than the nation.
Home prices here have held up much better than nationally, only showing a slight decline as of the second quarter of 2008.
Our percentage of homes in foreclosure, 1.35% of all mortgages, is half the national rate and around a third of the worst-hit states such as Arizona.
New Mexico is fourth, per capita, is getting federal spending.
New Mexico tax revenue collections for state government were up all of 1.8% in the fiscal year ending June 30,2008. Without severance tax money, up 25%, we would have been in big trouble.
New Mexicans should get this information—and much more—regularly from the Bureau of Business and Economic Research at the University of New Mexico. BBER has the data, paid for with public money, but keeps it secret due to the structure of BBER's FOR-UNM Economic Forecasting Service. Transparency in the forecasting service is a battle I've long since lost, but the situation is so annoying, I can't resist mentioning it once in a while.

No comments: