NM Economy: Recession Continues, Says KC Fed

A dozen days ago Mark Snead came to Albuquerque with the traveling road show of the Federal Reserve Bank of Kansas City. Snead is branch executive and regional economist with the KC Fed’s Denver branch. Snead talked about the New Mexico economy.
New Mexico and Colorado are the poorest performers among the KC Fed’s seven states. Both lag the economic cycle, stuck in a last in/last out situation. All in all, though, New Mexico “is progressing through the cycle nicely,” Snead said.
New Mexico entered the recession late, had a sharp contraction and, as yet, shows no recovery. We’re in the first severe recession of the post World War II period with 51,000 jobs lost. Continuing unemployment claims are a complication for New Mexico. The claims continue to continue, meaning that folks aren’t going back to work.
The metro situation is “no bottom” in Albuquerque and Farmington, a possible bottom in Santa Fe with Las Cruces bouncing back and adding jobs.
New Mexico has seen a 20% employment drop in the good producing sectors. State and local government employment stood above the fray until around June and since then has fallen steeply. New Mexico has lost 7,100 jobs since December 2009 including 5,000 in state and local government.
Proprietor’s income is the technical name of what self-employed people earn. This fell off a cliff in 2009, especially in the construction and energy sectors. Earning and compensation also fell, but much less, and now show a slight increase. Proprietor’s income, though increasing again, remains well short of the peak.
Real estate and construction are “your Achilles heel,” Snead said. Construction employment, seasonally adjusted, picked up a little during the summer and is now headed back down.
Home prices here, down 8.5% since 2007, show the largest drop of the KC Fed states. Existing home sales dropped 60% from peak to trough, but have recovered a bit. Mortgage delinquencies may have peaked here and nationally.
Some evidence exists of stabilization in commercial construction employment.
One good note is that New Mexico is seeing a strong rebound in drilling.