Wednesday, December 30, 2015

Business "Climate"

A friend from New England works for a large national organization that has a branch in Albuquerque. Recently a New England colleague of my friend called an Albuquerque colleague and inquire about the meth atmosphere in Albuquerque. This environment was all too well portrayed in the "Breaking Bad" television series. While one can't complain about the Albuquerque businesses offering tours of the sites seen in "Breaking Bad" and in the "Better Call Saul" series, this overlay (underlay?) on the Duke City's reputation could be one of those other-things-equal decision points that would drive a business or an individual to locate elsewhere.

Friday, December 18, 2015

NM Continues as Unemployment Rate Leader

A statistically significant seasonally adjusted job gain of 3,900 happened in New Mexico Between October and November. But it was little enough to keep us at the bottom (or top) of the unemployment rate rankings with 6.8% unemployed, up from 6.1% in November 2014, according to figures from the Bureau of Labor Statistics released this morning.
The 6.8% unemployment rate was unchanged from October (and, indeed, unchanged from September. We now have the nation’s highest unemployment rate, up (or down) one place from October. We continue, therefore, with the nation’s worst economy.
New Mexicans are dropping from the labor force. Some of those not working have gone back to not bothering looking for work. The labor force dropped 2,100 from 916,600 in November 2014 to 914,700 last month, a drop of two tenths of one percent (0.02%). The more serious deterioration has been since September when the labor force was 923,500. The two-month seasonally adjusted decline is 8,800 people, or 0.95%, more than four times the year-over-year rate.
Meanwhile 6,100 more people have become unemployed year-over-year.
Unemployment has been steady at around 62,000 the past three months with the unemployment rate at 6.8%. That means the unemployment rate increase between November 2014 and November 2015 have come because of the drop in the labor force, because of people giving up this work thing.
“Employment” is defined as the labor force count minus unemployment. Employment dropped 8,000, or 0.93%, year over year.
Wage employment, the “other” set of job numbers, puts us in a bit better light. Between November 2014 and November 2015, seasonally adjusted wage employment increased 3,000 or a whopping 0.36% (a bit more than three tenths of one percent).
Separate surveys produce the separate numbers.
The Department of Workforce Solutions reported the unemployment rate in its release in mid-afternoon. DWS ignored our national unemployment rate standing. Gee.
The seasonally unadjusted sector wage job growth leaders between November 2014 and November 2015 were leisure and hospitality, up 3,100 jobs, or 3.5%, education and health services, up 2,900 jobs, or 2.2%, and professional and business services, up 2,800 jobs, or 2.8%.
Mining, meaning oil and gas, was down 2,900 jobs. Manufacturing and transportation both lost 1,100 jobs over the year.

Sunday, December 13, 2015

Fundamental Issues Confronting New Mexico Today

Revised 2015. Prepared for discussion by Harold Morgan, syndicated columnist

In this week's newspaper column I promised to post the revised list of what I consider fundamental issues facing New Mexico. These issues provide the basis for much of what appears in the column each week. While the list is incomplete, it provides a broad framework of deep, structural matters needing attention. How to take discussion of these issues to the rest of state is the problem. I'm working on an idea, a series of conferences, which of course would cost money. If you have any thoughts on the issues list and/or on how to bring the issues to a wider audience, email to - Harold

Some major institutional issues (including the usual suspects, such as water, agriculture and energy) are listed alphabetically:
• A majority of Hispanics tracing their heritage to Mexico. Cultural differences with traditional northern Hispanics.
• A state economy crossing multiple sectors and therefore not usefully measured. Generally we do science (labs to Intel) and work deriving from the land and culture (tourism, agriculture, literature, the Museum of New Mexico). Pure national defense (Holloman, Cannon) is a separate, smaller sector.
Economic activity should be identified to include everything associated with the business. Mines and smelters should go together. Aggregating everything involved with agriculture might take the sector from two percent of the economy to nine percent.
Comprehensive arts sector study released in 2014 indicates measurement approach as does the 2015 Borderplex Strategic Plan.
• Broadband (transportation of information).
• Environmentalist politics.
• Financial institution capability and role of community banks. Dodd-Frank regulations increase costs and constrain lending, more so in smaller communities.
• “Government dependence.” “Too much,” it is always alleged. In New Mexico federal activities are appropriate—border administration, land management, Indian affairs (see Native American, below). Research, itself widely varied. Military. Culture creates process orientation.
• Labor force participation. Low for decades.
• Land use and ownership. The private sector is the biggest owner of land in the state with 44 percent. Surprise! The feds own about a third of the state—34.3 percent—with the state at 12 percent and tribes with 9.4 percent. Private land ownership ranges from 6 percent in San Juan County to 93 percent in Curry County. These are old numbers and may have changed a little.
• Native American. Tribes, comprising almost ten percent of New Mexicans, are said to consider themselves ignored, not “at the table.” The Traditional Cultural Property dispute, fundamentally about theology and bureaucracy, has a major land use component. (See PERC Reports, Summer / Fall 2012, or Custodial “trust” relationship with federal government inhibits reservation economic activity.
• New Mexico as the nation’s number two majority-minority state.
• Non-farm proprietorships (commonly without employees).
• Northern counties as “rural ghetto.”
• Population change driven by new babies. Adults provide the smaller portion of our population growth. But adults are the ones who pay taxes. Babies consume taxes. Increasing movement to other states. Population decline in 2014.
• Technology transfer: Being in the national defense business with an emphasis on nuclear limits development of an entrepreneurial culture. Some technology heads to the private sector. Los Alamos National Laboratory has recently restructured its approach. Recent awards for technologies involving contaminant removal, filtering water, open software wireless well monitoring and recycling Strontium-82 generated enthusiastic news releases and headlines.
• New Mexico’s Constitution.
• Transportation – highways, that is. Nine figure gap between desired construction and maintenance and money available.
• Underground or shadow economy. The only available estimates says 9.3% of New Mexico’s gross state product operates “off the books.” Aspects: cash only, no regular healthcare, no use of banks, inability to grow businesses. See non-farm proprietorships.
• Uneducated young people. That our kids can’t read is bad enough. History courses appear to be process. Knowing the facts—who won the particular war—is necessary before the processes. A high school catalogue calls New Mexico history a semester-long survey “with an emphasis on the 20th century to the present.” The 17th, 18th and 19th centuries don’t count much.
The economics course cites “government agencies” as the first player in the “allocation of scarce resources and the economic reasoning.” People are mentioned but not markets.
• Communication: Perhaps the biggest challenge. New Mexico is a big state with 77.9 million acres, or 121,335 square miles. Just over half of us live in the north central Rio Grande Valley from Belen to Velarde. The rest of us live everywhere else.
Events in one corner of the state fail to penetrate the other corner. The private sector might step up here.

Colorado Column 2014, No. 1

In my newspaper column that will appear in nine community newspapers around the state this week, I wrote about New Mexico's (non) rankings among the 50 state on 109 factors listed in the new edition of “Toward a More Competitive Colorado.” I promised to post for comparison the columns about the 2014 edition of the publication. The first column follows. The second column is the next post. - Harold Morgan


Colorado Comparison Part One: Things Can Change

By Harold Morgan

If Colorado’s leaders are smarter than those in New Mexico, something I don’t believe, they can’t be that (BF? Ital?) much smarter. After all, to determine our performance in a host of categories, we can freeload off Colorado and save work and money. The reference here is to the just released 10th edition of “Toward a More Competitive Colorado,” a comprehensive look at nine general categories, each with up to a dozen components. To find the report, go to and look in the research and reports section.
New Mexico’s various national rankings are what this column and the next are about. But the other important point, maybe the important point, is that things can change and change for the better. In 2013 Colorado was third for job growth. It was 49th in 2002 after what the report calls “the ‘dot.bomb’ recession.”
Many of the comparisons are ugly. But facing these things offers a place to begin a vision. Colorado seems in the top handful on just about everything. New Mexico, well, not so much.
Necessarily the report deals with the past; most tables use data through 2013. In the present, New Mexico tied Idaho for 34th place among the states in job production performance between October 2013 and 2014. Alaska was the only state losing jobs during the year. New Mexico’s four neighboring state all finished in the top ten for job growth percentage. Texas was 2nd; Utah 3rd; Arizona 8th, and Colorado 9th.
For economic outlook, the American Legislative Council places New Mexico 37th. New Mexico’s outlook has been in the mid-thirties since dropping ten places in 2010. Colorado’s outlook has slipped. “The economic outlook for all (Colorado’s) competitor states except New Mexico surpassed Colorado in 2013 and 2014,” the report says.
The big categories are economic vitality, innovation, taxes, livability, K-12 education, higher education, health, infrastructure and international.
The overall infrastructure index from the Beacon Hill Institute puts New Mexico 42nd in 2013 after a bump to 22nd in 2008. The index measures “concentration of mobile phones, access to high-speed broadband, air travel, worker commute times, and access to an affordable cost of living.”
Getting federal money for highways is a place where New Mexico does well. The criteria seem to be few people and much land. New Mexico is 11th in per capita federal highway money (Alaska is first, Wyoming, 2nd) and 7th in “highway performance,” according to the Reason Foundation. This measure leaves unexplained the nine figure gap between available money and what the Department of Transportation would like to build and fix.
Health is another matter. We are 48th in the percentage of the population with health insurance. For registered nurses per 100,000 people, we are 43rd, not good but a six-place improvement since 2008.
Subsidized energy is big. New Mexico is fourth in installed solar energy. Colorado is sixth. Colorado is tenth in wind with New Mexico 18th.
Population growth rate reflects the decisions of many people. Our neighbors live in the top ten. Utah is 2nd, Colorado 3rd, Texas 4th, Arizona 8th, and New Mexico almost last at 48th.
People moving here come to the state with the ninth highest per capita state government spending. Our low property tax status disappears when comparing the largest city in each state. New Mexico, i.e., Albuquerque, is 25th. Only California and Minnesota claim higher business taxes than New Mexico. “New Mexico’s top corporate income tax rate and its higher sales, gross receipts, and excise tax burdens are challenges,” the report says.
“Challenges” is the report’s double-speak word for “problems.” More next week on the opportunities and the problems including the economic vitality rankings.

Colorado Column, 2014, No. 2

Harold Morgan/ New Mexico Progress

“Oil Curse” Is Invented

By Harold Morgan
New Mexico Progress

Forty-fourth is New Mexico’s position on a State Competitiveness Index from the Beacon Hill Institute, and it’s included as the first item in “Toward a More Competitive Colorado,” an annual publication of the Denver Chamber of Commerce.
Eighth place for openness and environmental policy was New Mexico’s highest competitiveness sub-index ranking.
“Competitiveness is a useful concept that points us to the micro‐foundations — the right mix of policies and endowments — that lead to prosperity,” Beacon said in announcing the 2013 rankings. As usual, our neighbors ranked well above New Mexico. Colorado, Utah and Texas were, respectively 7th, 8th, and 9th.
Definitions of economic competitiveness are fuzzy. One suggestion is how well a state marshals resources for prosperity. In the political and policy dialogue, competitiveness seems to mean how well one state compares to another for those businesses seeking a location for a new facility.
State competitiveness leads the economic vitality section. The remaining ratings are for “new economy,” employment growth, gross domestic product per employee, per capita income and economic outlook.
At 37th among the states, our economic outlook isn’t that bad. We could be New York (50th) or Vermont (49th). Vermont and New York lead per-student spending in public schools. We should be with Utah (1st) and Arizona (7th). The outlook comes from the American Legislative Exchange Council.
The Innovation category leads with a state innovation index from the federal Economic Development Administration that seems to measure pervasive technology. Massachusetts leads, with California second, Idaho third (no idea about that one) and Washington fourth (Microsoft, Amazon, etc.) New Mexico is 25 for 2013, down four places from the two previous years.
Montana and Alaska, respectively, lead the entrepreneurial index. We are eighth, well above the innovation rank. For California and Colorado, innovation and entrepreneurialism rankings closely associate. I wonder if New Mexico’s situation might be much more characterized by the one-person businesses. As a percentage of employment, New Mexico’s proprietors are 29th. The small business survival index ranks New Mexico 27th.
In theory, our long leadership in the ratio of research and development spending to state gross domestic product should translate to high per capita R&D spending at our universities. Wrong. The academic spending rank is 21st after being sixth and ninth a few years ago. One can only speculate about the reasons.
The Milken Institute’s State Technology and Science index puts us 22nd for 2012. Massachusetts, Maryland, California and Colorado lead in that order. We do have a lot of high tech employment, sixth per 1,000 workers, but apparently they aren’t that well paid; the average wage is 22nd. Curious.
New Mexico’s oft-cited sunsets apparently add little livability. The well being index places us 33rd. The Dakotas lead. Money and employment must bring happiness. Check with Lea and Eddy county residents on this point. Third place Nebraska is nice but without the psychic sunset appeal. The football, perhaps?
Our sunsets draw few people. Our 2013 population growth placed 48th, ahead of coal-ridden West Virginia and really cold Maine. Utah and Colorado, both blessed with functioning economies, are second and third in population growth.
A thorough review of the Competitive Colorado report might spark understanding of our state’s situation. Or as Wisconsin Gov. Scott Walker said Nov. 4 in his election victory speech, “We believe you should build the economy from ground up that’s new and fresh and organic.”
For now we’re stuck with the latest Albuquerque pundit complaint that we have an “Oil Curse,” that masses of resource money will destroy us just like Equatorial Guinea and other sixth world countries. That’s wrong, bizarre, stupid and insulting.
New and fresh and organic. I like that.

Thursday, December 10, 2015

Home Sales Continue Ahead of 2014

The metro Albuquerque real estate performance for both single family houses and townhouses/condominiums continued in November to run nicely ahead of the month a year ago, according to the November sales report released today by the Greater Albuquerque Association of Realtors.
Closed sales for single family homes were 652 in November, 8.5% ahead of November 2014. Seasonality stepped into the November sales picture with a 183 unit, or 22%, drop from October. Sales during November 2014 were 21% below October 2014.
November showed 794 pending sales, 56 homes or 7.6% ahead of a year ago. Pending sales dropped 17% from October.
Homes sold during November were on the market an average of 62 days. May was the last month when the days-on-market period was last over 60 days.
The median single family detached home price was $180,000 during November. That was down $5,000 from October, but remained ahead of October 2014 by $5,000. The average price, $213,686, was down one percent or about $2,200 from November 2014 and also down from October by about $2,600. The average price is down around $13,000 since hitting $226,337 in June, the high for the year.
No $1 million-plus homes closed sale during November.