Tiny glimmer appears for poor New Mexico economy
A little bitty glimmer of light exists somewhere in the dark tunnel of the New Mexico economy. The tiny flicker is in construction, of all sectors. This word comes from economist Alison Felix of the Federal Reserve Bank of Kansas City.
Felix tracks New Mexico from the Fed’s Denver office. She came to Albuquerque the day after the election as part of the occasional Fed economic outlook and update road show. The star was Felix’s overall boss, Esther George, KC Fed president and CEO since October 2011.
Back in the tunnel, our economic situation remains ugly with a 1.3 percent drop in wage jobs from September 2011 to September 2012. That performance ranked 49th nationally with West Virginia taking Mississippi’s role and finishing last. Nationally, wage jobs grew 1.4 percent in the year from the second quarter of 2011 to 2012, Felix said.
For real personal income growth, we place 48th with a 0.4 percent increase for the period. The anemic increase puts New Mexico’s personal income over the pre-recession level of 2008.
Felix discussed the entire state. See www.kc.frb.org/publicat/speeches/2012-Felix-NMEconForum-11-07.pdf.
As a matter of respect, a digression is in order to briefly consider the southeast, specifically Eddy and Lea counties, heart of oil production and the growing nuclear cluster. Lea County employment grew 5.3 percent during the September-to-September year. The Eddy County growth was 3.4 percent. The two added 2,460 jobs, a more than healthy increase, with unemployment under 4 percent.
Only two other counties showed less than 4 percent unemployment: tiny agricultural Union County, which broke even with employment, and Los Alamos, where the labor and employment shrank.
Los Alamos, the home to a national laboratory, provides the shining star of another problem — the future of federal spending. The Pew Center on the states reports that 9.2 percent of state GDP is federal nondefense spending on procurement, salaries and wages, more than four times the national average.
The professional and business services sector, the weakest large employment category, is “tied to government contracts,” Felix said. Procurement contracts and grants, both closely linked to the national laboratories, are about half the federal spending.
Federal employment grew in New Mexico through roughly mid-2011, Felix said. With a few quarterly exceptions, state and local employment has fallen since 2010.
Construction, the state’s weakest sector over the past year (and for some time before that) will be one of the strongest going forward, Felix said. To the more than a few widened eyes in the audience, Felix explained. The value of residential construction contracts is up a third through the first nine months of 2012 as compared to the same 2011 period.
Residential construction has shown sharp gains over the past few months, possibly, Felix said, even leading to a few new jobs in 2013. Multi-family housing is driving the construction increase, she said. New households explain the demand for apartments, news reports indicate.
Home prices statewide are down 12.9 percent from the peak, but the FHFA purchase-only index shows prices up 2.9 percent in the year through the second quarter of 2012.
According to recently released figures from the Greater Albuquerque Association of Realtors, Albuquerque home sales have defied gravity all year. Not only did October sales increase 19 percent from October 2011, sales were 3 percent more than September. The year-over-year increase was no surprise. Sales have increased every month of 2012 over the previous year by percentages from 4.1 percent in June to September’s 26.3 percent.
Esther George brought good news and other news to the audience of several hundred. The good news is that, nationally anyway, “The consumer has been spending.”
The other news is that interest rates will hang around zero until mid-2015. Take that, savers.