On Wednesday, April 18, 2018, the President and Vice President of Federal Reserve Bank of Kansas City, Esther George and Alison Felix respectively, spoke in Albuquerque to a business and banking group.

The topic of their presentation was recent economic trends in New Mexico.

https://www.pressreader.com/usa/albuquerque-journal/20180419/281861529099809

Needless to say, the outlook for New Mexico’s economy remains less than stellar and there were very few bright spots seen by both Federal Reserve officials.

Federal Reserve Bank of Kansas City President Esther George reported three economic trends were worth noting:

1. State and local government comprise approximately one fourth of all employment and this creates a “drag” on the economy when government is reduced in size.

DINELLI COMMNETARY: Reliance on federal government spending, including the national labs and the military bases, has always been part of New Mexico’s problem in failing to diversify our economy.

2. The number of adults ages 25 to 54 has declined in New Mexico over the past decade, which could challenge growth prospects for the state economy.

DINELLI COMMENTARY: The United States Census has reported consistently for the last 8 years that New Mexico is losing population while virtually all the surrounding states are increasing in population and have pulled out of the great recession. A year ago, Albuquerque Business First reported how Wallet Hub found that New Mexico ranked fourth worst in the country for millennials (people born roughly between 1980 and 2000) for employment opportunities.

3. Employment demands in New Mexico appear to be shifting to low skill jobs, while the demand for high-skill jobs is holding steady.

DINELLI COMMENTARY: Economic studies preformed by the University of New Mexico have consistently reported that over the last four years, the service and tourist industry, including call centers, has grown. Further, New Mexico institutions of higher learning or training such as our community colleges are capable of meeting training demands, but simply put, there are no jobs being generated because of flat economic development.

Federal Reserve Bank of Kansas City Vice President Alison Felix reported other economic trends worth noting:

1. New Mexico’s employment growth over the past year has picked up. Employment growth has gone from a negative 1.1% over the past ten years to a 1.4% growth over the past year.

DINELLI COMMENTARY: Although this is positive news, the reality is all surrounding states have been experiencing incredible job growth. According to an August 11, 2017 US News and World report, New Mexico’s economy continues to grow, but the working population has decided to leave the state. According to the report, those between the ages of 30 and 59 “are fleeing by the masses, taking kids with them who researchers say are unlikely to return.” People are leaving New Mexico for a number of reasons, including the lack of jobs. Nearby states are offering better job opportunities.

2. Most industries in New Mexico have added jobs over the past year, particularly in the construction, financial activities, natural resources, mining and oil and gas industries.

3. Oil production has reached record levels and oil prices are expected to remain around $60 per barrel for the next two years.

DINELLI COMMENTARY: The increase in oil production and prices is considered by many as the number one reason New Mexico government is no longer faced with a deficit and now has a surplus.

4. The migration of people leaving the state appears to be slowing.

5. The good news is that home prices are now approaching previous peak levels, but the bad news is that new residential construction remains at pre-recession levels.

6. The tourist industry in New Mexico continues to be a bright spot as far as growth and a key component for the growth in our economy.

7. Farming is a major industry in New Mexico and farm income is now projected to decrease slightly this year due to decreases in revenues for some commodities that offset others.

The most discouraging news is that New Mexico’s 5.8% unemployment rate is the second worst in the nation.

DINELLI COMMENTARY

During the last eight years, Albuquerque has fallen to the bottom and in many cases dead last of every meaningful ranking in the country, including economy, jobs, crime, education, real estate, desirability, and traffic.

Even though Albuquerque is the largest city economy in the State, New Mexico is number one in unemployment and number one in children living in poverty.

It has been reported that Albuquerque lost 14,900 jobs during the last 10 years, which is roughly 4 jobs a day.

According to one Brookings Institution report, the Albuquerque metro area’s economy was so bad between 2009 and 2014 that it almost fell off the charts of three measures of economic health.

Of the largest 100 metro areas in the U.S., Albuquerque ranked 100th, 99th and 83rd in the three areas measured by the Brookings Institute: Growth, Prosperity and Inclusion.

According to the same Bookings Institute report, economically hobbled cities like Jackson, Miss., and Rochester, New York, fared better than Albuquerque. Albuquerque ranked 99th for economic growth, 83rd for prosperity and 100th for inclusion, which measures how an area’s poorest residents are doing in the economy.

According to US Census reports, more people are leaving the State than moving in, and our youth are leaving Albuquerque in droves to seek employment with a future elsewhere even after they get their college education at our universities.

On October 1, 2017 Wallet Hub, a personal fiancé website, published the story “Fastest Growing Cities In America”.

https://wallethub.com/edu/fastest-growing-cities/7010/#city

Albuquerque ranked 450th in economic growth among 515 cities in the United States according to the Wallet Hub report.

Wallet Hub ranked the cities using 15 metrics, including population growth, unemployment and poverty rate decrease, job growth and other measures.
Among large cities, Albuquerque ranked 60th out of 64.

Among all cities, Albuquerque fared especially poorly on unemployment rate decrease (481); job growth (446); growth in number of businesses (443); median house price growth (433), and regional gross domestic product growth (433).

According to US Census reports, more people are leaving the State than moving in, and our youth are leaving Albuquerque in droves to seek employment with a future elsewhere even after they get their college education at our universities.

The truth is, Albuquerque recovery is well over four years behind the national economy in terms of reaching post-recession employment levels.

Government employment limits growth, with private sector employment growth exceeding total employment growth from FY/12 through FY/21.

CONCLUSION

Construction has improved somewhat and is now helping the economy according to the Federal Reserve Officials.

The unemployment rate is expected to slowly decline to 5.3% in FY/20 and FY/21.

City hall’s Economic Development Department need pay far more attention to Albuquerque’s growth industries if the city is going to have any chance of turning our economy around.

Our next Governor, who will be elected in November, with a little luck will be dealing with an improving economy and a surplus in tax revenues thanks to oil and gas production.

Notwithstanding, our New Governor and our new Albuquerque Mayor need to work together as much as possible and come up with a viable solution to diversifying our economy with less reliance on federal government spending.

Federal Reserve Vice President Alison Felix closed by saying “Things are improving. We are seeing a lot of substantial gains, but New Mexico has a long way to go”.

New Mexico and Albuquerque do do indeed have a long way to go, let’s hope we can really get there.