new mexico’s economy: current situation and outlook...jeff mitchell, bber director, [email protected]...
TRANSCRIPT
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T H E N E W ME X I C O E C O N O MI C F O R E C A S T: R E C E N T D E V E L O P ME N T S A N D O U T L O O K P R E PA R E D F O R F O R - U N M S U B S C R I B E R S ’ M E E T I N G
J E F F M I T C H E L L , B B E R D I R E C TO R , J E F F M @ U N M. E D U + M I C H A E L O ’ D O N N E L L , R E S E A R C H S C I E N T I S T, M O 8 6 84@ U N M. E D U
N O V E M B E R 2 , 2 0 1 8
New Mexico’s Economy: Current Situation and Outlook
Presented to the 2018 BBER Data Users Conference Presented by Jeffrey Mitchell, Director
November 15, 2018
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New Mexico Current Economic Situation oNew Mexico’s economic outlook is the strongest since the Recession.
o The economy is creating jobs, incomes are beginning to respond.
oGrowth is relatively broad-based – in non-metro, in Albuquerque and more recently in Las Cruces and Santa Fe.
o Job growth is strongest in high-wage mining, construction and transportation as well as professional service sectors.
oOil & gas production is surging, will face midstream bottlenecks but every reason to expect that expansion will continue.
o FY19 General fund accruals are way up.
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Source: Census American Community Survey (ACS), PUMS.
Net State-to-State Migration, by Age Net out-migration
since 2011.
Losses greatest among younger cohorts, including children (families) and Millennials; least among middle-aged.
Recent slowing of out-migration.
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Source: Census American Community Survey (ACS), PUMS.
Net State-to-State Migration, by Educational Attainment Net out-migration
since 2011.
Losses greatest among BAs and AS/Some college.
Recent slowing of out-migration.
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Labor Force by Region (2011 - September 2018)
Source: BLS Local Area Unemployment Statistics (LAUS)
Lea & Eddy account for 7% of NM labor force, but much of the year-over-year volatility.
Recent growth of labor force is because Eddy & Lea AND Albuquerque are moving in the same direction.
(5,000)
0
5,000
10,000
15,000
20,000
(15,000)
(12,000)
(9,000)
(6,000)
(3,000)
0
3,000
6,000
9,000
12,000
15,000
Albuquerque MSA Santa Fe MSA Farmington MSALas Cruces MSA Lea & Eddy Counties RestJob Gains/Losses (Right axis)
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Job Growth/Loss by Region (2012 - September 2018)
Source: BLS Current Employment Survey
Strong 2018 job growth as all areas expand.
Up 2.2% in 2018Q3 – highest since 2007 and 13th highest in the country.
Total employment now equal to pre-recession high.
FOR-UNM expects final Q2 and Q3 to be revised down slightly.
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BEA Revisions to NM Personal Income
Source: Bureau of Economic Analysis
Changes back to 1998, mostly ‘smoothing’ the series.
Net effect is estimated total personal income in NM is 3.0% higher.
Recent improvements due to higher wages & salaries to private sector workers.
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Source: NM Legislative Finance Committee
Gain/Loss in General Fund Accruals, FY19 July & August
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Gross Receipts by Industry, FY18 v. FY17
Source: NM Taxation and Revenue Dept., RP80s
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Gross Receipts by County, FY18 v. FY17
Source: NM Taxation and Revenue Dept., RP80s
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Change in Personal Income Growth, by Component
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New Mexico’s share of US Oil Production & Rigs
Source: EIA, Baker Hughes
Recent boom in US shale oil production concentrated in Permian Basin, including NM.
Share of all US rigs in NM to 9.5%, from 3.1% in 2016.
NM is 3rd state in crude production, more than 6%, up from 3.5% in 2011.
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Oil Rigs, Production + Price
Source: EIA, Baker Hughes
Crude prices (WTI, West Texas Intermediate down 20%, from $70.25/barrel in Sept to $56.25/barrel.
We don’t expect a big impact on NM production – at these prices.
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Housing Sales by Region + Building Permits (3rd Quarter YTD)
Source: NM Realtors Association, BBER
Home sales up 50% in 2018, with increase in nearly all areas.
Only recent and small impact on housing values (unlike some areas of US)
And only recent and small impact on new construction (like most areas of US)
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New Mexico Outlook
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New Mexico Economic Outlook 2018-2023 o Forecast 10,500 jobs (1.3%) in 2018 and 2019; and average 10,000 jobs (1.2%) thereafter.
o Addressing oil & gas midstream constraints (pipelines, processing plants) will be a focus in Oil Patch through 2019 – construction, transportation, professional & technical services.
o After construction slows, metro growth will depend more on PBS, and leisure & hospitality.
o FY20 budgets expected to allow growth in government, including schools (Local Government)
o Faster personal income growth (4.3%/year), driven by private Wage & Salary growth, and Dividends/Interest/Rent and after 2021 stronger transfers.
o Oil production to continue to increase sharply, from 235 million barrels in 2018 to 300 million in 2020 (25%/year) to 345 million in 2023 (6%/year). This bullish outlook is lower than most industry forecasts. Will depend on midstream bottlenecks.
o Pessimistic scenario (25%) substantially outweighs Optimistic scenario (15%).
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Employment growth forecast, by Region
Source: BBER FORUNM, October 2018
Recent boom in US shale oil production concentrated in Permian Basin, including NM.
Share of all US rigs in NM to 9.5%, from 3.1% in 2016.
NM is 3rd state in crude production, more than 6%, up from 3.5% in 2011.
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Job Comparison by Sector, 2018
Source: BBER FORUNM, October 2018
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Job Creation by Sector, 2019 – 2023
Source: BBER FORUNM, October 2018
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Job Creation by Sector, 2019 – 2023
Source: BBER FORUNM, October 2018
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Forecast Personal Income Growth, by Component
Source: BBER FORUNM, October 2018
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Forecast Crude Oil Production and Price
Source: BBER FOR-UNM, IHS Global Insight, October 2018
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Housing Permits by City or Region (Forecast)
Source: BBER FORUNM, October 2018
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NM Employment Forecast, Alternative Scenarios
Source: BBER FORUNM, October 2018
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ECONOMIC FORECAST DATA DASHBOARDS RESEARCH DATA BANK