New Mexico is losing large chunks of population to other states, probably because job opportunities are better elsewhere, according to a University of New Mexico economist’s evaluation of new Census Bureau data.
Natural population growth and new arrivals from other countries have increased New Mexico’s population, but 7,500 more people left for other states than migrated here from other states between July 2011 and July 2012, said UNM Bureau of Business and Economic Research director Lee Reynis, who addressed the Eighth Annual Economic Outlook Conference on Tuesday in Albuquerque.
That loss of population could explain why New Mexico’s job growth has been flat or declining for several months while its unemployment rate is only 6.2 percent, Reynis said. The exodus would produce a smaller workforce, so the share of the workforce that is unemployed would be smaller, even in the absence of job growth.
Population growth, which had been around 1.4 percent annually, was nearly zero in 2012. “When you go behind those data what you find is that indeed New Mexico in 2012, and this is the first time we’ve seen this in the data, has experienced negative domestic migration,” Reynis said. “That net migration is a response to limited job opportunities here compared to elsewhere.”
Employment, at a 0.1 percent rate, hardly grew in New Mexico between the second quarter of 2011 to the second quarter of 2012, the most recent period for which reliable data are available. Albuquerque employment declined 1.3 percent in the same period.
BBER believes the state’s employment grew 0.4 percent in 2012, and Albuquerque employment declined 0.7 percent.
The bureau expects both state and Albuquerque job growth to be 1.2 percent this year and 1.8 percent in 2014.
Declining government employment is a big reason job growth has been so slow, Reynis said. While the private sector added almost 4,000 jobs between the second quarter of 2011 and 2012, the total economy added only 1,100 jobs when government employment cuts are factored in.
Declining federal government spending is reducing professional and business services employment. “We’ve already seen substantial cuts at Los Alamos National Laboratory,” Reynis said. “Sandia National Laboratories is watching it very closely, anticipating cuts there as well. We have a lot of companies around the state that are dependent on federal contracts and grants. All of that is vulnerable as they try to deal with the (federal) deficit.”
In answer to an audience question, Reynis said an increase in Albuquerque’s minimum wage approved by voters last November is probably good for the economy because it will increase workers’ purchasing power. As they spend more, the economy will improve, while “very, very few” businesses fail, she said. “There are a whole series of studies across the country that have found that to be true.”
Businesses being cautious
Nationally, gross domestic product is expected to grow 1.6 percent in 2013 and 2.4 percent in 2014, said Wells Fargo Securities economist Tim Quinlan.
Quinlan told the conference a recovery in home construction, more confident consumers who are carrying less debt than before the recession, improving economic stability in Europe, and cash-rich corporations should help strengthen the economy.
However, small businesses are worried about taxation and regulation and large companies continue to be reluctant to hire, he said.
On balance the economy should produce about 150,000 new jobs a month nationally, enough to keep up with population growth and bring down the jobless rate slowly over time, Quinlan said.
The economy faces a host of risks introduced by monetary policy pursued by the Federal Reserve System, said Esther George, president of the Federal Reserve Bank of Kansas City.
No one knows how investors and businesses respond when the federal funds rate is near zero for years on end, especially what kind of risks they will take in pursuit of better yield, she said. No one knows if another asset bubble, like the residential real estate bubble that triggered the 2008 financial panic, is forming as a result of very cheap money. No one knows how quickly inflation will return when the economy revives. And no one knows what happens when, once the economy recovers, the Fed tries to sell more than $1 trillion in Treasury notes, mortgage-backed securities and other assets it is carrying on its balance sheet.
George assured the audience Federal Reserve officials are sensitive to all of those issues, but warned the monetary easing the recession and financial crisis forced the central bank to undertake has put the Fed into uncharted waters.
“Monetary policy can’t fix everything in the economy,” she said. “In the long term, it can’t fix the unemployment rate.”
— This article appeared on page A1 of the Albuquerque Journal