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Friday, January 12, 2007

Economic Forecast Is Sunny

By Andrew Webb
Copyright © 2007 Albuquerque Journal; Journal Staff Writer
    The nation's economy will continue to shake off would-be assailants such as a housing slump, and New Mexico's economy will likely sail along slightly ahead of it, prognosticators said Thursday.
    Speakers at the 2007 Annual New Mexico Economic Outlook Conference painted a rosy picture of New Mexico's job growth, especially in the high-tech, extractive and manufacturing sectors, and suggested the national economy would flourish in this new year, despite fears to the contrary.
    "There has been a chronic sense of caution or pessimism in this economy since the (2003) recovery," said James Paulsen, chief investment strategist for Wells Fargo & Co.'s Wells Capital Management.
    But none of the predicted impediments, such as the feared "jobless recovery," epidemics such as bird flu, or new reporting restrictions on businesses, such as employee option expensing, has had a substantial effect on the economy. Nor, Paulsen said, did continued federal interest-rate tightening.
    That will bode well for Gross Domestic Product growth in 2007 and beyond as the housing and auto markets— which compose about 9 percent of the GDP— stabilize from a yearlong plunge.
    He said persistent worries prompted companies and investors to hold their cards, meaning there will be plenty of cash on hand for capital and employment growth.
    Paulsen predicted the national economy would grow by about 3.5 percent this year, a full percentage point more than predictions by other economists.
    New Mexico's economy, which has grown steadily since 2004, grew 3.1 percent in the last quarter of 2006, beating the national rate of 1.4 percent, said Larry Waldman, senior economist with the University of New Mexico's Bureau of Business and Economic Research. That was the largest gain in more than 10 years.
    Unemployment in New Mexico was 4.3 percent at the middle of 2006, compared to 4.7 percent nationally.