For years, economist Jeff Mitchell has delivered a speech on New Mexico’s economic forecast at an annual data conference in Albuquerque. Typically, the gist is, in his words, “depressing.”
But not this year.
“Today, for the first time in my stint in doing this, I’m actually not a depressive economist of the dismal science,” said Mitchell, director of the University of New Mexico Bureau of Business & Economic Research (BBER). “We’re in the strongest position we’ve been in since 2008.”
Mitchell told conference participants he is forecasting an increase of 10,500 jobs, a gain of 1.3 percent, in 2018 and 2019, and an average of 10,000 jobs, or a gain of 1.2 percent, through 2023. He said he expects oil production to increase sharply from 235 million barrels in 2018 to 345 million in 2023. He also said personal income is likely to grow at about 4.3 percent per year as a result of private wage and salary increases, among other factors.
Those predictions are based on several assumptions: that oil production increases and prices stay in the $50 to $80 range, that state spending emphasizes education and infrastructure investments, and that a significant amount of cash flows into the state’s recently-established “rainy day” fund.
“Barring any really significant changes in the structure of the economy . . . next year is about as good as you’re going to see,” said Mitchell.
Still, Mitchell said he didn’t see “a tremendous upside beyond that,” and long-term growth in the state’s economy will require addressing New Mexico’s long-standing education and poverty issues, as well as becoming less dependent on the volatile oil and gas industries.
New Mexico’s recent economic growth has been relatively broad-based, according to Mitchell, with strong gains in the construction, mining and transportation industries. Out-migration to other states has slowed, and several energy companies have made significant infrastructure investments in New Mexico, which indicates those companies are likely to maintain their presence here for several years. Sales of residential homes are up 50 percent compared with the year prior.
Mitchell emphasized that he is not completely bullish in his predictions. He estimates the likelihood of better-than-expected economy at 15 percent, but the chances of a worse-than-expected economy at 25 percent. A more optimistic scenario would involve increased business investment, consumer purchasing and residential home sales. A more pessimistic scenario would likely be tied to the macro economy and the threat of trade issues, currency fluctuations, higher interest rates and other variables that have the potential to upend the economy.
“I still have some gloom left in me,” he said.