LAS CRUCES >> Economic growth in the United States, New Mexico and Doña Ana County is showing signs of growth, but the pace at which jobs are being created remains sluggish, according to Eugenio J. Alemán, director and senior economist at Well Fargo, and Jim Peach, regents professor of economics and international business at New Mexico State University.
The two addressed the 4th annual economic outlook conference, hosted by the NMSU college of business and Wells Fargo at the Las Cruces Convention Center on Thursday. They offered a look back at 2014 and shared their thoughts on what 2015 will hold for the local, state and national economy.
“After the first quarter of 2014, things picked up,” Alemán said. “Growth in jobs in 2014 occurred in three quarters. That is the longest recovery of jobs since 1999.”
A contributing factor to the gain in jobs was the launch of the Affordable Care Act, he said. While he acknowledged that “this is what makes the Repbulicans mad at me,” the cushion added for many workers and job-seekers who would otherwise go uninsured eased some of the economic hardship on the working class.
“Imagine what would have happened without Obamacare,” he said.
But, he added, “We are not out of the woods yet” when it comes to the economy rebounding.
While the nation and state have seen an increase in government spending, on which New Mexico relies heavily, those increases have been at the state and local level while the federal government still suffers with issues created by the recent, and potential future, sequestrations.
There is, however, good news at the federal level. The federal deficit has decreased by roughly 66 percent since 2009, but still tops the $1.5 trillion mark, he said. Gross Domestic Product has risen roughly .2 percent over last year.
“Things are going to get better this year,” Alemán said. “We’ve seen the longest streak of job growth in the U.S. (recently). All sectors saw growth. Everything is growing.”
Unemployment rates nationally dropped to 5.6 percent in December and hovered at 5.7 percent in January, he said. The unemployed are staying on the job hunt for an average of 32 weeks. Unfortunately, the uptick in job creation is happening only in the upper and bottom tiers of the job force and not in middle-class job openings.
“How do we get back to creating middle-class jobs? I have no clue,” he said. But those are the jobs we need to be creating.”
For New Mexico, the energy sectors have taken a hit, not only in the oil fields and state tax coffers, but also in secondary support jobs in the industry. But the housing market is poised for a resurgence. “This is the year where the housing market will take off,” he said. Regarding the New Mexico economy, Peach said there are “signs of life here.”
Employment is up, he said. But New Mexico still lags behind neighboring states and the national economy. He agreed that the oil and gas industry drop in production has taken a toll.
“Oil and gas is the biggest issue in New Mexico right now,” Peach said.
New Mexico hit peak production in 1969 and, once numbers are crunched, 2014 should almost equal that amount, an estimated 120 million barrels. And with rigs ceasing operation in light of the low price of oil, there are secondary jobs lost. When drilling, producing and support services are included with secondary services like housing, shopping and dining for workers are factored in, it accounts for roughly 30 percent of the state economy, Peach said. In 2013, there were roughly 20,380 oil and gas employees in the state. Rig counts have dropped from 101 in January to 66 in February. Peach said each rig accounts for roughly 50 people to man the operation round-the-clock and an additional 200 jobs involved in supporting operations.
Still, he said, “evidence suggests we haven’t hit the bottom” of oil prices yet.
And, while progressing, the rate of job creation is slow. New Mexico is currently down 25,000 jobs when compared to December, 2007.
“By 2017, we should be back to ’07 levels,” he said.
Education, mining and healthcare are growth areas, but most other sectors declined between 2007 and 2014. But improving national trends bode well for local growth.
“When the nation does well, we do well,” Peach said.
Another concern, Peach added, was a decreasing population. Between 2013 and 2014, the state lost 1,300 residents after accounting for births, deaths and people moving in or out of the state. The last time the state saw a net decrease of residents was 1968.
“I’m sorry,” Peach said. “That’s not the sign of a healthy economy. Let’s hope that’s reversed” this year.
Jason Gibbs may be reached at 575-541-5451.
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