Wednesday, January 13, 2010
Conference To Get Gloomy Analyses
Copyright © 2010 Albuquerque Journal
By 2010 Winthrop Quigley
Journal Staff Writer
The national economy has avoided catastrophe for now, New Mexico's economy is worse than it has been in years, and no one really knows what happens next, two economists scheduled to present their forecasts at today's Economic Outlook Conference in Albuquerque told the Journal.
“We've never been here before,” said Eugenio J. Alemán, Minneapolis-based senior economist with Wells Fargo & Co. “On the positive side we've pulled back from near collapse. We could have fallen into a deflationary spiral. Now our biggest risk is inflation.”
On the negative side, said Larry Waldman, senior research scientist at UNM's Business and Economic Research, “The local situation is terrible. Job growth is the lowest it has been since at least World War II. It's worse than most people thought it would be.” He said New Mexico's economy probably won't show signs of recovery until at least the second quarter of this year.
The construction industry has lost 20 percent of its jobs in the last 12 months, and in 2009 New Mexico recorded a net loss of 43,000 jobs in a work force of a bit more than 800,000 people, he said.
Traditional sources of strength like oil and natural-gas extraction and mining are “not coming back any time soon,” Waldman said.
Only the health sector has shown any meaningful employment growth in New Mexico in the past year, he said.
The economy is being helped by an increasingly stable financial sector, Alemán said. However, consumers have to start buying again, banks have to start lending to small businesses, and new industries have to start producing new jobs if the economy is to recover fully, he said.
“No one has taken care of small business,” Alemán said. “They're out in the cold.”
Auto workers, construction workers and others with traditional skills have lost jobs because traditional industries have suffered permanent damage, he said. These workers “don't know what else to do and they can't reinsert themselves into the labor force. There's no place for them. If you depend on the automobile sector to create jobs we'll never see the recovery.”
Alemán said that a better use of federal stimulus money than public works construction would have been investment in worker retraining.
Meanwhile, banks can't find enough credit-worthy small business borrowers, and enormous government demands for credit have crowded business borrowers out of the market, Alemán said.
The Economic Outlook Conference begins at 7:30 a.m. today at Embassy Suites. In addition to Waldman and Alemán, Federal Reserve Bank of Kansas City President Thomas M. Hoenig is scheduled to speak.