How the presidential election affects NM’s economic base

While Washington, D.C. may be more than 1,500 miles away, budding political tensions as the presidential election in November looms closer and closer are revealing how New Mexico’s economic base could be impacted.

Kelly O’Donnell is an economist and public finance expert. She said a lot of current economic drivers could change depending on which political party takes the Oval Office.

Currently, New Mexico is in a pretty stable economic situation, she said. While the state can improve in a lot of places, O’Donnell said, it’s also certainly seen much worse economic conditions.

The state’s economy doesn’t really experience the wild ups and downs the national economy does, she said.

“We’re muddling along,” O’Donnell said.

But the uncertainty of November’s presidential election — potentially between Vice President Kamala Harris and former President Donald Trump after current President Joe Biden announced last week he wouldn’t run for reelection — has huge implications for parts of New Mexico’s economy, O’Donnell said.

“A lot of what the state is hoping or needs to accomplish in order to really strengthen its economy for the long-term is dependent on federal policy,” she said.

One such plan is New Mexico’s clean energy transition.

O’Donnell said while the state has money in its bank account to help fund the transition — the State Investment Council oversees more than $50 billion in savings — it really needs federal support to make it happen.

“There’s a great deal of uncertainty associated with the ongoing support for an equitable energy transition,” O’Donnell said.

Trump is known for his vocal support of the oil industry. Still, crude oil production has boomed under Biden’s administration, despite Biden’s pro-renewables stances.

Kyle Armstrong, president and CEO of the New Mexico-based oil and gas company Armstrong Energy Incorporation, said the federal election results can definitely impact what acreage producers are able to extract from. He said that’s especially true in a place like New Mexico where there’s so much federal land.

Armstrong referred to the San Juan Basin, which is a checkerboard of federal and tribal land. He said it’s difficult for companies to extract there at times, which leads to negative local employment and economic impacts.

The federal government has put different moratoriums in place around New Mexico due to environmentally sensitive or culturally significant areas. In 2022, Navajo Nation allottees — people who get royalties from oil and gas exploration — created a barricade entering Chaco Canyon to deter a celebration of a recent 20-year ban on new oil, gas and mining leases in the area.

While federal officials have a say over production decisions like that, Armstrong said the president likely won’t affect gas prices at the pump — though political parties may argue otherwise. It’s something also affected by international affairs, like Russia’s invasion of Ukraine.

O’Donnell said another economic opportunity for New Mexico to take advantage of is remediating land damaged by oil and gas companies. She said that too will need federal support.

Another significant area economists expect the national election will affect is the health care crisis the nation has been experiencing. New Mexico, along with the rest of the U.S., lacks health care workers.

O’Donnell explained that not only is health care an economic driver, but unaddressed behavioral health care needs act as an impediment to economic needs and growth.

She said Medicaid funding, which depends on the federal government, could significantly change New Mexico’s health outlook and its behavioral health expert shortage. She said the outcome of the election “may have real implications for health care funding in New Mexico.”

“We’ll have a much clearer perspective on the road forward after November,” she said.