Tuesday, August 08, 2017

On The Econ Beat: Not So Fast; The Claims That The Bear Is In Retreat Put To The Test; Oil Drilling Pop Does Not Make For A New Era 

Blogging New Mexico 
The administration in Santa Fe is hailing the end of the Great Bear Market that has embraced New Mexico for nearly a decade because of a shot in the arm of economic activity primarily due to a jump in energy royalties from the heavily drilled SE Permian basin. While the worst may or may not be behind us, it sure doesn't feel like the Bear has completely retreated to his lair.

While the Governor was gushing over an increase in the somewhat obscure economic indicator known as the gross domestic product (GDP), significant layoffs continued. The town of Estancia in Torrance County is preparing for 200 lost jobs at the privately run prison there which is being shut down. When that is fully absorbed the population in Estancia could easily return to what it was two decades ago. And a once high-flying (and heavily state-subsidized) tech firm in Rio Rancho just laid off 50 employees.

There are green shoots appearing in the economic desert. Construction workers are finding plenty to hammer, nail and pave. That's in large part because of the Facebook data center being built near Los Lunas and construction of the controversial ART transit project in ABQ. Notably, new home construction is nowhere near the rate of yore, forcing an imbalance in supply and demand and giving us price increases, but only modest ones compared to our neighbors. Homebuilders don't seem to have the confidence in the economic future that the Governor does.

There are no cranes in the sky of ABQ, no reports of the city's coffers flush with new cash generated by a rush of economic activity and no reports that interest from the educated classes in moving here is now higher than their interest in getting out.

The latest labor reports indicate the pop in employment is due primarily to the oil patch, low-paying jobs like those in tourism and home health care due to Medicaid expansion. Still, that is good news for those without college degrees and any jobs are welcomed.

(The June state jobs report had such a wild gyration that we're going to wait for confirmation of the higher employment numbers).


So, the GDP increase seems to signal nothing much new about the economy, but something rather old--that when the oil business does well, state revenues do well. But the macro picture for the New Mexican economy has not changed significantly. Some examples why:

The jobless rate relative to other states remains historically high.

Revenue collections for cities and towns remain mostly flat.

Crime remains rampant in ABQ,

High school graduation rates lag the region and nation.

Medicaid eligibility for low income households has soared to well over 40 percent of the state population.


Nothing goes up or down forever. And in a number of ways New Mexico has bottomed out. For example, most of those who want to move out, probably have. And local governments have raised the gross receipts tax to stabilize revenues. But the extreme damage done to the Land of Enchantment by the epic Bear Market is now evident--like smoke clearing from a battlefield.


The once NM monied middle class has shrunk. They wanted a Nordstrom's but they got payday loan stores. They wanted housing prices to roar again, but they whimper. They wanted local business to flourish as the Federal money spigot for the military/scientific complex flowed. Today it only trickles upward. They wanted to make a dent in crime and poverty, but the Bear (and a listless leadership) mauled that dream.

Given the cellar-dwelling polling numbers of those in charge in ABQ and Santa Fe, it seems a bipartisan conclusion that the current leadership has failed and failed mightily. New leadership will soon arrive and be charged with repairing the damage from an economic earthquake. From a state buried in rubble come cries of hope from the survivors.


You may not be bowled over by the 8 individuals running for mayor of ABQ in the October election, but you can take heart that we don't have this problem:

Half of the eight mayoral hopefuls on Detroit’s primary have been convicted of felony crimes involving drugs, assault or weapons, a Detroit News analysis shows. Three were charged with gun crimes and two for assault with intent to commit murder. Some of the offenses date back decades, the earliest to 1977. The most recent was in 2008. Political consultant Greg Bowens said there are candidates with past hardships in every election cycle. It’s not something unique to Detroit or the political arena in general, he said. “Black marks on your record show you have lived a little and have overcome some challenges,” said Bowens. . .

Being charged with "assault with intent to commit murder" shows you "have lived a little?" Well, now we know how Detroit got to where it is. Today's Detroit mayoral primary is the first since the city exited bankruptcy in 2014. The field of eight will be narrowed to two who will meeting in a fall run-off election.

This is the home of New Mexico politics.

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