Monday, December 30, 2013

Left Behind: New Mexico's No Growth Economy Draws National Attention From WSJ; Experts Warn Of Trouble For "Years To Come," Also: Guv Contender Frank Bond Dies At 70 

It's no secret that New Mexico has suffered and continues to suffer from the worst economic downturn in Post-WWII history, but the staggering length of the stagnation--it dates to 2009--is now drawing national attention and raising the question of whether the long awaited jobs recovery will remain a mirage for years to come.

The Wall Street Journal tackles the state's dilemma, noting that surrounding states are experiencing robust recoveries from the Great Recession, while New Mexico scrapes along the bottom.

A key reason, of course, is the decline in federal spending here which for decades has been the state's main economic driver. That could mean no light at the end of the tunnel for years to come. From the WSJ:

While New Mexico isn't the only state enduring a fitful recovery, its sluggishness in a region of the country that is otherwise enjoying solid growth could signal trouble for years to come if the problem isn't remedied. . .The state's job growth is so sluggish that some experts believe it could be years before it reaches prerecession employment levels. By contrast, New Mexico's neighbors, especially Colorado and Texas, are enjoying strong economic growth thanks to a vibrant private sector and the oil-and-gas boom and have recovered the jobs they lost in the recession.

Many New Mexicans are becoming former New Mexicans as they vote with their feet and choose to move to surrounding states in search of greener pastures. The state's population growth has become stagnant along with its economy. In the process we are losing some of our best and brightest.


The Republican administrations in power in Santa Fe and ABQ continue to tout "business friendly" measures (mostly tax cuts) as a means of attracting out of state companies to replace the jobs being lost (or not gained) from the Feds.  The polices have not worked. The state and ABQ continue to stumble in attracting employers. The jobs coming on line are mostly low-wage service jobs that pay drastically less than the ones being lost.


The state's always present but now more severe social conditions crisis also seems to be playing a role in our inability to climb out of the economic pit. Businesses don't just relocate because of taxes and regulation. Their employees and managers have to live where they work.

Our worst-in-the-nation ranking in child well-being, the ongoing deterioration in student performance, ABQ's reputation as a high crime city and many more glaring social problems make the state increasingly unattractive to those looking at us from the outside.

In 2014 and beyond the clamor for the state to aggressively address the depressing social conditions could grow but don't bet on it. The state's minority population now totals nearly 64%. It is this population that is most afflicted by the state's in-the-cellar rankings in just about all social rankings.

Expectations have to be changed. A culture will have to be instilled that values education at a very early age. And it will take money--a boatload of it. That's what happens when you slip to the bottom of the barrel. 


New Mexico does not seem eager to rise to the challenge. Austerity prevails in Santa Fe when it comes to the social conditions crisis while policy makers simply shrug their shoulders when businesses that benefit from tax breaks go belly up or don't provide the jobs they promised. Or as in the case of Eclipse Aviation--they give them even more. The state willingly lost millions when Eclipse tanked, but seems unwilling to assume similar risk when it comes to investing in the extremely at-risk population.


The recent budget deal in DC basically keeps the state's national security budget flat for the next two years. Federal employment levels are not going to rise appreciably. In fact, they may fall more. In Rio Rancho, Intel has completed 400 layoffs and more could come.

The bright spots remain the bull market in the SE oil and gas fields that is pumping tax and royalty money into state government and a nascent economic build-out on the New Mexico-Mexico border. 

The often savage economic downturn that has ripped at the state now for five years has not resulted in "a come to Jesus moment" that some observers thought might occur. Instead of a galvanized population and political class we have disengagement or denial. The status quo means we stay where we are in all those dreaded national rankings or dip down even more. 


As we've often discussed, the economic opportunity in the months ahead in New Mexico will actually come--ironically--from the federal government. While it takes money from one hand via flat or declining federal spending for the national security complex, it puts billions more in the other hand through a vast expansion of the Medicaid program under Obamacare. Health care entrepreneurs will benefit. 

And the payouts from Social Security, Medicare and veterans benefits continue to make the state attractive for retirees seeking a mild climate and less stressful lifestyle. Businesses that service them should continue to benefit.

2 OUT OF 3

On Dec. 18 we erroneously blogged:

We allowed our governors to seek a second, four year term beginning with the election of Republican Gary Johnson in 1994.

Actually, Democrat Bruce King was the first Governor allowed to seek a second four year term following his 1990 election. He did so in 1994 and was defeated by Johnson. Johnson was re-elected to a second term as was Bill Richardson.


One of the great economic opportunities in state history arrived when the railroad came in the late 19th century and with it families like the Bonds. Coming from Canada, they established a wool empire based in EspaƱola.

You may not have heard of the Bonds, but you may know about the historically important Wool Warehouse in downtown ABQ. It was built by the family of Santa Fe attorney Frank Bond who died of cancer Christmas Day.

Bond, who was 70, will ring a bell with students of La Politica. He was a two term legislator from Santa Fe first elected in 1976. In 1986 he made a play for the GOP governor nomination but came up short against Garrey Carruthers. He returned to the statewide stage in 1990 and the GOP rewarded him with their  nomination for Governor. He went on to lose to Democrat Bruce King, 55% to 45%.

Bond was a fluent Spanish speaker who practiced a middle-of-the-road political brand. We remember talking politics with him in 1984 when we were working a congressional campaign in Santa Fe and he was eyeing that '86 Guv race. He emailed us a time or two when we first started the blog back in '03 but his interest in falconry overtook his earlier zeal for politics. He made his mark in both.

And we've received word of the passing of another New Mexican who was well-known to the business and political community in the last century. Lee Zink passed away Nov. 29 at his home in Carlsbad after a long struggle with Parkinson's. In 1968, Zink began a long tenure as director of UNM's Bureau of Business and Economic Research. He also served  as president of the ABQ Chamber of Commerce.

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