New Mexico’s Economy: Current Situation and Outlook · o Forecast 12,100 jobs (1.5%) in 2019,...
Transcript of New Mexico’s Economy: Current Situation and Outlook · o Forecast 12,100 jobs (1.5%) in 2019,...
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New Mexico’s Economy:Current Situation and Outlook
PRESENTED TO THE RISK MANAGEMENT ASSOCIATIONJEFFREY MITCHELL, BBER DIRECTOR
DECEMBER 10, 2019
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New Mexico Current Economic Situationo In 2019Q1, New Mexico added 11,000 jobs (1.4%), in line with 2018 growth.
o Nearly half of the jobs were in Eddy & Lea counties (5,250 jobs, 6.5%), tied to oil & gas.
o Metro areas (except Farmington) also added jobs, giving some balance.
o Preliminary CES data indicate faster growth in Q2 (1.7%) and Q3 (2.2%). FOR-UNM is more cautious (1.5% and 1.6%).
o Total personal income playing catch up +5.9% in Q2 (9th among states).
o State government recurring revenues +16.3% in FY19 (35% since FY17); more than 60% of the increase is directly due to oil & gas boom.
o Yet, data indicates growth in oil production is slowing – Q2 up just 0.4% (QoQ).
o Next phase of the oil boom shifts from production to State government.
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Labor Force by Region, 2012 – 2019Q3
Source: BLS Local Area Unemployment Statistics (LAUS)
o Lea & Eddy account for 7% of NM labor force, but much of the year-over-year volatility.
o FOR-UNM expects significant downward revisions for 2019 – note change in ‘Rest’.
-2.0%
-1.0%
0.0%
1.0%
2.0%
3.0%
4.0%
(15,000)
(10,000)
(5,000)
0
5,000
10,000
15,000
20,000
25,000
30,000
Year
-ove
r-Ye
ar S
tate
wid
e G
row
th
Gai
n / L
oss i
n La
bor F
orce
Albuquerque MSA Santa Fe MSA Farmington MSALas Cruces MSA Lea & Eddy Counties RestStatewide (Right)
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Net State-to-State Migration (In-Out), 2007-2018
Source: US Census Public Use Micro Statistics (PUMS)
o New Mexico had large net out-migration between 2011 and 2017.
o Out-migration has been greatest among BA and ‘Some college/Associate’.
o But in 2018, migration was positive, especially 18-29 y/o and 30-44 y/o; but among all educational groups.
o Temporary oil & gas workers?
699
(9,228)
(18,789)
(1,227)
(12,662)
(776)
(10,041)
8,503
1 to 17 yrs 18 to 29 yrs 30 to 44 yrs
45 to 64 yrs 65 yrs and over
(190)
(5,542)
(13,398)
(1,015)(5,693)
290
(5,777)
5,057
(20,000)
(15,000)
(10,000)
(5,000)
0
5,000
10,000
< HS HS GraduateSome college or AS Bachelor's degreeGrad or Prof
Age Cohort Educational Attainment (25 y/o +)
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NM Consensus Revenue Estimation Group (CREG)
Gain/Loss in General Fund Accruals, FY 2019 (preliminary)
$290
$23
$11
$125
$17
($69)
($9)
$140
$603
$9
$5
($100) $0 $100 $200 $300 $400 $500 $600 $700
Gross Receipts
Compensating Tax
Selective Sales *
Personal Income Tax
Corporate Income Tax
Mineral Production Taxes
License Fees
Investment Income
Rents & Royalties
Tribal Revenue Sharing
Misc. Receipts
Millions $
12%
40%
2%
8%
16%
-14%
-15%
18%
89%
13%
11%
-25% 0% 25% 50% 75% 100%
Change YoY %
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NM TRD
Gain/Loss in Gross Taxes by County, FY19 v FY18($25) $0 $25 $50 $75 $100 $125
Bernalillo (ABQ)ChavesCurryDona AnaEddyLeaLos AlamosMcKinleyOteroSan JuanSandoval (ABQ)Santa FeTaosValencia (ABQ)UnclassifiedOthers (20 Counties)
Millions $
-10% 0% 10% 20% 30% 40% 50%
% Change
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New Mexico’s Share of US Oil Production & Active Rigs
EIA, Baker Hughes
0%1%2%3%4%5%6%7%8%9%
10%11%12%13%14%
2011 2012 2013 2014 2015 2016 2017 2018 2019$0
$20
$40
$60
$80
$100
$120
New
Mex
ico
shar
e of
US
Tota
l
$/Ba
rrel
Oil Price (WTI) Drill Rigs (NM/US) Oil Production (NM/US)
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Housing Sales by Region + Building Permits (January-September)
NM Realtors Association, BBER
o Sales boomed in 2018, and remain above trend.
o New homebuilding remains flat, regardless of values & sales.
-
500
1,000
1,500
2,000
2,500
3,000
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
Resid
entia
l Uni
ts P
erm
itted
for C
onst
ruct
ion
Hous
ing
Uni
ts S
old
Bernalillo Co Santa Fe Co Dona Ana Co San Juan Co
Oil Patch Other Permits (Right)
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$0
$50,000
$100,000
$150,000
$200,000
$250,000
$300,000
$350,000
$400,000
Santa Fe Co
Median Residential Sales Values by Region, 2010-2019
NM Realtors Association, BBER
$0
$50,000
$100,000
$150,000
$200,000
$250,000
Statewide Bernalillo Co Dona Ana Co San Juan Co Lea Co
2019=7.5% 7.7%
2.0% 11.8%3.0%
7.5%
Sales values are increasing more rapidly –increased sales with little growth to stock.
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New Mexico Outlook
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New Mexico Economic Outlook 2020-2024o Forecast 12,100 jobs (1.5%) in 2019, 13,850 jobs (1.7%) in 2020; 9,600 (1.1%); average 6,850 jobs
(1.0%) thereafter. Forecast is mostly unchanged through 2021 but slightly weaker thereafter.
o Growth dynamic begins to shift in 2020 and slows beginning 2021 –
o Investments in oil & gas in Eddy & Lea Counties slow.
o FY20 & 21 State spending supports growth statewide – construction, schools, and State government.
o Sustained and broader metro growth will depend more on PBS and leisure & hospitality.
o Personal income growth takes a hit in 2020 (3.8%) due to final shift of ACA-Medicaid obligations to State.
o Growth of oil production slows – after 120% in 3 years (147 mb in 2016 to estimated 323 mb in 2019), production growth slows to 11% in 2020 and average of 4% thereafter; reaching 415 million in 2024.
o Probability and impact of pessimistic scenario (35%) substantially outweighs optimistic scenario (10%).
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Forecast Job Growth by Sector, 2020
BBER FOR-UNM, October 2019
(1,000) (500) 0 500 1,000 1,500 2,000 2,500 3,000 3,500
Federal GovernmentState GovernmentLocal Government
Accom. & Food Svs.Arts & RecreationHealthcare & Soc. Asst.Educ. Svs.Admin. & Waste Mgmt.Prof.& Tech. Svs.Real Estate & LeasingFinance & InsuranceInformationTransport. & Warehsng.Retail TradeWholesale TradeManufacturingConstructionMining
-2% 0% 2% 4% 6% 8%
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Forecast Job Growth by Sector, 2021-2024
BBER FOR-UNM, October 2019
(2,000) (1,000) 0 1,000 2,000 3,000
Federal GovernmentState GovernmentLocal Government
Accom. & Food Svs.Arts & RecreationHealthcare & Soc. Asst.Educ. Svs.Admin. & Waste Mgmt.Prof.& Tech. Svs.Real Estate & LeasingFinance & InsuranceInformationTransport. & Warehsng.Retail TradeWholesale TradeManufacturingConstructionMining
-4% -2% 0% 2% 4%
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FOR-UNM Forecast Oil + Natural Gas Revenues
BBER FOR-UNM, IHS Global Insight, October 2019
$0
$20
$40
$60
$80
$100
$120
$0
$1,000
$2,000
$3,000
$4,000
$5,000
$6,000
$7,000
$8,000
$9,000
$10,000
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
$ / B
arre
l
Mill
ions
$
NM Oil Reveues NM Natural Gas Revenues WTI Spot Oil Price -- Right
History Forecast
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Job Gains/Losses by Region, 2019-2024
BBER FOR-UNM, October 2019
(2,000)
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
18,000
2019 2020 2021 2022 2023 2024
Albuquerque MSA Farmington MSA Las Cruces MSA Santa Fe MSA NonMetro
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NM Employment Forecast, Alternative Scenarios
BBER FOR-UNM, October 2019
-0.5%
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
2018Q1 2019Q1 2020Q1 2021Q1 2022Q1 2023Q1 2024Q1
Baseline Scenario Pessimistic Scenario Optimistic Scenario
-8,600 jobs
+2,550 jobs
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ECONOMIC FORECAST DATA DASHBOARDS RESEARCH DATA BANK