What's the matter with New Mexico

 

The silence here is as big as the sky. It’s early December, and I’ve pulled to the side of the road, next to the shell of an old service station, its adobe walls well on their way to returning from whence they came. I listen to nothingness, and look around for signs of population in this little town way out on the high plains. One of the houses still has all its windows and a satellite dish in the yard, and across from the abandoned post office sits the USPS’s archetypal rural P.O., of the blue-grey prefab type. The light’s on, so I guess people live here after all, though they can neither be heard nor seen.

This is Yeso, New Mexico. I suppose it was thriving once, but all its good times appear to have dried up and blown away in the incessant wind, leaving an assortment of mostly empty stone and adobe buildings.

If you’re the type to watch economic monitors and forecasts and stats, you might think that New Mexico, as a whole, is going the way of Yeso. A flurry of recent statistics has indicated that the state’s economy is in deep trouble. Even as much of the rest of the nation climbs slowly out of the wreckage left by the housing bust and Great Recession, New Mexico’s economy has flatlined, or worse. Okay, the state isn’t Yeso, nor will it be anytime soon. Still, it’s worth asking: What’s the matter with New Mexico?

The Brookings Institution’s Metro Monitor keeps regular track of how various metro areas across the nation have fared since the Recession. The most recent monitor expands its scope to look at 300 cities worldwide. When it comes to economic performance, Denver, Salt Lake City, Portland, Seattle and San Jose are doing pretty well. Even Phoenix appears to be on the rebound, going from 296th place (300th is the worst) during 2007-2011, to 92nd place in 2011-2012. Then there’s Albuquerque, the only New Mexico metro to make the monitor. It is not only near the bottom in the U.S., but at 282nd place it’s competing with Athens, Naples and Madrid as one of the worst performing economies in the world. It has lost employment, lost GDP and shows absolutely no signs of recovery, remaining in full recession.

It’s true that New Mexico’s economy has never been the healthiest -- it has chronically high poverty rates, and the biggest gap in the nation between the rich and the poor (or between the people living on Santa Fe’s hillsides and those who commute into town to serve them in the snazzy restaurants). Now, however, the state’s economy not only seems to be staggering along far below that old, already low standard, but it isn’t even stumbling in that direction. New Mexico, it seems, has already fallen off the dreaded fiscal cliff.

Here are a few more charts that paint a grim picture of New Mexico’s economy. John Fleck, the Albuquerque Journal’s water reporter (that means drought reporter these days), alerted me to these dire-looking economic drought stats. Why is a water reporter following this stuff? Because in the West the economy and water are closely linked in any number of ways. Economic growth can drink up what little water we have, scant water supplies can hinder growth, and scant money supplies can hinder water infrastructure construction.


Notice how, in this graph, employment in the state grew steadily for years. Then the Great Recession (grey bar) hit, and employment crashed. More surprising is what’s happened since: Employment numbers flatlined, then actually dipped, while much of the rest of the nation is recovering. The recession lingers.

Maybe we don’t like it, but housing is a major component of economic health. When a place is doing well, demand for housing goes up, supply goes down and prices go up. (Okay, it’s not always so straightforward; the housing boom of the mid-Aughts was fueled as much by cheap, easy credit and speculation as it was by any kind of economic health or growth). Then developers build new houses, and employ more construction workers, and fuel the economy some more. Meanwhile, the rising value of a home turns it into a virtual ATM, from which people can get cash via refinancing and spend it in the local economy. Ponzi scheme? Sure. But it works. Until it doesn’t. Anyway, this chart shows how the housing market crash, beginning in 2006, helped lead to the recession. But it also shows that housing starts, six years after the bust, remain lower than they were in the late 1980s.

And in case you think things are in a temporary slump, this map from the Federal Reserve shows New Mexico as the only economy in the nation that has no growth forecast in the next six months. Bummer.

Here, finally, we get a glimmer of what’s causing all this grief. While employment in general is flat in New Mexico, government employment appears to be crashing. And New Mexico is one of the most government-job-dependent states in the nation. New Mexico gets a lot more money from the federal government -- whether it's for contracts at Los Alamos National Lab or welfare -- than its citizens pay in federal taxes. The result is that government austerity has hit New Mexico hard, from labs to the state's many tribal lands. And that federal fiscal cliff/austerity bomb that looms? Yeah, that will hit New Mexico harder than just about anyone. Even if the bomb is avoided, any deal that ends up cutting federal spending is bound to resonate in the Land of Enchantment.

Add to that the combination of low natural gas prices and declining natural gas production in the state that is one of the top producers in the nation. And then there’s the drought, which has rippled through the state’s economy. The tourism industry, especially strong in Santa Fe, has had to grapple with brown ski slopes in winter and catastrophic fires in the sum

mer that not only cost a lot to fight and cause expensive damage, but also scare away visitors. It adds up to the perfect storm, so to speak.

And we can't discount that yawning income gap I mentioned earlier. When a state's wealth is drawn away from the poor and to the already wealthy like flies to s---, you're going to have problems. The ultra-rich can only eat out so many times a day, and only build so many houses in the hills above Santa Fe. Their ability to fuel the economy, in other words, does not increase in proportion to their wealth. But put some of that wealth back in the hands of the middle class and the poor, and you've got increased consumer spending. And everyone knows that's the best way to get an economy going.

Is it time to load up the Gypsy truck (like this one I encountered in Tucumcari, NM, in early December) and hit the road for neighboring states, where recovery is underway? Not yet. I suspect what New Mexico really needs is some stimulus to jump start the economy. And I fear that will have to come from the federal level. Let's face it: Rather than detonating an austerity bomb, the feds need to set off a tax-the-rich and invest in the people sort of explosion.

Photos of Yeso and Tucumcari, NM, courtesy of the author. Charts from the Philadelphia and Kansas City Federal Reserve.

Jonathan Thompson is a senior editor for High Country News. His Twitter handle is @jonnypeace.

Susan Murphy
Susan Murphy
Dec 26, 2012 02:49 PM
You forgot to mention the sadly decimated New Mexico Film Industry. In 2010 when Gov. Martinez got elected, without any studies or foresight, she capped and drastically modified the NM film rebate program , causing one of the cleanest industries in New Mexico to drop by around 80% from the Richardson years. We lost thousands of clean, well-paying jobs. Film industry professionals relocated to Louisiana, New York or Georgia, where the film industry is thriving (New Orleans has been compared to a gold-rush town). The Martinez administration claimed that the state could not afford to pay the film industry rebates, yet they did not cut the outrageous rebates (twice the film industry's) that New Mexico pays to the oil and gas industry--her biggest political contributors. Both Georgia and Louisiana have GOP governors, who obviously recognize the value of a thriving film industry. In 2009, Albuquerque was voted the #1 movie town in the United States. Today, in terms of film and television, it is a virtual ghost town.
Jonathan Thompson
Jonathan Thompson Subscriber
Dec 27, 2012 08:16 PM
Susan: Thanks for the comment and the information. I wasn't aware that the film industry had taken such a hit in NM, too.
Tara Lumpkin
Tara Lumpkin
Jan 02, 2013 06:18 PM
Susana Martinez destruction of the film industry was disastrous. But there are a combination of factors at work that are destroying NM. One of the first is the fact that NM has never been able to get its ecotourism business rolling, which from a rational logistical position should have been a slam dunk over twenty years ago. I worked in Rwanda after the genocide and it now has a booming ecotourism business. I've been in Taos, NM, for 24 years and the local government has refused to engage in pushing ecotourism. The biggest issue in Taos, where I live, and I’d guess in the rest of NM too is that no one can get along long enough or well enough to actually DO anything. For example, in the southern part of the state we have ranchers who shoot lobo wolves, when just south of them in Mexico, ranchers have turned to making money from tourists visiting their ranches to see, not shoot, lobo wolves. In Taos, one can easily start believing stereotypes listening to the various contingents’ complaints. The old hippies are terrified of any change, period. The new hippies are living out on the Mesa ("Mesa Rats") and aren't invested in any economy except the economy of survival. The retired folks who bought their condos before the crash don't participate in local governance, don’t care if the schools are lousy, and love the fact that we have low taxes. The Hispanics don't want any change period, unless it's to drive out the Anglos whom they see as the cause of their problems. A group even claimed that a large tract of land, the Hondo Land Grant, was given to their forefathers and belongs to them, making it impossible for people who bought their homes within this area to have clear title and sell their homes. Many people who want to move are just walking away and leaving their homes in the banks’ hands. HCN covered this story. The state government refused to deal with this issue and tossed it back to Taos government to deal with. Good luck on that. Rumor has it that Susana Martinez pushed for legal muddle to occur in order to help get her votes in the upcoming election. So, imagine a state where encouraging this type of thing actuall helps get a governor votes. The artists aren't selling their work. The schools are terrible. The teen pregnancy rate is ridiculously high. Domestic violence is common, as are gangs. The demographoics of the entire town, and Santa Fe too, is one of an aging population, as retirees move here (it's cheap compared to Sun Valley, Jackson Hole, and Telluride) and as youth flees, if possible, after high school. And worst of all is that no-one can come up with or agree upon a path to lead us out of this muddle at the same time that global warming has hit us hard with drought. It’s not a pretty picture and without any leaders in government at the state or local level who can DO something, it’s likely to get worse.
Charles Fox
Charles Fox Subscriber
Jan 10, 2013 06:53 PM
Despite it's remaining natural beauty and vast spaces, much of it already trashed, New Mexico is home to a human culture or "tradition" of abuse that includes high rates of domestic violence, as well as animal neglect and abuse. In Santa Fe, the state capital, the high school graduate rate is about 50%. It's abysmal. There are high rates of drug abuse and a general acceptance of grinding, miserable failure. The politics are corrupt and new ideas are generally rejected, even if they have succeeded elsewhere. There is only a part-time, volunteer legislature. NM governors generally veto all the legislative work done each session. After living in Santa Fe for nearly 8 years, I may have to accept that this state is a lost cause.
Geoff Monroe
Geoff Monroe
Feb 11, 2013 09:56 AM
New Mexico is toast. The state is sooo dependent on government jobs its absurd....and that ship is sailing folks. wehn nearly 20% of your employment comes from one form of government or another you have zero chance in this economy, I seriously see no way to salvage the situation.
Linda VanFossan
Linda VanFossan Subscriber
Feb 12, 2013 11:51 AM
I moved to Taos several months ago for the scenery and climate, but it didn't take long for me to see exactly what Tara has stated above. I came from a rural, deep-south community, but I'm stunned at the general apathy surrounding this beautiful area. Rampant political corruption seems to be the norm, "toothless" laws concerning DWI, animal abuse, domestic violence and child abuse are on the books and no one seems to care. Mr. Fox, above, is correct about the general acceptance of grinding failure and lack of any cooperation among community leaders. It's a terrible situation and likely to get worse as there does not appear to be any solutions on the horizon.
Susan Tixier
Susan Tixier
Feb 12, 2013 04:54 PM
And, insofar as economics is concerned, the article makes sense, BUT...what New Mexico has to offer is NOT about money, and we will learn from the people here who have always had a life NOT about money, but about Nature, and Spirit, and helping one another from the heart, not by waiting on them for tips, or carrying luggage for movie stars. Mark my words: NM could lead the way to what will make the world, the United States, a better, less greedy, more human place to live.