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.

High Country News Classifieds
    STAFF ATTORNEY POSITION OPENING www.westernlaw.org/about-us/clinic-interns-careers The Western Environmental Law Center (WELC) is a nonprofit public interest environmental law firm with a 25-year legacy of success...
    Searching for candidates with a Bachelor's Degree in Planning, Community Development, or a related field with 7 years' experience in land use planning forums, including...
    Manage, develop and implement all stewardship and land management plans and activities on both private and public lands. Guide and direct comprehensive planning efforts, provide...
    Based in the state capitol, Boise State Public Radio is the premier NPR affiliate in Idaho. With 18 transmitters and translators, it reaches 2/3rds of...
    Dream of owning your own business, being your own boss, working from home ... this is the one.
    Organization Background: The Mojave Desert Land Trust (MDLT) is a non-profit 501(3)(c) organization, founded in 2006. Our mission is to protect the ecosystems of the...
    If you are deeply committed to public service and would like to become part of our high performing, passionate and diverse team, NCAT is looking...
    Create a base in the center of Southern Utah's Grand Circle of National Parks. Multiple residential property with three established rental units and zoning latitude...
    with home on one beautiful acre in Pocatello, ID. Blackrock Forge - retiring after 43 years! Fully equipped 5,500 sf shop including office, gallery and...
    Certified organic fruit/berry/veggie/flower farm. Home, barns, garage, separate apt, more. Just under 2 ac, edge of town. Famously pure air and water. Skiing, mountaineering, bike,...
    Become a force for nature and a healthy planet by joining the Arizona Chapter as Forest Stewardship Project Director. You will play a key role...
    Ranchers Stewardship Alliance is accepting applications for an Executive Director. This position will provide leadership to RSA, develop a fund raising plan, and effectively communicate...
    The Equity in the Outdoors Coordinator will lead community engagement, program implementation and development, and data collection for the Eagle Valley Outdoor Movement (EVOM). EVOM...
    The Idaho Conservation League is seeking a personable individual who is passionate about conservation to join our Sandpoint Field Office. The Community Engagement Assistant will...
    4 standard or custom lengths. Rugged protection for backpacking. Affordable pricing.
    Actively introduce students to Experiential Education, Outdoor Recreation, and Sustainability while engaging and challenging them to learn and participate in these diverse opportunities. Room, board,...
    In-depth investigations of polluters, lobbyists, regulators, elected officials and others focused on environmentally damaging projects in the U.S. and internationally. We specialize in mining projects,...
    in beautiful Montezuma County.
    Class A & B drivers, pass all DOT requirements and clean driving record
    - Thriving Indie bookstore in the heart of Durango, Colorado. General bookstore with 34-year history as a community hub for Southwest region of CO. 1800...