Economic Forecast - Chase · PDF fileEconomic Forecast OUTPUT AND EMPLOYMENT WHAT THE TABLE SHOWS: New Mexico’s GDP forecast is derived from ... New Mexico’s economy is expected

Economic Forecast

OUTPUT AND EMPLOYMENT WHAT THE TABLE SHOWS:

New Mexico’s GDP forecast is derived from

the national forecast by allocating output to

each of the 50 states based on employment

shares. So, forecast misses reflect surprises

in the aggregate forecast as well as

unexpected shifts in a state’s GDP share.

New Mexico’s recovery has been a bit slow-

going but the state’s economy did not

contract as sharply as the national economy

in 2008 and 2009 either.

KEY MESSAGES:

New Mexico’s economy is expected to pick

up speed in coming years.

Note: GDP figures are based on quarterly values that are

interpolated from annual GDP estimates using quarterly

employment changes. Unbolded figures are reported actual

values and bold figures represent forecasts.

Sources: US Department of Commerce;

US Department of Labor.

February 9, 2014

Regional Perspectives: New Mexico Economic Outlook

Commercial Banking 2

2007 2008 2009 2010 2011 2012 2013 2014

United States

Real GDP

$ billions (fourth quarter) $14,996 $14,575 $14,540 $14,942 $15,242 $15,540 $15,907 $16,464

% change over the four quarters 1.9% -2.8% -0.2% 2.8% 2.0% 2.0% 2.4% 3.5%

Nonfarm employment

Job count (fourth quarter) 137,943,000 135,153,333 129,526,667 130,283,667 132,286,667 134,462,667 136,729,000 138,288,195

% change over the four quarters 0.9% -2.0% -4.2% 0.6% 1.5% 1.6% 1.7% 1.1%

Average monthly change 99,750 -232,472 -468,889 63,083 166,917 181,333 181,333 181,333

New Mexico

Real GDP

$ billions (fourth quarter) $69 $69 $70 $71 $71 $71 $73 $75

% change over the four quarters 0.1% 0.1% 1.4% 0.3% -0.1% 0.7% 2.3% 3.6%

Nonfarm employment

Job count (fourth quarter) 847,800 841,533 803,900 801,967 803,000 806,733 813,674 822,953

% change over the four quarters 1.3% -0.7% -4.5% -0.2% 0.1% 0.5% 0.9% 1.1%

Average monthly change 936 -522 -3,136 -161 86 311 578 773

The Economy’s Structure

PERCENT OF TOTAL GDP DERIVED FROM SELECTED INDUSTRIES WHAT THE CHART SHOWS:

The figure compares the relative importance

of selected industries to the state’s economy

with the national footprint of each industry

(state and national figures reflect the value

added of each industry as a percent of

aggregate state or US nominal GDP,

respectively).

The energy, manufacturing, and military

sectors have a bigger foot print in the state,

compared with the national norm.

KEY MESSAGES:

The strong energy sector and the military

activity cushions New Mexico’s economy.

Source: US Department of Commerce. Updated through

2011.

February 9, 2014



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US industry mix

New Mexico industry mix

Bankruptcies

RATIO OF BANKRUPTCY FILINGS TO THE 2007 Q4 NUMBER WHAT THE CHART SHOWS:

The figure illustrates trends in bankruptcy

filings by businesses and persons relative to

the number of filings in 2007 Q4, prior to the

recession.

Bankruptcy filings are back to normal.

KEY MESSAGES:

Indicators of financial stress are a useful

coincident indication of economic distress.

From this perspective, economic pressures

are modest.

Source: Administrative Office of the U.S. Courts; Updated

through September 2013.

February 9, 2014



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1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012

Business bankruptcy filingsNonbusiness bankruptcy filings

All US bankruptcy filings (shaded area)

Oil & Gas Activity

NUMBER OF DRILLING RIGS ON LAND, INLAND WATERS, AND OFFSHORE WHAT THE CHART SHOWS:

The figure illustrates recent trends in the rig

count for petroleum drilling operations.

Oil and gas drilling activity in New Mexico is

relatively robust.

KEY MESSAGES:

New Mexico’s energy sector is bringing

welcome help to an otherwise slow

economy.

Source: Baker Hughes rig count. Updated through 2013 Q3.

February 9, 2014



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1983 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013

United States (left scale)New Mexico (right scale)

FRB KC Business Survey

REAL GDP (% CHANGE 12 MONTHS EARLIER) DIFFUSION INDEXES (0 = NO CHANGE) WHAT THE CHART SHOWS:

The Kansas City Federal Reserve Bank

survey of local businesses has recovered

from last summer’s lull, and that is a positive

omen for the economy’s future.

The index readings represent the net

difference in the percent expecting

improving conditions and those expecting

worsening conditions.

The survey indicates activity has picked up

recently.

KEY MESSAGES:

Still, business outlook remains favorable in

New Mexico.

Note: Survey data unavailable prior to 2001.

Sources: Federal Reserve Bank of Kansas City; US

Department of Commerce. Updated through November

2013 (surveys) and 2013 Q3 (GDP).

February 9, 2014



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1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014

New Mexico real GDP (left scale)

FRB-Kansas City's manufacturing survey (right scale)

Forecast

FRB Dallas Business Survey

REAL GDP (% CHANGE 12 MONTHS EARLIER) DIFFUSION INDEXES (0 = NO CHANGE) WHAT THE CHART SHOWS:

The Dallas Federal Reserve Bank survey of

local businesses has faded a bit in recent

months.

The index readings represent the net

difference in the percent expecting

improving conditions and those expecting

worsening conditions.

The survey continues to point to moderate

expansion.

KEY MESSAGES:

The business outlook remains favorable in

New Mexico.

Note Survey data unavailable prior to 2004.

Sources: Federal Reserve Bank of Dallas; US Department

of Commerce. Updated through November 2013 (surveys)

and 2013 Q3 (GDP).

February 9, 2014



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1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014

New Mexico real GDP (left scale)

FRB-Dallas' survey of manufacturing, current conditions (right scale)

FRB-Dallas' survey of manufacturing, expected conditions (right scale)

Forecast

Initial Jobless Claims

RATIO OF INITIAL CLAIMS FOR UNEMPLOYMENT INSURANCE TO THE 2007 Q4 LEVEL WHAT THE CHART SHOWS:

The figure tracks layoffs in New Mexico and

the national level of claims.

Weekly layoffs, both the state and national

tallies, are illustrated in the figure as a ratio

to the level of layoffs in the fourth quarter of

2007, prior to the recession.

Layoffs picked up recently, likely in response

to the government shutdown.

KEY MESSAGES:

Layoff trends signal little economic

improvement.

Source: US Department of Labor. Updated through

November 16, 2013 (state) and November 23, 2013 (US).

February 9, 2014



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2007 2008 2009 2010 2011 2012 2013 2014

New Mexico

US (solid area)

Economic Growth

REAL GDP GROWTH (PERCENT CHANGE FROM FOUR QUARTERS EARLIER) WHAT THE CHART SHOWS:

Real GDP growth in New Mexico (the line in

the figure) is superimposed on top of US

real GDP growth (bars in the figure).

The state’s economy has lagged national

growth trends for the past decade.

KEY MESSAGES:

New Mexico is recovering, like the national

economy, only more slowly.


2012 (state) and 2013 Q3 (US). Quarterly estimates for

states after 2012 are interpolated from employment figures,

based on the historical correlation of state and national

employment changes.

February 9, 2014



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90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15

New MexicoUS

Forecast

Economic Output

REAL GDP LEVEL (RATIO TO 2000 Q4) WHAT THE CHART SHOWS:

The figure illustrates the evolution of real

GDP of the state and the overall US

economy since the fourth quarter of 2000,

the peak of the previous business cycle—

that is, at any point in time the lines trace the

ratio of real GDP to its level in 2000 Q4.

New Mexico led the national economy for

the better part of the last decade. It did not

contract when the national economy fell into

recession, so it now is on a slower-growth

trajectory because it has less ground to

make up.

KEY MESSAGES:

New Mexico benefits from the strength of its

neighbors and is expected to begin to speed

up.


2012 (state) and 2013 Q3 (US). Quarterly estimates for

states after 2012 are interpolated from employment figures,

based on the historical correlation of state and national

employment changes.

February 9, 2014



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2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

New Mexico

US

Forecast

Employment Growth

NONFARM PAYROLL EMPLOYMENT (PERCENT CHANGE FROM 12 MONTHS EARLIER) WHAT THE CHART SHOWS:

New Mexico’s employment trend compared

with the nation’s.

Employment growth has been slow, but may

be accelerating.

KEY MESSAGES:

Employment growth is likely to remain

moderate for a while.

Source: US Department of Labor. Updated through October

2013.

February 9, 2014



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New MexicoUS

Forecast

Employment

NONFARM PAYROLL EMPLOYMENT (RATIO TO THE 2000 Q4 LEVEL) WHAT THE CHART SHOWS:

The figure illustrates the evolution of

employment in the state compared with the

nation since 2000 Q4, the peak of the

previous business cycle. The lines trace out

the ratio of employment at the time to

employment in 2000 Q4.

Albuquerque’s economy may be turning the

corner.

KEY MESSAGES:

Employment is expected to strengthen in

coming years.


2013.

February 9, 2014



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2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

New Mexico

Santa FeAlbuquerque

US

Forecast

Intrastate Employment

NONFARM PAYROLL EMPLOYMENT IN SELECTED COMMUNITIES (RATIO TO 2000 Q4 LEVEL) WHAT THE CHART SHOWS:

Employment trends in local communities

across the state.

Lines are the cumulative percent change in

employment since 2000 Q4, the peak of the

previous business expansion.

Employment in most communities is stable,

expanding in a few.

KEY MESSAGES:

The state has a wide dispersion of economic

performance.

Source: US Department of Labor. Updated through April

2013.

February 9, 2014



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1.02

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2001 2003 2005 2007 2009 2011 2013 2015

US forecast

US

Las Cruces

Farmington

Santa Fe

Albuquerque

New Mexico forecast

New Mexico

Forecast

Unemployment

UNEMPLOYMENT (PERCENT OF THE LABOR FORCE) WHAT THE CHART SHOWS:

Unemployment rate trends in New Mexico,

compared with the national average.

The region’s rise in unemployment has

lagged the national average.

Unemployment crested near 8 percent and

has come down to near 7 percent.

KEY MESSAGES:

The unemployment rate is the single best

indicator of the relative economic

performance of a region.

The state’s economy seems to be turning,

judging by trends in the unemployment rate.


2013.

February 9, 2014



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1976 1979 1982 1985 1988 1991 1994 1997 2000 2003 2006 2009 2012 2015 2018

New Mexico

US (shaded)

Forecast

Relative House Prices

RATIO OF THE STATE’S HOUSE PRICES TO THE NATIONAL AVERAGE (1995 Q2 = 1.0) WHAT THE CHART SHOWS:

The figure tracks the relative price of houses

in the state versus the nation—that is, it

reflects the ratio of the state price index to

the national house price index, with that ratio

set to unity in the summer of 1995. A drop

in the line means that house prices in the

state lag the national trend. States that did

not suffer from speculative conditions saw a

decline in the relative price of houses in this

last decade.

New Mexico mirrored some of the real

estate trends elsewhere but speculation

seemed more muted.

KEY MESSAGES:

New Mexico is not plagued as much by the

housing excesses that were common to

some of its neighbors.

Source: FHFA. Updated through 2013 Q3.

February 9, 2014



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1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012

Real Estate Markets

HOUSE PRICES IN SELECTED COMMUNITIES (RATIO TO THE 1995 Q2 LEVEL) WHAT THE CHART SHOWS:

The figure tracks the cumulative percentage

deviation in house prices since 1995 in

selected local markets and compares those

with the national average.

The state’s house prices are beginning to

flatten.

KEY MESSAGE:

Inflated real estate conditions are largely

history.

Source: FHFA. Updated through 2013 Q3.

February 9, 2014



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1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012

US

New Mexico

Santa Fe

Albuquerque

Las Cruces

New Home Building

HOUSING STARTS (RATIO TO THE JULY 1990 LEVEL) WHAT THE CHART SHOWS:

The pace of new home building (housing

starts) in New Mexico, compared with the

national trends.

Housing construction remains flat.

KEY MESSAGES:

Housing construction remains weak and

there is little sign of a recovery in New

Mexico so far.

Source: Census Department. Updated through August

2013.

February 9, 2014



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2000 2003 2006 2009 2012 2015

USNew Mexico

Forecast

Office Markets

PERCENT OF OFFICE SPACE THAT IS VACANT WHAT THE CHART SHOWS:

Office market conditions in selected

markets.

Office vacancy rates remain high and are

still rising in Albuquerque.

KEY MESSAGES:

Office vacancy rates signal little meaningful

improvement in commercial real estate

markets just yet.

Source: CB Richard Ellis (formerly CB Commercial Property

Information Systems), Office Vacancy Index of the United

States. Updated through 2013 Q2.

February 9, 2014



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1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014

Albuquerque

All metropolitan areas (shaded area)

Documents

Economic Forecast - Chase · PDF fileEconomic Forecast OUTPUT AND EMPLOYMENT WHAT THE TABLE SHOWS: New Mexico’s GDP forecast is derived from ... New Mexico’s economy is expected