Contacts: Larry Waldman, (505) 277-7077 Steve Carr, (505) 277-1821

December 17, 2002 NEW MEXICO ECONOMIC GROWTH CONTINUES SLOWDOWN Expansion in the New Mexico economy continued to slow in the third quarter of 2002. Nonagricultural employment growth reached only 0.5 percent, following declines in each of the preceding six quarters. The struggling national economy, numerous layoffs and firm closings, a tourism sector not yet recovered from Sept. 11, and a statewide drought are among the reasons for the dismal performance, according to Larry Waldman, Sr. economist at University of New Mexico’s Bureau of Business and Economic Research. Weakness was evident throughout, with only the government sector exhibiting more than minimal growth. Employment declined in four of the state’s eight (not including agriculture) broad sectors during the third quarter. The mining sector took the biggest hit, posting a 10.3 percent employment drop. Construction employment dropped 3.5 percent, as the Big-I renovation and the Intel expansion were completed and hundreds of construction workers left the state. In the manufacturing sector, employment was down 2.8 percent, a reflection of numerous layoffs and plant closings during the past year, while the transportation/communications/utilities sector lost hundreds of jobs in railroad transportation, warehousing & trucking, and utilities. The government sector was the major net source of new jobs. Government employment growth in the third quarter was 3.1 percent, with local and state government each up 2.9 percent, and federal government up 4.6 percent. The local government gains were mostly in education and Native American enterprises (casinos and resorts). State government employment was boosted by the addition of hundreds of jobs at Los Alamos National Lab, while the federal sector added a multitude of defense-related jobs. The outlook for the New Mexico economy is not particularly good, but tomorrow will be better than today says Waldman. Nonagricultural employment will increase slightly to 0.7 percent in the final quarter of 2002 and the first quarter of 2003, and then rise to the neighborhood of 1.5 percent by the second half of next year and remain in that vicinity through 2004. On an annual basis, growth will reach only 0.7 percent this year, but will climb to 1.3 percent next year and 1.6 percent in 2004. In New Mexico this year, employment declines in mining, manufacturing, construction, and transportation/communications/utilities will place a substantial restraint on economic growth. The major impetus for expansion will come from the government sector, with services also contributing. Next year government employment growth will slow a bit, while job losses in manufacturing, mining and construction will slow substantially, although not disappear. The services sector will enjoy an elevated growth rate, boosted by a large jump in health services. By 2004, services will once again be the lead sector, with further support coming from government, construction, and trade. A tight state government budget next fiscal year will also be a contributing factor to the slow growth. For more information contact Waldman at 277-7077 or via e-mail at lwaldman@unm.edu. # # #

The University of New Mexico
Public Affairs Department
Hodgin Hall, 2nd floor
Albuquerque, NM 87131-0011
Telephone: (505) 277-5813
Fax: (505) 277-1981