Contact:	Larry Waldman, (505) 277-7077 Steve Carr, (505) 277-1821
May 8, 2002 GROWTH SLOWS BUT NEW MEXICO ECONOMY HOLDS UP The New Mexico economy took some hits in 2001 and exhibited a pattern of declining growth throughout the year as nonagricultural employment growth slowed to 1.6 percent from 2.1 percent in 2000, according to recent data compiled by the University of New Mexico’s Bureau of Business and Economic Research (BBER). The 1.6 percent increase last year was about half of the state’s long-term (1950–2000) average. Employment growth fell from 2.4 percent in the first quarter of 2001 to 1.9 percent in the second quarter, 1.2 percent in the third quarter, and 0.9 percent in the final quarter. Still, New Mexico fared well compared to other states and to the country as a whole. The national employment increase for 2001 was only 0.4 percent, which means New Mexico employment growth was four times the national average last year. The 1.6 percent increase in New Mexico was the sixth-largest among the states, trailing only Nevada (2.6 percent), Wyoming (2.6 percent), Alaska (2.1 percent), Idaho (1.8 percent) and Florida (1.7 percent). Personal income growth was a robust 6.6 percent during the third quarter of 2001 on the strength of large gains in wage and salary disbursements and transfer payments. For the year, personal income growth was 6.1 percent, which ranked first among all the states. Per capita personal income growth (5.6 percent) also ranked first among all the states in 2001. The unemployment rate reached 5.0 percent in the fourth quarter, and 4.7 percent for the year, just below the national average of 4.8 percent. Despite the fact the New Mexico economy did not have a particularly great year in 2001 compared to the long-term trend, it was nevertheless one of the strongest and best-performing state economies in the country. Employment growth in 2001 was led by the mining, construction and local government sectors. Mining employment rose 5.8 percent, as employment in oil and gas extraction jumped almost 900 jobs, an 8.4 percent gain. Employment in coal/nonmetal mining increased 4.8 percent, adding 150 jobs. In metal mining, however, employment dropped 9.4 percent, or 150 jobs, attributable to several layoffs early in the year at the Phelps-Dodge copper mining complex in Grant County. Employment increased 3.8 percent in the construction sector. A major capital expansion at Intel and the renovation of the Big-I intersection in Albuquerque, contributed significantly to the strong showing. Another factor was the housing market. Total housing units authorized jumped 17.2 percent to 10,374, among the highest totals on record. Local government employment increased 3.1 percent with most of the gain occurring in education and at Native American enterprises. Recent expansions in Native American enterprise include the openings of the Sky City Hotel and Conference Center at Acoma Pueblo, the new Isleta Casino & Resort Center, the Dancing Eagle Travel Center at Laguna Pueblo and the new Sandia Casino. The outlook for the New Mexico economy calls for very modest growth this year, followed by a moderate recovery in 2003. Nonagricultural employment is expected to increase only 0.7 percent this year before increasing by 2.2 percent in 2003. In New Mexico this year, several shrinking sectors coupled with middling expansion everywhere else, leads to a slow growing, lethargic economy. Next year, for the most part, growth gets back on trend. Personal income growth will jump from 5.1 percent this year to 6.2 percent next year, while the unemployment rate drops to 5.6 percent in 2003 from 5.9 percent in 2002. The shrinking sectors include mining, manufacturing and construction. Construction and mining were significant sources of strength in 2001, and both will be sources of weakness in 2002. Mining employment will drop 3.9 percent in 2002, followed by a small 0.2 percent increase in 2003. In metal mining, employment is expected to fall 33.5 percent this year and 4.2 percent next year, as Phelps-Dodge lays off 450 miners at their Grant County complex. Another 100 miners will be laid off at the Molycorp molybdenum mine in Taos County. Coal/nonmetal mining employment will also be in contraction mode for the next two years, with expected declines of 2.4 percent this year and 2.0 percent next year. The York Canyon coal mine near Raton will close later this year with the loss of 140 jobs. Oil and gas extraction employment will also decrease this year, by 0.6 percent, before increasing slightly in 2003. Growth in construction employment reached 3.8 percent in 2001, but will drop in 2002, posting a 3.0 percent decline, followed by a 0.9 percent rise in 2003. The completion of the Intel expansion and the Big-I renovation will result in the loss of thousands of construction jobs. A slowdown in housing construction will also contribute to the construction weakness. Following a 17.2 percent gain in total housing units during 2001, growth in housing construction will sink to 5.8 percent this year, and then will post a 6.5 percent decline in 2003. For more information contact BBER’s Larry Waldman at 277-7077 or 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