Jim Peach is an economist at New Mexico State University. He says the state's economic recovery will remain sluggish in 2012. (NMSU photo by Darren Phillips)
The state’s economy will continue to grow at a tepid pace in 2012, mirroring the national recovery, according to an economist at New Mexico State University.
In his economic forecast for New Mexico, Jim Peach said the economy will generate between 8,000 and 12,000 non-farm payroll jobs this year, which is consistent with historic averages.
“Unfortunately, at this rate it will take New Mexico three or four years to have as many jobs as we did when the state entered the recession in 2008,” Peach said. “Even so, the New Mexico labor market appears to be in better shape than the national labor market.”
Peach, expanding on the forecast he made at the recent Economic Outlook Conference sponsored by NMSU’s College of Business and Wells Fargo Bank, also said total personal income in New Mexico will grow between 4 percent and 5 percent, “within the range of recent history.”
“In the last couple of years New Mexico personal income has benefited from extraordinary increases in transfer payments and these are about to end,” Peach warned. “I am referring to the extraordinary federal dollars injected into New Mexico from the 2009 American Recovery and Re-investment Act.”
As for the state’s real gross domestic product, Peach is forecasting an increase between 2.5 percent and 4 percent. Whether the growth is closer to 2.5 percent or 4 percent will depend on two critical factors: the strength of the national economy and the price of oil and gas. According to the Wells Fargo forecast, the nation’s economy is projected to grow by 2 percent.
“There is considerable uncertainty about both the national economy and oil and gas prices,” Peach said. “The New Mexico economy tends to do well when the national economy does well. Energy prices are highly volatile; a change in oil prices of $20 per barrel means a change in New Mexico real GDP of $1 billion or more â€” about 1.2 percent of the total. No one should be silly enough to think they can predict oil prices accurately.”