https://www.youtube.com/watch?v=74V3i-4uLQY
New Mexico State University hosted the 2021 Economic Outlook Conference, covering both the state and national economies.
If there’s a reoccurring theme from the conference, it’s the vast economic uncertainty from the pandemic that has led to high unemployment across the nation. Wells Fargo Economist Charles Dougherty emphasized it’s reduced economic growth at a historic rate.
“A lot of what's happened over the past year or so, has been directly tied to the pandemic, the Coronavirus,” Dougherty said. “We saw the sharpest reduction in economic growth that maybe we've ever seen aside from maybe back to World War II.”
According to a Pew Research Center report, one-in-four adults have had trouble paying their bills since the start of the pandemic. Dougherty says that while some of the over 22 million jobs lost have been regained, the recovery rate has slowed down.
“We’ve only recovered about 50% of jobs, a little bit more than 50%. Essentially, we've lost 22 million, and we've recovered about 12,” Dougherty said. “So, we're still very much in the hole. Furthermore, over the past few months, we've sort of slowed down in terms of job growth.”
In December of 2020, the national unemployment rate rose to 6.7%, up more than 3% from the previous year. At 8.2%, the state of New Mexico far exceeded the national average, ranking 46th in the nation. Jim Peach, a professor emeritus of economics at New Mexico State University, highlighted the stark economic changes caused by the pandemic in New Mexico.
“We were finally above the level of the Great Recession,” Peach said. “And then between February and April, we dropped 105,000 jobs in the state. And that's just an awful lot. We gained some of that back. We are at 795,000 as of December.”
Peach says the hardest-hit sectors in New Mexico include both mining and the leisure and hospitality industries.
“Leisure and hospitality lost 32,000 jobs between January and December of last year,” Peach said. “And the other sector that I'd like you to look at is mining…and that's minus 7,500 jobs out of about 25,000 jobs. Those two sectors are really important in the state. Leisure and hospitality counted for almost 100,000 jobs before this started.”
But there’s a bright spot in the economic outlook—consumer spending. Dougherty says increased national personal consumption of items like exercise equipment and electronics has helped to stabilize the economy. He forecasts spending will further increase this spring.
“You see a big increase in personal consumption expenditures, which is just economics parlance for consumer spending,” Dougherty said. “You see durable goods—that's the Peloton bike, basketball hoop, the laptop computer. That's actually not only risen back to where it started but 10% above that since last February. So, we've seen this big surge in personal or durable goods spending, and that's a big reason why the overall economy has fared, you know, reasonably well over the past few months.”
Dougherty predicts the national economy will regain its pre-pandemic strength by the third quarter of 2021—on the assumption that COVID cases continue to go down. He says as the weather grows warmer and people begin to resume normal economic activity the economy will recover.
“We actually think the economy grows just a shade above 5% this year, and a shade above 5% next year,” Dougherty said. “It doesn't sound like much, but if you think about what I was saying at this time last year, I was talking about 2% growth, and how great 2% growth was. So clearly we're digging ourselves out of a hole.”
