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New Mexico State University

New Mexico State University

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NMSU prof. says outlook for Southern New Mexico depends on global economy

The 1999 economic outlook for Southern New Mexico will hinge on the global economy, said Christopher Erickson, an assistant professor of economics in the New Mexico State University College of Business Administration and Economics.

The whims of global markets were apparent in Southern New Mexico's economy over the past year, Erickson said. "Falling commodities prices were offset by increased Mexican trade activity, and the 18-month outlook predicts more of the same," he said. "Job growth and personal income should continue to rise, as well."

The major trend in Southern New Mexico is the region's increased dependence on the global economy, Erickson said. World events during 1998 were a mixed bag for the area. He pointed to the Asian downturn, which depressed global demand for primary commodities, leading to layoffs in the copper fields of Grant County. Already 200 hundred jobs have been lost and 300 more are at risk.

The downturn in copper prices led to the shutdown of the 100-year-old El Paso Asarco plant, putting 400 employees out of work, he said. Weak global demand has resulted in the lowest oil prices in 25 years, hurting New Mexico's oil industry. The high-tech sector, an important factor in recent economic growth, has been hit particularly hard by the problems in Asia, he added.

Nevertheless, Erickson said there was a bright side last year to global markets for Southern New Mexico, with a strong dollar increasing Mexican imports. Expanded trade across the Santa Teresa border crossing helped Las Cruces experience the fastest job growth of any statewide metropolitan area, he said. The city saw 2.1 percent overall job growth with a whopping 8.3 percent gain in services, led by retail employment. Overall, the region finished the year with moderate, 2 percent employment growth.

The 18-month economic outlook for Southern New Mexico will continue to depend somewhat on global market events, Erickson said. "Fortunately, the Asian downturn appears to have bottomed out," he said. "Japan has adopted a bailout plan for its ailing banking system and other Asian economies appear near a turnaround. Continued strength in the U.S. economy, moderate inflation and increased demand from Asia should allow Southern New Mexico to continue to experience moderate employment growth during 1999."

Erickson said nonagricultural employment growth should average 2 percent during 1999 and current dollar income should increase by a moderately strong 5 percent in 1999 and 2000, which means personal income should increase by 2.5 percent after adjusting for inflation.

Persistent influx of retirees and natural population growth will mean continued service sector growth, especially in the medical sector, he said. Memorial Medical Center has broken ground on a new facility and an El Paso hospital has expressed interest in expanding into Las Cruces. The software industry, while small, will likely also see growth, he predicted.

Real estate should continue its recovery through 1999, Erickson said. "Population growth and low interest rates will buoy construction spending, and the inventory of unsold existing homes should decline," he said.

Erickson said considerable uncertainty surrounds the manufacturing sector. The shutdown of the Sara Lee facility in December put downward pressure on manufacturing employment, but the opening of two wire manufacturing facilities and a foam manufacturing plant will create new jobs. A recently proposed motorcycle manufacturing plant could create up to a thousand new jobs, although plans have yet to be finalized, he said.