Economic Trends, California, Texas and New Mexico
ECONOMIC TRENDS, CALIFORNIA, NEW MEXICO AND TEXAS
Research by: Boothe and Associates, www.benboothe.com
We call our client family the "Connected Generation" or the "Global Generation" because we have such an extended readership of BootheGlobalPerspectives in 35+ nations. This trend report examines three states in the USA each of which has a unique personality and multi faceted cultures. It is instructive for investment, location, planning purposes.
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Boothe Companies By: Ben Boothe, Sr. Chairman
With a broad based economic recovery and in some places outright "boom", conversely we see states where diversity and contrasts indicate areas of great wealth, next to poor areas. In New Mexico, pockets show suffering and high unemployment, contrasted with other areas where business can't find enough workers. Texas shows farmers failing because of drought, with some cities almost ghost towns, while other farmers are prospering and towns booming. In California we see huge debt and infrastructure demands, high taxes, in the richest economy of the nation.
TEXAS: For example, in Texas, buses line up in the city of San Antonio to take workers to oil/gas fields in SW Texas, and it is almost impossible to find a hotel or motel room in SW Texas or in West Texas because of new drilling, exploration and production. 
a recent visit showed 9 help wanted signs in 3 blocks, and a surge in new housing and new construction.
CALIFORNIA: In California, the movie industry has consolidated into fewer and fewer, larger and larger film conglomerates, 
and there are still many independent film makers which often offer more new jobs and opportunities than the big companies. The big film houses have created expanded "theme parks" that generate millions in tourism dollars. The entertainment industry continues to be strong. Farming in the Sacramento Valley is showing greater profitability, but a water shortage and drought concerns continue to stress the economy. 
Retail, housing, manufacturing, imports are all still suffering from some economic slowness. Yet California, is showing good travel, tourism and a growing economy. California has huge debt issues, and the expensive infrastructure demands higher taxes to keep it maintained.
New Mexico, an area of beautiful vistas, has had slow growth, particularly in remote areas of the west, and northern New Mexico. Towns such as JAL, Mora, Wagon Mound, Watrous, Springer, Raton, have seen their communities struggle to survive. But, Santa Fe and Albuquerque, Roswell, Hobbs, Carlsbad, and Los Alamos have all maintained strong and growing economies. Clovis and Los Alamos enjoy military and federal research spending. Locations such as Albuquerque, Santa Fe and historic towns with well preserved older buildings such as Las Vegas, New Mexico have become magnets for film productions.
Las Vegas, New Mexico appears to be stable, with slow growth, but this city has water issues and cultural conflicts that have in the past slowed growth. Younger progressive bankers and thinkers are bringing new hope for Las Vegas vs other small towns. Young educated and motivated leadership may be the best hope for the economy of New Mexico, because young progressive business executives and investors appear to be emerging and doing well in bringing new economic opportunity to the state. Being the smallest of the three states of this report, it has excellent potential for expansion and change.
|
Economic Factor |
CALIFORNIA |
NEW MEXICO |
TEXAS |
|
Unemployment Rate |
7.8% statewide (4.4% San Francisco, 8.5% Los Angeles)
California added 27,000 new jobs in July. Overall new job growth has been slow but steady. |
6.5% (5.6% in Albuquerque, 4.2% Santa Fe)
New jobs were largely offset by losses with very slow growth in 2013-14. |
5.2% (3.5% Austin, 5.1% Dallas)
Texas added 46,600 new jobs in July, and 60,000 new jobs in June of 2014. With 370,300 new nonagricultural jobs from June 2013 to June 2014. |
|
Population Trends |
California grew to 38.200,000, but most of this is from birth, and immigration. The population rose .88%, considered a "slow growth, with 170,000 coming to California while 103,000 people left for other States in the USA. |
Average 3% growth per year over 10 years, although net population dropped in 2013. Mora, Sierra, Quay, DeBaca and Hidalgo counties are all shrinking. |
Average 5% growth per year over the past 10 years. The fastest growing state in the USA, has population of 27,194,258 in 2014. |
|
New Construction |
Growing slowly, 10% increase in new construction projects. Large downtown rehabilitations in San Francisco and Los Angeles, with $1.7 Billion to be spent in Los Angeles and San Francisco. Public spending on new high speed rail and new sports facilities are in process. Regulations and red tape appear to slow new construction in Los Angeles, and San Francisco, and there is new home construction in outlying areas such as Lancaster and mid-sized towns. California coast has some of the highest valued real estate in the nation. Many Californians and companies liquidate and expand to less expensive properties in other states. |
20% increase in new construction is single family housing, and a few large corporate facilities such as the 192,000 Schott Solar plant in the Mesa Del Sol submarket for a data center, and US cotton expanded their facility in Rio Rancho with 64,000 s.f. Demand for new space is slow, and contractors have excess capacity that needs to be absorbed. Most new projects are expected to be delayed until 2015. New Mexico Real estate is undervalued and driven by out of state investors.
|
Energy construction boom for the coast of Texas and Louisiana, at $116.85 billion, $12.18 billion of industrial projects, and more infrastructure for roads and water projects in the billions. Also large expansion of new residential, apartment, condominium and new office buildings state wide. New construction activities for commercial buildings, hospitals and luxury gated communities is becoming brisk in Texas. Texas real estate shows stable growth over last 30 years. |
|
Tax Trends |
Taxes are high and must go higher. Huge political battles over already high taxes looming. California has huge deficits, and may ultimately see public defaults or restructuring. |
Taxes are moderate but will be increased. Much political resistance to increases. |
Taxes are low, and probably will show few increases. Culture of Texas resists taxes and public spending vs private development. |
|
Major industries driving growth/recovery |
Entertainment, distribution, export import, shipping, high technology, medical, government spending, public sector projects, oil, research, import/export. Large service sector. State facing water issues to support industry. |
Defense, government, oil, ranching, tourism, high technology, mining, service industries. Ranching and agriculture strong in certain sectors. State has water shortage, which limits growth. |
Oil, gas, wind, agriculture, manufacturing, high tech, medical, aviation, defense, service industries, small manufacturing, large service sector. State facing water issues, over long term this could slow growth, but state has excellent long term water plan. |
|
Growth Described As |
Steady (but not dynamic) recovery. Growth better in some sectors, including travel, vacation, movie industries". Los Angeles, San Diego and San Francisco good all stable to growing. Ports and Airports huge economic entities. Agricultural communities stable, but drought is of concern. |
Slow Recovery, most income in SE sector (Hobbs, Portales, Carlsbad, Clovis) areas of oil and gas production, and some growth in Albuquerque and Santa Fe, with diversified economies. Lack of port, makes highway, rail and only one major airport critical to state economy. |
Boom, expansion, in construction, energy, industrial, travel and retail. Houston, DFW, Austin, San Antonio, and the Valley all show very strong growth. Texas is a window of commerce from Latin America into the USA. Ports and Airports huge economic entities. |
|
Agricultural Markets |
Good profits and prosperity among food and agricultural producers, due to rising commodity prices. There are negative impacts because of drought. |
Good profits and prosperity among agricultural growers, especially irrigated areas, although drought has sapped capital from many farmers. |
Farmers report recent rains have brought the best crop potential in 7 years, but past drought still shows lakes below normal. Increasing profit margins in farm goods. |
|
Median Household Income |
$61,300 |
$44,424 |
$50,730 |
The industrial market in New Mexico appears to be a bargain for renters and those wishing to invest in a depressed market. Note these figures:
USA STATES RENAMED IN ACCORDANCE WITH SIMILAR GDP'S OF OTHER NATIONS
Gross Domestic Product by state, as compared to similar GDP of nations.
California has long been the largest economy of all of the states in the USA with over $2. Trillion of economic output and still growing. But Texas is increasing with $1.6 trillion and gaining on California every month, due to oil, gas, wind, as well as a healthy agricultural sector and growing exports of manufactured, healthcare and technical goods. New York is third, followed by Florida, Illinois, Pennsylvania, Ohio, and New Jersey. New Mexico's GDP, is 38th on the list, at $80,600,000, less than Nebraska, but greater than Hawaii, about equal to Ecuador.
CALIFORNIA'S ECONOMY HAS CONFLICTS:
The state is huge, but there are deep divisions of cultural and political direction, plus the infrastructure and debt have put great financial pressures on the state. Prisons there are overcrowded, schools indicate that California ranks 3rd to last in the nation, minority dropout rates exceed 60% in much of Los Angeles. The water crisis is real and there is $1.1 trillion in city, county and state debt which has caused concern. If California does not show a significant increase with this recovery, it must face that it has the 46th worst unemployment in the nation, and 50th as a good business startup destination.
Yet California's land prices show that it is still one of the most popular and sought places to live, the climate, the progressive forward thinking leaders, the leadership for trends in the entire nation all bode well for California. No doubt that in some future date, like General Motors, or Detroit, California's public debt will probably default and some kind of bankruptcy will occur. But California will continue to be the nation's economic star and leader...that is, until Texas passes it by sheer fundamental strength of can do people with a good work ethic and a lot of energy and agricultural production.
All of the above factors suggest that a national recovery is being helpful in California, New Mexico and Texas. Of the three states, California is the largest economy, Texas the most dynamic, and New Mexico a lovely place to live in a multi-cultural environment with resorts, mountains and enough economic diversity to attract highly qualified people. Many people in California, make their money there and then move to Texas or New Mexico where the costs of real estate are much lower. But many in Texas make their money in Texas and have second homes in New Mexico and along the California coast to enjoy the best of beauty and nature. But these three states, in tandem, offer great opportunities for business, lifestyle, and a good quality of life. Real estate values in all three are destined to increase.
Research by: Appraiser Consultant
Thank you for reading. Pass it on. Sincerely,
Ben Boothe, Sr.
BOOTHE COMPANIES By: Ben Boothe, Sr. Chairman