Economic improvement for the U.S. and New Mexico is moving at a slow rate and isn’t expected to pick up any speed in the new year, according to officials from the Federal Reserve Bank of Dallas.
Three Federal Reserve officials visited Eastern New Mexico University on Wednesday afternoon, each giving a presentation on different aspects of national and state economy.
The three officials covered past, present and future economy, saying how the U.S. economic recession began and how recovery is going.
“It ultimately stemmed from a housing crisis,” said Robert Gilmer, vice president and senior economist for the Federal Reserve Bank of Dallas. “We had strong demand for housing and that demand was due to job expansion. They (Wall Street) managed basically to turn the housing market into a time bomb.”
Gilmer said at the start of the recession, people who could not afford homes were being allowed to buy them anyway.
He said before the recession 1.8 million homes were being bought and now, 400,000 homes are being bought.
“It’s just another example of how the bubble from before the crisis carries through to after and slows growth,” Gilmer said. “It’s a question of when do auto sales go back to 16 million and when do home prices go back to normal.”
Gilmer said U.S. commodities are recovering well, the automobile markets are recovering at a slow rate and the housing market has not recovered yet.
He said 16 million automobiles were sold a year before the crisis and the current number has only risen back to 13 million.
Roberto Coronado, senior business economist, said Mexico has been making a strong recovery from the recession and this could have a positive impact on U.S. economy, especially because of the advantages of foreign-owned, controlled and subcontracted manufacturing plants in Mexico that process imported components for export.
“Transportation exports directly affect the Texas/New Mexico border cities,” Coronado said. “From the contacts we have, we are starting to see that trend of product manufacturing coming back from Asia to North America.”
Thomas Siems, director of economic outreach, said people are correct when they say the current U.S. recession is the worst since the Great Depression but it came nowhere near being as severe.
“Growth is slow; slower than we expected but it’s still rising,” Siems said.
The officials said, in short, U.S. and New Mexico economy will continue their slow recovery, not speeding up any in 2012.
Gilmer said the economy will recover but it will be at least another two years before it does.
“This recession will cost us 10 percent of our growth,” Gilmer said. “But the good news is there will not be permanent damage and we will eventually reach the growth level we were at before.”