MODEST GROWTH PREDICTED IN NEW MEXICO

Fed Sees Modest Growth in New Mexico Sep 4, 2008 - New Mexico Business Weekly
Economic growth in the Federal Reserve’s Tenth District, which includes Albuquerque, Santa Fe and nothern New Mexico, remained modest in early April and May, according to the Fed’s latestBeige Book, a survey of economic activity published eight times a year.
The district, based in Kansas City, includes part or all of seven states: Oklahoma, Kansas, Nebraska, Missouri, Colorado, Wyoming and New Mexico.
Consumer spending in the district remained soft in May, despite solid travel and tourism activity. Retail managers expected sales to ease in coming months. Mall traffic remained slow, partly attributed to higher gasoline and food prices limiting purchases of non-essential goods.
After a rebound in March, auto sales slumped, especially for trucks and SUVs, and access to credit tightened. Auto dealers anticipated sales would remain sluggish, even with aggressive sales incentives and discounts.
Hotel occupancy and average room rental prices moved higher, and restaurants reported an uptick in sales despite a slight increase in menu prices.
Residential real estate activity strengthened seasonally from the last survey and commercial real estate activity held steady in late April and May. Demand for lower priced homes was stronger than demand for high-end homes requiring jumbo mortgages. Still, one realtor noted the market for first-time home buyers has slowed because higher living expenses constrained buyer efforts to save for a down payment. Apartment vacancy rates were down across the district, prompting further rent increases. Commercial real estate construction remained solid since the last survey though the number of sales declined. Commercial vacancy rates edged up and rents stabilized after steadily increasing over the past year, according to the Beige Book.
Bankers reported tighter credit standards and somewhat stronger loan demand than in the previous survey. Half of the respondents reported a tightening of credit standards for commercial real estate loans, about the same fraction as in the previous survey. Just under half of respondents reported tightened standards for commercial and industrial loans, up slightly from the previous survey.
Price pressures continued to build since the last survey period in all industries, but wage pressures held steady. District labor shortages persisted, especially for minimum-wage positions and technically skilled workers, but most firms did not plan to raise wages. District hiring announcements continued to outpace layoff announcements.
The complete report on the Tenth District is available at: www.federalreserve.gov/fomc/beigebook/2008/20080611/10.htm