New Mexico is among seven states that are considered to be fairly well-prepared for a recession, according to a report released on March 23. The report came from both the Center on Budget and Policy Priorities and New Mexico Voices for Children.
Amid the negative economic effects of the recent shut-downs due to the COVID-19 pandemic, many believe a recession is on the horizon – including Michael Leachman, senior director of state fiscal research at CBPP. “This recession is likely to be significant and difficult for all states – but especially severe for those that have failed to prepare,” said Leachman. “State policy is very important in determining how people fare in a recession.” Fortunately for New Mexicans, among all U.S. states, New Mexico is ranked in the top ten in two of the four areas of recession preparedness laid out by the CBPP.
The policies for recession preparedness from the CBPP are listed as follows: adequate budget reserves, accessible Medicaid coverage, strong unemployment insurance and affordable colleges and universities.
New Mexico is strong in the first two areas, thanks to the bi-partisan policy decision-making of the governor and state legislators. These policies have created strong budget reserves for the state and backed the Medicaid program so that it is reliable for those who use it, even in difficult times.
While New Mexico is less prepared in unemployment insurance and affordable colleges and universities, none of the 50 states rank in the top ten in all four categories.
However, there are many factors that determine how a state fairs a recession. According to James Jimenez, executive director of New Mexico Voices for Children, it is especially crucial that New Mexico is reasonably prepared to endure a recession. Because of drastic price drops in the oil and gas industry, New Mexico will be harder hit than other states due to its over-reliance on the industry as a revenue source. “Still, recessions are hardest on those who earn the lowest incomes, and a large share of New Mexicans fall into that category. Our federal and state lawmakers must continue to expand and streamline policies and programs that soften the economic crisis by protecting workers from job losses and wage cuts, health insurance losses, barriers to education, and other cascading effects,” Jimenez explained.
According to the CBPP, even the highest performing states will struggle to manage the fiscal and public health crises that is currently unfolding across the nation. Even though the proposed economic responses from the federal government will provide assistance, the measures that states take to face the oncoming crisis is crucial at this time. The actions of state policy makers to this point have landed New Mexico in a relatively good position to weather the recession compared to other states; however, state and federal lawmakers must continue to do everything in their power to protect citizens from the oncoming health and economic hardships.