New Mexico
New Report Shows How To Boost New Mexico’s Economy
Backpacker at the top of Sandia Peak in New Mexico. USA.
New Mexico is not known as an economic powerhouse. Despite being one of the sunniest states in the country, its population has hardly grown over the last decade. Meanwhile, the populations of its biggest neighbors—Arizona, Texas, and Colorado—have grown rapidly. Economic growth in the region follows a similar pattern, with New Mexico’s growth trailing its neighbors. In a new report, author’s Matthew Mitchell and Paul Gessing link New Mexico’s weak economy to its lack of economic freedom.
New Mexico is the fourth sunniest state in the country. It has cooler summers than Phoenix and warmer winters than Denver. Research shows that people are attracted to places with nice weather, yet New Mexico’s population only grew by 1% from 2013 to 2022. Meanwhile, Arizona’s grew by 12%, Colorado’s by 11%, and Texas’s by 14%. Employment growth, real GDP growth, and income growth all follow the same pattern (see figure below), with New Mexico trailing its neighbors over this period.
Income growth in the Southwest
New Mexico’s favorable weather should be a plus, yet there is something holding the state back. In their new report, Mitchell and Gessing make a convincing case that a lack of economic freedom is keeping New Mexico from experiencing the same success as its neighbors.
Economic freedom is the degree to which individuals are allowed to make their own economic choices. Choices about where to work and on what terms, and how to invest their time and money. Places that allow more economic decisions to made by individuals have more economic freedom.
Dozens of studies show that places with more economic freedom, whether it be countries, states, or cities, tend to have better economic outcomes, including more job growth, higher incomes, less poverty, and more business creation. New Hampshire is the freest state according to the latest edition of the Fraser Institute’s Economic Freedom of North America index, while New Mexico ranks 47th, well behind Arizona (32), Colorado (14), and Texas (5).
Even worse, New Mexico is the only state where economic freedom declined over the last 40 years. Yes, you read that right—in every state but New Mexico, economic freedom increased from 1981 to 2022 (the latest available data).
New Mexico’s lack of economic freedom is contributing to its poor economic performance. As the report notes, if New Mexico increased economic freedom by 10% to a level like that of Maine (which is not that free at 38th overall) its per capita GDP could increase by as much as 5%, or about $10,000 for a family of four. This is a non-trivial increase in output that requires relatively modest policy changes.
A state’s overall economic freedom score is composed of scores from three areas—government spending, taxation, and labor market regulation. New Mexico ranks 49th in government spending, 36th in taxation, and 49th in labor market regulation. Each of these scores is the lowest in the Southwest, as shown in the figure below.
Economic Freedom scores in the Southwest
One of the first things New Mexico should do to increase economic freedom is lower its taxes. It has the highest top marginal income tax rate in the region at 5.9%, more than double Arizona’s 2.5% flat rate. Texas has no personal income tax. It also has the region’s highest corporate income tax rate, also at 5.9%. Worse, its corporate income tax is not indexed to inflation. This means more and more companies will pay the higher rate as inflation pushes their income over the minimum threshold, despite their profits not being higher when inflation is accounted for.
New Mexico policymakers should lower their top personal and corporate income tax rates to make them more competitive with their neighbors. A lower, flat rate like Arizona’s 2.5% rate would incentivize work and investment. New Mexico can also afford a lower rate since the state’s oil and gas industry is bringing in billions of dollars in tax revenue each year. The report notes that New Mexico has had a run of $3.5 billion surpluses in recent years.
Policymakers in New Mexico should also make it easier for people to work. Mitchell and Gessing point out that New Mexico has some of the most onerous occupational licensing regulations in the country. The state places a particularly large burden on occupations that often serve as an entry into the labor market. For example, HVAC contractors and sheet metal workers are required to spend four years in training before they can obtain a license. Drywall installers must train for three years before they can get a license. Barriers like these make it difficult for younger and less experienced workers to earn a living and support a family. Reducing these and other unnecessary licensing regulations would improve New Mexico’s economic freedom score and increase opportunity for the state’s residents.
New Mexico’s economy is lagging its neighbors and has for years, but it does not have to be this way. New Mexico policymakers can improve the state’s economy by lowering tax rates and reducing barriers to work. Such changes would increase economic freedom in New Mexico, and increasing economic freedom is a proven path to prosperity.
Grant’s Monday Night Forecast
A few evaporating rain showers are possible again Tuesday with warmer temperatures. Windier weather later this week will bring a high fire danger back to New Mexico.
It’s been a warm day with a few isolated showers and thunderstorms across central and northern New Mexico. Some of that rain has made it to the ground, while other showers have evaporated before reaching the surface. Temperatures have climbed into the 70s and 80s for most of the state. Showers will fade after sunset, with mostly clear skies overnight and mild temperatures.
Even warmer weather is on the way Tuesday with lighter winds. More areas will reach the 80s by the afternoon. A few spotty showers will develop again, especially near the mountains, with some of that rain evaporating before reaching the ground.
Winds pick up Wednesday afternoon, with gusts between 25 and 45 mph. This will begin another stretch of high fire danger across the state. The strongest winds arrive Thursday, with westerly gusts of 35 to 55 mph. That will expand the fire danger statewide. A dry cold front will move through Thursday as well, but temperatures will only drop slightly, ending up closer to average.
Breezy conditions continue Friday through the weekend as the jet stream pulls more moisture into New Mexico. That will bring increasing chances for rain and thunderstorms this weekend, with a few lingering into early next week.
New Mexico
Landlord AC ordinance, Rio Grande water levels, Spotty rain, New legislative office, New Mexico Motorfest
Monday’s Top Stories
Monday’s Five Facts
[1] ABQ City Councilor aims to bolster protections for renters amid unseasonable warmth – Albuquerque city councilor is looking to make sure city landlords are not only providing cooling systems, but also ensuring they actually work when they’re needed. City Councilor Tammy Fiebelkorn spearheaded an ordinance in December of 2024, requiring all Albuquerque rental properties to have a cooling system. Now, Fiebelkorn is taking it a step further, hoping to establish cooling system performance requirements. The ordinance is expected to be voted on in final action at Monday’s city council meeting.
[2] Rio Grande showing dry spots in Valencia County amid record-low snowpack – Portions of the Rio Grande are now seeing dry spots earlier than expected. Officials say the timing is not normal. In Valencia County, parts of the river are already running dry. Near the river crossing in Los Lunas, the river has open pockets. Further south, it is being reported as dry as well. There is a slight positive outlook for the monsoon season, with forecasters and officials predicting a strong season in the Middle Rio Grande Valley.
[3] Very spotty rainfall, warmer, & mostly calm week – Warmer weather will continue building in across the state throughout the upcoming week. A few isolated rain chances will return Monday in parts of New Mexico, but some of that rain may evaporate before reaching the ground. Temperatures will continue to increase through the middle of the week.
[4] NM representatives celebrate grand opening of new office with open house – A new state legislative office made its debut for representatives Eleanor Chavez and Yanira Gurrola. The new location is just one of the handful of new legislative offices now open across the state. They hosted a grand opening for the building that was open to the public. Representative Gurrola says it’s just one step towards modernizing the state’s legislature. The new office will allow residents to stay more connected to each representative.
[5] New Mexico Motorfest 2026 takes place in celebration of Route 66 Centennial – Another Route 66 celebration took place over the weekend and this one was all about cars. The New Mexico Motorfest happened at the Expo New Mexico racetrack. Over 300 vehicles from classic hot rods to lifted trucks were featured at the event. Some of the proceeds went to New Mexico veterans.
New Mexico
Los Alamos Public Schools Students Compete At 2026 New Mexico State Science & Engineering Fair
Students from Barranca Mesa Elementary, Mountain Elementary, Los Alamos Middle School, and Los Alamos High School at the 2026 New Mexico State Science & Engineering Fair at New Mexico Tech. Photo CourtesyLAPS
LAHS junior Tate Plohr and freshman Linus Plohr qualified to attend the 2026 Regeneron International Science and Engineering Fair in May in Phoenix, Ariz. Photo Courtesy LAPS
Los Alamos Middle School student Branden Keller was awarded the CO2 & Greenhouse Gas Scholarship in the amount of $2,000 at the 2026 New Mexico State Science & Engineering Fair. Photo Courtesy/LAPS
LAPS NEWS RELEASE
Twenty students from Barranca Mesa Elementary, Mountain Elementary, Los Alamos Middle School (LAMS) and Los Alamos High School (LAHS) competed, with several garnering awards at the 2026 New Mexico State Science and Engineering Fair held at New Mexico Tech in Socorro.
LAHS junior Tate Plohr qualified to attend the Regeneron International Science and Engineering Fair (ISEF) next month in Phoenix, Ariz. He was awarded the 3rd-place Grand Award. Freshman Linus Plohr qualified as an alternate and will also be attending the Regeneron ISEF.
Students who participated in the state competition include, from Barranca Mesa Elementary, Sydney Chen, Mary Beth Kelsey, Lily Neale, Aurora Roberts Voss and Henry Rodarte; and Glyn Lo and Ernest Maupin, Mountain Elementary.
Students from LAMS who competed include Evelyn Fobes, Mason Garcia, Andrew Gilbertson, James Junghans, Sequoya Ke, Brandon Keller, Nejan Liyanage and Daniel Yampolsky.
LAHS students Julia Neale, Linus Plohr, Tate Plohr, Lilia Veteva, Helena Welch and Kalliope Welch competed at the senior level.
2026 Award winners:
Category Awards – Junior Division
- Animal Science, Cellular & Molecular
- Biomedical & Health Science
- Honorable Mention: Sequoya Ke
- Embedded Systems, Math, Robotics, Software & Technology
- 2nd place: Nejan Liyanage
- Physics & Astronomy
- 1st place: Sydney Chen
- 2nd place: Mason Garcia
- Honorable Mention: Marybeth Kelsey
- Plant Science
Category Awards – Senior Division
- Behavioral & Social Science:
- Honorable Mention: Linus Plohr
- Earth & Environmental
- Honorable Mention: Lilia Viteva
- Embedded Systems, Math, Robotics, & System Software
- 3rd Place: Helena Welch and Kalliope Welch
- Physics & Astronomy
Grand Awards
- ISEF finalist 3rd place: Tate Plohr
- Brandon Keller received the CO2 & Greenhouse Gas Scholarship in the amount of $2,000. James Jungans and Marybeth Kelsey garnered Thermo Fisher Awards.
Other special award winners include:
- CO2 & Greenhouse Reduction Awards (Junior Division)
- Daniel Yampolsky, 2nd place, Earth & Environmental Sciences
- Sequoya Ke, 1st place, Biomedical & Health Science
- Brandon Keller, 1st place, Energy & Materials Science
- Andrew Gilbertson, 1st place, Physics & Astronomy
- CO2 & Greenhouse Gas Reduction Award (Senior Division)
- Lilia Viteva, 1st place, Earth & Environmental Sciences
- Office of Naval Research Award
- David Shortess Award
- New Mexico AVS Award
- Citadel Award
- Naval Research Award
- NM Network for Women in Science & Engineering Award
- Yale Science & Engineering Award
- Rose Baca Rivet Award
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