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Consensus revenue forecast shows slower growth; oil receipts and tariff revisions weigh on outlook
Summary
The Legislative Finance Committee heard a consensus revenue estimate showing slower GDP growth over the forecast period and warning that reduced oil demand and lower tariff assumptions could cut New Mexico oil and corporate tax receipts, the chief economist said.
A chief economist for the consensus revenue team told the Legislative Finance Committee that the state faces a slowing economic outlook and revenue risks tied to energy markets and revised trade assumptions.
Dr. Doolittle, the chief economist, said the committee’s consensus revenue estimate uses multiple agency inputs and Moody’s Analytics’ November 2025 baseline. “We’re using their November 2025 baseline forecast,” Dr. Doolittle said, and summarized national growth projections of “2.3% in FY25, down to 2% in ’26, 1.9% in FY27.”
Why it matters: the consensus estimate furnishes the baseline for appropriations and budget planning across state agencies. Dr. Doolittle told lawmakers the forecast assumes slower hiring, a modest rise in unemployment and somewhat elevated inflation — all factors that feed into revenue expectations.
Key takeaways from the presentation included: consumer spending remains the primary growth driver; federal government spending now contributes less to GDP growth than previously; trade is a larger drag on growth; and the US labor market is expected to slow, with unemployment rising toward about 4.8% in 2026, according to the presentation.
Dr. Doolittle also flagged energy and trade as direct risks to New Mexico’s tax collections. “For energy prices, there is a global trade war reducing global demand for oil, which directly impacts New Mexico oil revenue and corporate income tax revenue,” he said. The presenter added that tariff assumptions were revised downward: “Tariffs are closer right now to 12% versus what was assumed at 15% in the last forecast.”
Senator Pete Campos, who opened the meeting, framed the review as a chance to assess prior investments and plan for services: “We have a great opportunity before us to take a look at what the investments that we made are doing, to be smart as we move forward,” he said.
The transcript segment provided shows no formal committee vote or action on the record. Midway through the recorded presentation the committee noted a technical interruption when the webcast went down; the chair apologized and the presentation paused.
The consensus revenue estimate is prepared twice a year by economists from the Department of Finance and Administration (DFA), the Taxation and Revenue Department (TRD), the Department of Transportation (DOT) and Legislative Finance Committee (LFC) economists; the committee heard this estimate as the basis for upcoming budget planning.
No formal action was recorded in the provided transcript segment. The committee continued with the presentation after noting the technical issue.
