CEDSSummary Background Regional Economic Relationships
Global Economic Risks
Commodity cycles, trade conditions, and technological change can affect local businesses, employment, and revenue.
External Exposure, Local Readiness
- Commodity Prices
- Supply Chains
- Capital Costs
- External Demand
- Market Exposure
- Trade Conditions
- Adaptive Capacity
Introduction
Prepare for Forces Beyond the Region.
External changes can reach local employers and communities through prices, trade, investment, and technology. The risks below provide a framework for considering exposure and preparing practical responses.
Commodity Volatility
Oil and gas prices respond to OPEC decisions, global recessions, and changes in Asian demand. Downturns reduce drilling activity, employment, and public revenue. Maintaining financial buffers and advancing diversification will help soften future bust cycles.
Trade Tensions and Market Access
Tariffs and regulatory barriers can restrict agricultural exports. China’s previous pecan tariff caused declines in New Mexico sales and similar restrictions on dairy or beef would have regional effects. Export-exposed industries will need strong market diversification and policy awareness.
Energy Transition and Decarbonization
If global EV adoption accelerates, oil demand may plateau within the next decade. This could slow Permian production unless offset by carbon-mitigation projects and investment in renewables. A balanced portfolio will be essential to retain competitiveness.
Geopolitical and Competitive Pressures
Conflicts, supply chain disruptions, and strong currency cycles can impact export pricing and tourism. Canada and Russia compete in potash markets and EU producers compete in dairy. Regions like Arizona and Utah compete for inbound foreign visitors. Differentiation, branding, and diversified markets will matter.
Key Insights
Grow Exports and Attract Foreign Investment
Support producers and processors who sell globally, and market industrial sites to international investors in energy, renewables, aerospace, and manufacturing.
Build Economic Resilience to Global Cycles
Reduce vulnerability to commodity swings by diversifying industry, encouraging risk-management tools for producers, and coordinating with state partners to monitor global trends and pricing shifts.
Strengthen Global Connectivity Infrastructure
Prioritize projects that make trade faster and cheaper, including freight rail upgrades, highway improvements, foreign trade zone designation, broadband expansion, and airport or customs capability where viable.
Develop Global Skillsets and Innovation Capacity
Promote bilingual education, export-readiness training, technology adoption, and energy innovation pilots such as carbon capture or hydrogen. Prepare the workforce and business community to compete in international markets.