New Mexico has seen a drop in its economic freedom ranking, falling from 45th to 47th place in the 2024 Economic Freedom of North America index.
The report, released by the Fraser Institute, highlights how state-level policies on taxation, government spending and regulation have worsened New Mexico’s economic landscape under the leadership of Gov. Michelle Lujan Grisham.
According to the Rio Grande Foundation, which advocates for increased economic freedom in the state, the recent drop reflects the impact of policies enacted by the current administration.
“Under Gov. Michelle Lujan Grisham and the State’s ‘progressive’ Legislature, New Mexico’s performance on the three major indices which make up economic freedom (taxation, government spending, and regulation) have worsened relative to other states,” the Rio Grande Foundation said in a press release.
The six areas used in the Economic Freedom of North America index are government spending, taxes, labor market regulation, legal system and property rights, sound money, and freedom to trade internationally.
The Economic Freedom of North America index calculates scores by transforming each observation into a number between zero and 10, based on the maximum and minimum values for each variable.
New Mexico’s score of 4.81 places it near the bottom, just ahead of Hawaii (4.68) and California (4.44), and far behind the leading states like New Hampshire (8.12), South Dakota (8.05), and Florida (8.03).
These figures underscore the growing gap between New Mexico and the states with the highest levels of economic freedom.
New Mexico's low ranking signals challenges in key areas like taxation, business regulation and labor market flexibility.
The Fraser Institute notes that jurisdictions with higher levels of economic freedom tend to experience better overall quality of life indicators, including lower poverty rates and better health outcomes.
“The indices in the Economic Freedom of North America 2024 measure the degree to which governments in North America permit their citizens to make their own economic choices,” the Fraser Institute said in a press release announcing the new rankings.
The report highlights the contrast between New Mexico’s relatively low ranking and the high performers like New Hampshire, which consistently ranks as the most economically free state in the U.S. The state’s policies on taxation and regulation have been cited as key factors contributing to its success, while New Mexico’s tax structure and government spending levels continue to weigh down its ranking.
With the state ranking near the bottom in a region that includes some of the most economically vibrant states in the nation, the need for policy changes has never been more pressing.
The index is based on the premise that greater economic freedom leads to better outcomes, including higher income, stronger economic growth, and improved democratic institutions.
The Economic Freedom of North America (EFNA) 2024 report is now in its 20th edition. It offers a comprehensive comparison of economic freedom across 93 jurisdictions, including Canadian provinces, U.S. states, Mexican states and the U.S. territory of Puerto Rico.
The report measures three key components: government spending, taxes and labor market freedom.
Additionally, it includes a broader "all-government index," which factors in federal policies like spending and taxation, allowing for a comparison of the impact of federal, state and local policies on economic freedom.
