Oil and gas production, tourism, and federal government spending are important drivers of New Mexico's economy. The state government has an elaborate system of tax credits and technical assistance to promote job growth and business investment, especially in new technologies.

In 2017 New Mexico's gross domestic product was $94.2 billion.

In 2017 the per capita personal income was $39,811 (ranked 48th in the nation).

In 2008 the percentage of persons below the poverty level was 17.1%.

Major industries and products

New Mexico industries by 2004 taxable gross receipts (000s)Retail trade 12,287,061Construction 5,039,555Other services (excluding Public Administration) 4,939,187Professional, Scientific and Technology Services 3,708,527Accommodation and Food Services 2,438,460Wholesale Trade 2,146,066Health Care and Social Assistance 1,897,471Utilities 1,654,483Mining and Oil and Gas Extraction 1,238,211Manufacturing 926,372Information and Cultural Industries 849,902Unclassified Establishments 725,405Real Estate and Rental and Leasing 544,739Finance and Insurance 254,223Transportation and Warehousing 221,457Public Administration 159,013Educational Services 125,649Arts, Entertainment and Recreation 124,017Admin and support, waste management and remediation 73,062Agriculture, forestry, fishing and hunting 71,853Management of companies and enterprises 48,714Totals 39,473,429 Source: State of New Mexico Department of Labor

Agriculture Although much of its land is arid, New Mexico has hosted a variety of agricultural activities for at least 2,500 years, centered mostly on the Rio Grande and its tributaries. This is helped by its long history of acequias, along with other farming and ranching methods within New Mexico. It is regulated by the New Mexico Department of Agriculture, specialty areas include various cash crops, cattle ranching, farming, game and fish.

Agriculture contributes $40 billion to New Mexico's economy and employs nearly 260,000 people. As of 2023, the state exports $275 million in agricultural goods and ranks first nationwide in the production of chile peppers, second in pecans, and fifth in onions.

Cattle and dairy products top the list of major animal products of New Mexico. Cattle, sheep, and other livestock graze most of the arable land of the state throughout the year.

Limited, scientifically controlled dryland farming prospers alongside cattle ranching. Major crops include hay, nursery stock, pecans, and chile peppers. Hay and sorghum top the list of major dryland crops. Farmers also produce onions, potatoes, and dairy products. New Mexico specialty crops include piñon nuts, pinto beans, and chiles.

The Carlsbad and Fort Sumner reclamation projects on the Pecos River and the nearby Tucumcari project provide adequate water for limited irrigation in those areas of the desert and semiarid portions of the state where scant rainfall evaporates rapidly, generally leaving insufficient water supplies for large-scale irrigation. Located upstream of Las Cruces, the Elephant Butte Reservoir provides a major irrigation source for the extensive farming along the Rio Grande. Other irrigation projects use the Colorado River basin and the San Juan River.

Lumber mills in Albuquerque process pinewood, the chief commercial wood of the rich timber economy of Northern New Mexico.

The state vegetables are New Mexico chile peppers and pinto beans, with the former being the most famous and valuable crop. According to the 2017 Census of Agriculture, New Mexico ranked first in the nation for chile pepper acreage, with Doña Ana and Luna counties placing first and second among U.S. counties in this regard. New Mexico chile sold close to $40 million in 2021, while dry beans accounted for $7.6 million that year. New Mexico is one of the few states commercially producing pistachios, and its piñon harvest (pine nut) is a protected commodity.

Dairy is the state's largest commodity, with sales of milk alone totaling $1.3 billion. Dean Foods owns the Creamland brand in New Mexico, the brand was originally founded in 1937 to expand a cooperative dairy venture known as the Albuquerque Dairy Association. Southwest Cheese Company in Clovis is among the largest cheese production facilities in the United States.

Caballero history among the indigenous and Hispano communities in New Mexico have resulted in large-scale ranch lands throughout the state, most of which are within historically Apache, Navajo, Pueblo, and Spanish land grants. Wild game and fish found in the state include Rio Grande cutthroat trout, rainbow trout, crawdads, and venison.

Restaurant chains originating in the state include Blake's Lotaburger, Boba Tea Company, Dion's Pizza, Little Anita's, Mac's Steak in the Rough, and Twisters; many specialize in New Mexican cuisine. Some companies like Allsup's gas stations have consumer foods, like chimichangas.

Mining New Mexicans derive much of their income from mineral extraction. Even before European exploration, Native Americans mined turquoise for making jewelry. After the Spanish introduced refined silver alloys they were incorporated into the Indian jewelry designs. New Mexico produces uranium ore (see Uranium mining in New Mexico), manganese ore, potash, salt, perlite, copper ore, beryllium, and tin concentrates.

Energy New Mexico is the second largest crude oil and ninth largest natural gas producer in the United States; it overtook North Dakota in oil production in July 2021 and is expected to continue expanding. The Permian and San Juan Basins, which are located partly in New Mexico, account for some of these natural resources. In 2000 the value of oil and gas produced was $8.2 billion, and in 2006, New Mexico accounted for 3.4% of the crude oil, 8.5% of the dry natural gas, and 10.2% of the natural gas liquids produced in the United States. However, the boom in hydraulic fracturing and horizontal drilling since the mid-2010s led to a large increase in the production of crude oil from the Permian Basin and other U.S. sources; these developments allowed the United States to again become the world's largest producer of crude oil by 2018. New Mexico's oil and gas operations contribute to the state's above-average release of the greenhouse gas methane, including from a national methane hot spot in the Four Corners area.

In common with other states in the Western U.S., New Mexico receives royalties from the sale of federally owned land to oil and gas companies. It has the highest proportion of federal land with oil and gas, as well as the most lucrative: since the last amendment to the U.S. Mineral Leasing Act in 1987, New Mexico had by far the lowest percent of land sold for the minimum statutory amount of $2 per acre, at just 3%; by contrast, all of Arizona's federal land was sold at the lowest rate, followed by Oregon at 98% and Nevada at 84%. The state had the fourth-highest total acreage sold to the oil and gas industry, at about 1.1 million acres, and the second-highest number of acres currently leased fossil fuel production, at 4.3 million acres, after Wyoming's 9.2 million acres; only 11 percent of these lands, or 474,121 acres, are idle, which is the lowest among Western states. Nevertheless, New Mexico has had recurring disputes and discussions with the U.S. government concerning management and revenue rights over federal land.

New Mexico is rich in fossil fuel and alternative energy resources. Major petroleum and natural gas deposits are located in the Permian Basin in southeast New Mexico and in the San Juan Basin in the northwest. The San Juan Basin Gas Area is the largest field of proved natural gas reserves in the United States. According to the Energy Information Administration, State crude oil output is typically just over 3 percent of the annual U.S. total, and natural gas output is nearly 10 percent of the U.S. total. New Mexico also contains major coal deposits in the northwest corner of the State. The boom in hydraulic fracturing and horizontal drilling beginning in the mid-2010s led to a large increase in the production of crude oil from the Permian Basin and other U.S. sources; these developments allowed the United States to again become the world's largest producer of crude oil, in 2018. New Mexico's oil and gas operations contribute to the state's above-average release of the greenhouse gas methane, including from a national methane hot spot in the Four Corners area. Nine tenths of electricity production in the State is from coal-fired plants. Much of New Mexico's geologically active Rocky Mountain region holds geothermal power potential, and pockets of the State are suitable for wind power development. New Mexico's southern deserts offer the State's most concentrated solar power potential.

The Waste Isolation Pilot Plant (WIPP) is located in the Delaware Basin, and is used to store nuclear waste.

New Mexico wind generation (GWh, million kWh) Year Total Jan Feb Mar Apr May Jun Jul Aug Sept Oct Nov Dec2009 1,547 142 149 163 145 108 90 94 123 95 163 133 1402010 1,832 156 94 168 199 193 139 102 120 136 144 182 1992011 2,089 183 186 210 248 235 203 118 92 113 159 196 1452012 219 213 220 193 194 Source:

Manufacturing Industrial output, centered around Albuquerque, includes electric equipment; petroleum and coal products; food processing; printing and publishing; and stone, glass, and clay products. Defense-related industries include ordnance. Important high-technology industries include lasers, data processing, solar energy and semiconductors.

Government and military

Federal government spending is a major driver of the New Mexico economy. In 2021, the federal government spent $2.48 on New Mexico for every dollar of tax revenue collected from the state, higher than every state except Kentucky. The same year, New Mexico received $9,624 per resident in federal services, or roughly $20 billion more than what the state pays in federal taxes. The state governor's office estimated that the federal government spends roughly $7.8 billion annually in services such as healthcare, infrastructure development, and public welfare.

Federal employees make up 3.4% of New Mexico's labor force. Many federal jobs in the state relate to the military: the state hosts three air force bases (Kirtland Air Force Base, Holloman Air Force Base, and Cannon Air Force Base); a testing range (White Sands Missile Range); and an army proving ground (Fort Bliss's McGregor Range). A 2005 study by New Mexico State University estimated that 11.7% of the state's total employment arises directly or indirectly from military spending. New Mexico is also home to two major federal research institutions: the Los Alamos National Laboratory and Sandia National Laboratories. The former alone accounts for 24,000 direct and indirect jobs and over $3 billion in annual federal investment as of 2019.

Federal government spending is a major driver of the New Mexico economy. In 2005 the federal government spent $2.03 on New Mexico for every dollar of tax revenue collected from the state. This rate of return is higher than any other state in the United States. The federal government is also a major employer in New Mexico providing more than a quarter of the state's jobs.

Many of the federal jobs relate to the military; the state hosts three air force bases (Kirtland Air Force Base, Holloman Air Force Base, and Cannon Air Force Base); a testing range (White Sands Missile Range); and an army proving ground and maneuver range (Fort Bliss – McGregor Range).

In addition to the National Guard, New Mexico has a New Mexico State Defense Force. Other minor locations include the New Mexico Army National Guard Headquarters in Santa Fe county and the National Guard Armory in far northern Rio Rancho in Sandoval county.