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.

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.

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

Important high-technology industries include lasers, data processing, solar energy and semiconductors.

SNL conducts electronic and industrial research on Kirtland AFB, on the southeast side of Albuquerque.

Virgin Galactic, the first space tourism company to develop commercial flights into space, has decided to put its world headquarters and mission control at Spaceport America in Upham, New Mexico (25 miles (40 km) south of Truth or Consequences); Virgin Galactic had its inaugural launch of the VSS Enterprise spaceship in 2008, and has begun launching ordinary citizens since early 2009.

[25] The private service economy in urban New Mexico, especially in Albuquerque, has boomed[clarification needed] in recent decades.[when?]

Since the end of World War II, the city has gained an ever-growing number of retirees, especially among armed forces veterans and government workers.

It is also increasingly gaining notice as a health-conscious community, and contains many hospitals and a high per capita number of massage and alternative therapists.

The warm, semiarid climate has contributed to the exploding population of Albuquerque, attracting new industries to New Mexico.

Financial incentives and construction of facilities (such as The Albuquerque Studios)[26] have created opportunities for locally based crew members with production reaching an all-time high in 2007.

[29] Meow Wolf, an artist collective that began in Santa Fe, has involved leading creatives such as George R. R. Martin and Matt King,[30][31] and has expanded throughout the Southwest, including Colorado, Nevada, and Texas.

Film and television post-production is also growing[36] In 2023, the U.S. Department of Energy announced several projects in New Mexico pursuant to the CHIPS and Science Act, which aims to expands domestic semiconductor manufacturing, research and development of new technology, and workforce training; the projects, which will total roughly $8 million, include a new 100,000-square-foot technology incubator for companies, academia, and national laboratories, and a new platform for facilitating the development of tech startups among minority communities.

[47] New Mexico law allows governments to provide land, buildings, and infrastructure to businesses to promote job creation.