Border city looking at ‘shocking’ V-shaped economic recovery

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El Paso economy picking up on the strength of trade and sales tax revenue, but continues to miss out on Mexican shoppers due to international travel restrictions

EL PASO, Texas (Border Report) – Like a patient recovering from the flu, the El Paso County economy is getting better, but not without lingering aches and symptoms.

In the past four months, sales tax revenues are up, unemployment is down, and international trade is surpassing pre-coronavirus levels, said International Bridges Director David Coronado.

 “We’re seeing a really good recovery in the unemployment rate and insurance claims throughout the county,” he said at Monday’s City Council work session. “We peaked at 15% unemployment just four months ago, but it’s been a constant, steady decline which is good for the economy.”

That’s quite a change from last March and April, when El Paso officials were predicting multimillion-dollar budget deficits after businesses hit the brakes and local governments issued stay-at-home orders due to the arrival of the COVID-19 pandemic.

Business activity is now at 70% of pre-coronavirus levels and sales tax allocations are up 3% year-to-year, he said. May, June and July did good compared to 2019 numbers, while the unemployment rate stands at 7.3%, he said.

When it comes to trade, El Paso surpassed pre-pandemic levels in June with $7.2 billion. “Only two regions in the U.S.-Mexico border have accomplished this: El Paso and Otay (California),” Coronado said. “It appears these are early signs of a V-shaped recovery, which is really shocking because we were expecting a really long recovery. But the trade numbers and employment numbers are positive signs.”

But in his presentation to the Council, Coronado noted that El Paso continues missing out on one of its traditional economic strengths: Mexican visitors.

Based on cellphone home data, it appears few of the Mexican residents who used to visit El Paso to shop, visit relatives, do business or go to school are coming across now.

“Total business activity throughout El Paso County remains at about 70% of pre-COVID levels, but when it comes to devices that cross into El Paso, we’re at 30% capacity,” Coronado said.

He attributed that to international travel restrictions and, as of mid-August, a crackdown on non-essential border travel that has shot up crossing times and discouraged people from coming into the United States.

Cross-border travel for the purposes of education, health care, shopping and to get services such as vehicle repairs “are flat,” he said.

Fewer Mexican visitors are contributing to El Paso’s economy. Local officials blame international travel restrictions and border crossing wait times. (graphic City of El Paso)

On March 21, Mexico and the U.S. began applying a non-essential land border travel restriction. Mexicans cannot cross into the United States with visas except for certain emergencies.

However, American citizens and U.S. legal permanent residents continued to cross for non-essential reasons, so U.S. Customs and Border Protection has been closing many lanes at ports of entry, shooting up wait times.

Coronado said some border commuters are adjusting to the long waits, opting to cross on foot to lessen the delays.

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