Editor's note: The Borderplex Business Barometer is published monthly by the Border Region Modeling Project at the University of Texas at El Paso. It summarizes recent economic trends in El Paso, Las Cruces and Juárez.
Four months of the coronavirus pandemic have exerted powerful impacts on the Borderplex regional economy. The Federal Reserve Bank of Dallas El Paso Metropolitan Business Cycle Index posted its largest ever decline in April. Correspondingly, the UTEP BRMP El Paso Household Economic Stress Index posted its largest ever one month increase in April. Federal Reserve actions to lower interest rates successfully pushed all Treasury instrument yields to less than 1.50%, sharply lower than year‐ago levels.
Regional labor market conditions have deteriorated in an unprecedented manner. El Paso County unemployment rose from 3.8% in February to a record 14.8% in April. El Paso County Supplemental Nutrition Program (SNAP or Food Stamps) enrollments jumped by nearly 10,000 in April and will likely increase further. BRMP model simulations indicate that total personal income is likely to decline on an annual basis for the first time since 1975 during the OPEC I oil shock recession.
El Paso housing market conditions have also changed. At 686, April sales of single‐family units dropped by 104 units from the same month in 2019. Total listing in April were 2,124, substantially below the 2,492 units listed one year earlier. The drop in listings kept inventories tight at only 2.9 months. Given that development, the median price for single‐family housing of $164,950 was approximately 3.4% higher than it was in April 2019. Although affordability is being damaged by income declines, conventional fixed mortgage rates are substantially below prior‐year levels. In April, the 30‐year rate averaged 3.15% and the 15‐year rate averaged 2.62%.
Sun City gasoline prices averaged $1.65 per gallon for regular unleaded in April. That is 88 cents below the April 2019 figure. In real terms, the April price for regular unleaded fell to its lowest level since March 2003 when the national economy was still extracting itself from the aftermath of the dot-com recession and the regional economy was experiencing the effects of the China syndrome manufacturing exodus.
The greater Las Cruces metropolitan economy is also experiencing the fallout from the COVID‐19 lockdown recession. The April unemployment rate for Doña Ana County rose to 11.4%, breaking the previous record from January 1996. SNAP enrollments rose to 27,380 in March with even higher enrollments forecast for April.
Currency market turmoil caused the peso to weaken noticeably in March and April. In nominal terms, the peso per dollar exchange rate averaged 24.26 for April. The BRMP real exchange rate increased to 145, the weakest monthly reading for the peso since December 1987. The U.S.‐Mexico border closure to "non‐essential" traffic allowed automobile wait times at the three principal ports of entry to plummet in April. Pedestrian and personal vehicle crossings to El Paso decreased by more than 50% each on a year‐over‐year basis, while cargo traffic decreased by roughly 24%.
The April estimate for the Northern Mexico Manufacturing Orders nosedived to 31.9, indicating sharp contraction in the manufacturing sector. That development was accompanied by export‐oriented manufacturing payroll cuts in Juárez. The COVID‐19 recession will also translate into markedly lower trade volumes once second quarter 2020 data are tallied.
Read the full report here.