When Roberto Coronado was a kid he knew what he wanted to be when he grew up: an economist.
What prodded him was a question. Like many who grow up in Juárez, Mexico, Coronado traveled with his family across the border to El Paso on weekends to shop.
“So I observed two very different worlds,” Coronado said. “Living in Juárez was one thing, coming to El Paso on weekends was a completely different thing.
“I always wondered how we could be so close yet so different. Maybe it’s the economy, maybe it’s institutions, maybe it’s the rule of law. Something must be different.”
The young Coronado thought an economist could probably answer those questions. His dad worked for a state-owned development bank in Mexico, so there were always a lot of books and other materials on trade around the house.
Today, Coronado is vice president in charge and senior economist at the El Paso Branch of the Federal Reserve Bank of Dallas. Does he have any answers to his question – how Juárez and El Paso could be so close yet so different?
“I’m still working on it,” Coronado said on a recent Tuesday in his office Downtown. “I have some, but I think today I probably have more questions than I did when I was 8 or 10.”
The El Paso Branch of the Dallas Fed, which opened on June 17, 1918, is celebrating its 100th anniversary this year. The El Paso Museum of History is marking the milestone with an exhibit, “Economy in Action,” which is free and open to the public through February.
The Federal Reserve, the nation’s central bank, was created by Congress in 1913. Twelve regional banks began operating in 1914, and over the next decade, branch offices were established across the United States.
Inside the El Paso Branch Downtown, is a cash vault where the region’s financial institutions deposit and withdraw money. It’s guarded by one of the most sophisticated security systems in the city. A shooting range keeps the federal officers on target.
The branch is where banks do their banking. There, cash is counted, sorted and distributed to financial institutions throughout the region. Currency that is not fit for circulation is shredded and thrown away.
The branch is also responsible for collecting on-the-ground economic intelligence for the Federal Reserve. It does that through a seven-member board of local business and community leaders. This year, it is chaired by businessman Renard Johnson, president of El Paso-based METI.
Coronado attended the University of Texas at El Paso where he earned a bachelor’s degree in accounting and economics, as well as a master’s degree in economics. Later, he earned a doctorate in economics from the University of Houston.
At UTEP, one of Coronado’s classmates was a research assistant at the Federal Reserve. He mentioned they were looking for an intern, Coronado applied and he was accepted. Since then, Coronado has risen through the ranks.
He serves on several boards and is also an assistant professor at UTEP where he teaches in the Executive MBA program.
“This is a great city to raise a family,” said Coronado who has three children ages 4, 5 and 9. “Both my wife and I are from Juárez, so we do spend time in Juárez on weekends visiting family.”
He sat down with El Paso Inc. and talked about immigration, trade, the outlook for the El Paso economy and the branch’s record-breaking cash operation.
Q: Do you think many 10-year-olds want to be an economist when they grow up?
That drove my dad crazy. He said you’re going to starve to death. Economists don’t make a living; they don’t find jobs.
Q: You’ve certainly proved it’s possible to make a great career out of it. What does the El Paso Branch do?
The Federal Reserve is the central bank of the United States. We are the bank of the banks.
Most people, when they hear Federal Reserve, they think about monetary policy, inflation, GDP or interest rates. That’s all true, but what we do a lot here is trying to have a much better understanding of what the business community is going through and making sure we know what the top economic issues in our community are. What are the impediments to growth? What are the bottlenecks? It’s important so our policymakers are better equipped.
We also supervise and regulate financial institutions, as well as promote the stability of the financial system, consumer protection and community development.
Q: How much cash is counted, sorted and then distributed to banks from the El Paso Branch every year?
That information is not available to the public, but let me tell you how it operates. As customers withdraw or deposit money at the bank, the financial institutions will either have a need for cash or have too much cash on their hands. So, they will send an armored vehicle to us to deposit or pick up cash. That happens five days a week.
That’s why we have the security we have.
Q: What dooms the cash to the shredder and dumpster.
When we accept a deposit, we process the currency, and if it’s not fit to go back into circulation, we will destroy it.
When you go to a bank, the currency you get should have at least the minimum standard of quality. So we shred day in and day out.
Q: How many people work here?
Close to 70.
Q: I was told the El Paso Branch won the BPH Championship in 2015, 2016 and 2017. What is that?
You have really good sources by the way. In the cash department, we have a number of different metrics to measure productivity, efficiency and that kind of thing. One of the metrics, is BPH, or bundles per hour – how many bundles of cash do we process an hour?
The team here in El Paso has been at the top and, today, continues to be the most efficient cash operation in the Federal Reserve System.
Q: How do they achieve that?
It’s a combination of things. We have very talented individuals and have built a culture here that they need to thrive. Every month, they continue to break records.
We’ve seen a lot of folks from across the Federal Reserve come to observe our cash operation to find out what the secret sauce is.
After 9/11, Federal Reserve officers were transitioned into federal law enforcement officers, so we have our own Federal Reserve police. There is a lot of training that comes with that. We are a center of excellence, I’d say, when it comes to training. Right now, our top training officer is in Philadelphia training officers there.
Q: Is there one thing about economics you wish people understood better?
Us economists, I don’t think we have done a good job explaining the merits and benefits of free trade. Lately, of course, it has received a lot more attention, but it’s a really complex issue to debate.
Q: What would you say about free trade?
At the end of the day, trade brings opportunities and challenges. In any trade transaction, there are some people and businesses who will win and some who will lose.
Often, we concentrate on the people who are negatively impacted, and I understand why. But we don’t talk enough about what could be done to help them out and mitigate the negative impacts.
It’s easy to identify those industries that lost or were hit by a negative shock. But since the benefits are so widespread to everybody, it’s so hard to see them. But for the economy overall, free trade is a positive thing.
Q: Is the new NAFTA likely to bring jobs back to the U.S.? Is it a better deal economically?
That’s a really complicated issue and long discussion. But what I would say is what I am encouraged about in the very short run is we have had a lot of uncertainty about trade policy and that uncertainty is gone for the most part.
That’s good news because we had heard there was a lot of investment and projects that were sitting on the sidelines in wait and see mode. I think we should start seeing those come on line, and that should stimulate growth.
As far as exactly how the new trade agreement will work out, it’s still up in the air. I’m optimistic, but the jury is still out.
Q: How is the El Paso economy doing?
The El Paso economy is doing fairly well. We are growing above our historical growth rate. Historically, employment grows about 1.5 percent a year. So far this year, we have been growing somewhere between 2 and 2 1/4 percent. To put that in perspective, we created more jobs through September in El Paso than we did in all of 2017.
Growth is broad-based – across all of the sectors. As a result, we have seen the unemployment rate decline in a significant way.
Traditionally, the El Paso unemployment rate has been above the U.S. and Texas levels. Today, it’s pretty much the same.
We’ve seen the local economy move more into the business and professional space – a lot of health care jobs and business professional service jobs.
Q: Are the jobs higher quality than the jobs created in the past?
Over the last two-and-a-half or three years, we’ve been creating jobs at a much better pay scale. We have seen wages and per-capita income go up.
Don’t get me wrong, there is still a gap between El Paso and the U.S. and Texas, but at least we are moving in the right direction.
Q: What are the top economic issues the U.S. and El Paso face in 2019?
The largest sector in El Paso is the government, and for the last number of years, government has not been a source of growth. I don’t expect 2019 to be different, so that brings some headwinds. If it’s the largest share of jobs and it’s not growing, it’s problematic, right?
I would hope the uncertainty with trade policy has been cleared out of the way and will allow economic activity to pick up here on the border. That is good news for the region.
One of the challenges El Paso has going forward, and El Paso is not alone, is workforce development. But there are a number of efforts in the El Paso region to improve education and the skill sets of the workforce.
We’ve seen a lot of growth in the health-care sector. I expect for us to continue to see growth there, and these are good-paying jobs that will improve the standard of living and quality of life.
There are also a lot of projects in the pipeline to address our infrastructure needs.
All of that is very good news and should bring growth to El Paso.
Q: And nationally?
The U.S. economic expansion has become the nation’s second longest on record. 2018 has been particularly robust for growth. It’s expected that GDP growth will land right around 3 percent by the end of the year.
A lot of the stimulus to the economy came from tax reform. The bulk of that is felt this year. Some will be felt in 2019, but most economists expect the U.S. economy to move back to historical growth rates of 2 percent or so.
Q: Immigration has gotten a lot of attention lately. Is it good or bad for the economy?
We have a great economist on our team who has done a lot of work around immigration. There are two ways GDP can grow – we increase productivity, meaning we work smarter, faster and better, which goes back to education and workforce development, or we increase the number of people who can work.
If you look at the U.S. demographics, it looks like the U.S. is aging and will continue to age. So the labor force participation rate is shrinking. That has implications. There are two things you can do about that. You can grow population or grow immigration.
Q: People don’t have as many children these days.
Yes, and the U.S. is not alone; other advanced economies are going through this.
So immigration could play an important role. If you look back over the past 20 years, half of the growth in the labor force has been by immigrants and their children. Over the next 20 years, 100 percent of the growth in labor force participation is expected to be by immigrants and their children.
Q: Nationwide, the housing market is cooling off, but sales remain strong in El Paso. Why?
My sense is it is a reflection of the local economy, which has done relatively well. So there is stronger demand. That’s part of the story.
Despite the stronger demand for housing, prices have remained stable. That’s likely because there is a lot of home construction.
Q: What’s most to blame for job losses today? Are robots taking them or are they being sent overseas?
There is an overwhelming body of research that basically says if you look at manufacturing jobs in the U.S. for the last 20 years or so, the bulk of the contraction is attributable to technology displacing workers.
We’ve done a lot of research at the Dallas Fed trying to quantify the impact Mexico has had on Texas or the U.S., and our research indicates the manufacturing partnership we have with Mexico has enabled Texas and the U.S. to be more competitive.
While maybe 20 years ago it could have been a headwind, today those partnerships allow the U.S. to be more competitive globally. Those manufacturing partnerships allow the U.S. to create jobs.
We are in a different cycle in North America when it comes to globalization. That’s why it is really exciting to see the new trade agreement.