|By LOGAN HAWKES
A maelstrom of devastating economic calamities has assailed Texas and the Nation over recent months, and even the most optimistic economic forecasters are predicting yet another abusive obstacle to statewide financial stability could be damaging, comparing it to the proverbial last straw that broke the camel’s back.
From hurricanes to rocketing fuel costs to a far-reaching national financial industry meltdown resulting in a recessive investment climate, times have been hard for the Texas economy in recent months, and now, with a devaluating Mexican peso, things could actually get worse.
While it's true Texas had suruvived the latest round of financial woes better than most of the Nation, the slow down is beginning to have it affect. From a slower jobs market to tighter credit and lending, Texas has not been completely immune to the troubles on Wall Street and Washington.
In terms of the impact on Texas travel, Calvin Vickers with the Texas State Comptroller’s Office reports that late season hurricanes left little time for recovery before the end of the summer travel season, and by the time early autumn arrived, pump prices had reached the $4.00 a gallon mark and the nation was being rocked by disastrous news from Wall Street that signaled the beginning of the mortgage meltdown.
“All of these factors played heavy in disrupting consumer confidence and spending habits. People pulled back the reigns on spending and it really affected popular tourist destinations,” reports a spokesman for the Texas Association for Business.
While the negative impact of a troubled U.S. economy has been felt less in Texas than most parts of the nation, and while South Texas particularly has fared well through the national economic slump, the sustained strain of Wall Street woes and mortgage maladies are beginning to weaken the foundation of even that small glimmer of local optimism, and South Texans particularly are beginning to worry.
And well they should, for on the heels of the incredible string of economic hardships comes news that the Mexican peso has entered a time of uncertainty, as evidenced by its spiraling devaluation in recent days, to a point that Mexican Nationals are beginning to slow their cross border excursions into the Valley and across the State. Less influx of Mexican tourists means fewer dollars spent on South Padre Island, for example, a popular destination for international travelers.
As of last week, the peso had lost ground to the U.S. dollar. The exchange rate had dwindled to 13.06 pesos to the dollar, down from a low of just 9.6 to a dollar late last year. That means when a Mexican National exchanges his currency from peso to dollar, he is losing over 30% in the exchange rate today than just a few months back. To bring the impact of that reality home to the average American, consider your mortgage or rent increasing next month from $1,000.00 to over $1,300.00.
If the peso loses more ground to the dollar in the weeks and months ahead, it may become impractical for large numbers of Nationals to cross the border to spend their money, and the result could be devastating to the Valley economy.
Statistics indicate Mexican tourists account for about 22.7 million border crossings into the Valley and spend an estimated $1.7 billion in Valley communities alone each year. Even conservative economists admit that is a powerful influence on the Rio Grande Valley’s economy.
No specific numbers are available for the economic impact of Mexican tourists on South Padre Island , but chamber officials there admit the numbers range in the millions each year.
McAllen Chamber President Steve Ahlenius says the Valley economy is in a slump. Ahlenius believes it'll be a difficult holiday shopping season for local retailers this year, largely because of the fewer numbers of Mexican border crossers and less money each will spend on the U.S. side of the border. McAllen Chamber economic development officer Matt Rusczcak agrees.
“The economic problems in the U.S. create waves of global economic problems felt around the world. The Mexican markets are being adversely affected by our problems on this side of the border. That in turn causes the peso to lose ground to the dollar,” Rusczcak says. “But the problem is complicated by new terrorist threats and the ongoing threats from Mexican drug cartel violence, making it more of a challenge for Mexican Nationals to cross the border.”
Chamber officials offered no solid number when gauging the impact so far on the Valley economy or for the declining numbers of Mexican tourists, but Carlos Sandoval with U.S. Customs and Border Security at the International bridge crossing to Reynosa says wait lines indicate the number of Mexican visitors has declined dramatically in recent weeks.
Ahlenius, Rusczcak and Laguna Madre officials say they still believe the South Texas economy is in better shape than most of the nation. But most warn that a slow economic recovery process and the continued devaluation of the peso could spell trouble for the Valley, South Padre Island, and the remainder of Texas in the months ahead.