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WESLACO, Texas – Economist Luis Torres of the Texas A&M Real Estate Center says the path to recovery for the Rio Grande Valley economy depends on COVID-19 outcomes.

By way of an example, Torres said the number of unemployment claims in the region grew around July 4, just as the number of coronavirus cases increased. He called this “worrisome.”


Torres made his remarks as keynote speaker during a recent webinar hosted by the Rio Grande Valley Partnership. It was titled Economic Indicators in Housing and Commercial Markets–Texas & RGV.

“The good news is the economy is on a recovery path, after the lockdown. But, the only thing here is, the recovery is going to depend on the COVID-19 pandemic. That is the issue going forward,” Torres said.

Luis Torres

Torres pointed out that the current economic crisis started because of a health crisis. 

“It was not started by economic forces. So, we closed the economy voluntarily. It was a self-induced coma of the economy. Now the issue here is the severity, because it will depend on health outcomes and the uncertainty going forward, the duration and the impact.”

Torres said the uncertainty is affecting everyone. 

“Households, businesses, all of our planning for the future depends on how well we control the COVID-19 pandemic. It affects investments, consumption decisions and, of course, that affects economic activity.”

Torres said the Texas A&M Real Estate Center has developed a weekly index for the Texas economy. “We need to know right now, in a timely fashion what is happening with the economy. There has been an uptick. However, we are currently in a recession.”

Torres said the Brownsville Metropolitan Statistical Area (MSA) lost about 60,000 jobs once the pandemic hit, while McAllen MSA lost around 28,000 jobs. He said things have recovered since then. “Things are still negative but the good news were are on a recovery path.”

The Valley economy was doing well before the pandemic, Torres pointed out, with unemployment in Brownsville at 5.7 percent and in McAllen at 6.5 percent. The stay-at-home orders and closure of certain business sectors led to a 19 percent unemployment rate in McAllen and a rate of almost 18 percent in Brownsville. Brownsville is now reporting 10.4 percent, Torres said, and McAllen 12 percent.

The sector hit hardest, Torres said, was leisure and hospitality. 

One positive thing for the Valley, Torres said, was implementation of the United States-Mexico-Canada Agreement.

“The good thing is we have USMCA. That brings certainty in trade and investment,” he said.

However, the retail sector has been hit hard by the current ban on “non-essential” Mexican visitors. Sergio Contreras, president of RGVP, said around 35 to 40 percent of sales tax revenues in the Valley are derived from Mexican shoppers.

“This is a major issue for the border, for retail sales on the border, Mexican nationals are not allowed to cross,” Torres said. “That is impacting the Rio Grande Valley economy. A lot of Mexican nationals cross the border, they buy goods and services, they have lunch, they have dinner, they have breakfast, they buy all these goods. They purchase all these services. We are losing those retail sales.”

To compound matters, the Mexican economy is not doing well, Torres said. “That is a negative going forward for the Rio Grande Valley economy,” he said.

In the Q&A section of the webinar, Torres was asked about the current travel ban on Mexican nationals.

“It is a negative shot to the border economy. From El Paso to Brownsville, that is going to be an anchor, holding back the recovery of the border. You see all those Mexican plates at the malls. You are not seeing that anymore. That is a big component. It is going to be negative headwind moving forward,” Torres said.

In his closing remarks, Torres said: “The path to recovery depends on COVID-19. We are recovering but unfortunately, what we are seeing, the recovery is slowing down because of the increase in COVID-19 cases.”


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