Border economy to pick up in second half of 2021, region’s economists say

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UTEP modeling project forecasts increased trade and retail activity on pace with continued COVID-19 vaccine rollouts

The Paso Del Norte International Bridge between El Paso, Texas and Ciudad Juárez, Chihuahua is seen empty amid the Coronavirus pandemic on November 16, 2020. – Businesses in downtown El Paso rely on foot traffic from Mexico citizens. The United States has closed the border to all except US citizens and residents to slow the spread of COVID19. Before the pandemic lines for the bridge stretched for hours, now barely anyone is able to cross causing a significant loss in income for downtown businesses. (Photo by JUSTIN HAMEL/AFP via Getty Images)

EL PASO, Texas (Border Report) – El Paso County is closing out the month with the unemployment rate still hovering around 8.1%. But, what will the rest of 2021 bring to this border region?

If the COVID-19 vaccines keep coming, El Paso, Southern New Mexico and Chihuahua, Mexico, should begin to see more jobs, increased trade and more air travel, according to the University of Texas at El Paso’s Borderplex Business Barometer.

A product of the Border Region Modeling Project, the January report from the university’s Department of Economics and Finance came up with economic predictions for the region in the coming months.

“Mass COVID-19 vaccine rollouts will help the regional economy reopen. Positive employment growth will occur during the second half of 2021 in El Paso, Las Cruces (New Mexico), Ciudad Juarez (Mexico) and Chihuahua City,” states report.

Vaccination rates are off to a fast start in El Paso County, with 67,822 residents having received a first dose as of Thursday, according to the Texas Department of State Health Services. That’s more than 8% of the population already.

Empty vials of the Pfizer-BioNTech COVID-19 vaccine . (AP Photo/John Locher)

Second doses are proceeding at a more modest rate, with only 16,006 El Pasoans getting the full protection, state data show. Across the border, the state of Chihuahua has only applied 22,425 first doses of the Pfizer vaccine – all to front-line health workers – and there’s no word when Mexico City will send more vaccines.

That could have a bearing on another of the department’s projections: that the U.S. federal government and the Republic of Mexico will ease border travel restrictions beginning in the second quarter (April through June) of 2021.

“Non-essential cross-border travel restrictions will begin to be eased during the second quarter. Northbound pedestrian and small vehicle traffic flows will surge by more than 1 million persons and cars,” the report states.

The travel restrictions have been in place since last March to prevent the cross-border spread of COVID-19 and there’s no official word from the Department of Homeland Security when they could be lifted.

International trade isn’t subject to those restrictions and, as global commerce accelerates, the border region can expect double-digit cargo volume increases, according to the report.

Many U.S.-run plants across the border in Juarez are already operating at near full employment and non-essential manufacturing has switched to the production of medical supplies and personal protective equipment.

Supporting warehouse and distribution operations in El Paso are also projected to ramp up and cause expanded inbound and outbound air-freight flows, the report says. Retail sales should also increase, as consumers regain confidence later in the year.

But there will be areas of continued struggle.

Unemployment rates in major Texas cities. (Courtesy Workforce Commission)

The department expects per capita incomes to drop to $38,500 in El Paso and Las Cruces as the effects of partial lock-downs drag on. Businesses in the region, such as restaurants, are only allowed to operate under full capacity and stores are limiting the number of clients they let in at a time.

Airfares and gas prices should continue to climb as demand increases, and the cost of housing will rise.

“A lot of homeowners are going to experience increase in taxes as a result of COVID-related price hikes,” Economics Professor Tom Fullerton told KTSM on Friday. Local supply limitations may drive average home prices to $177,000 this year.

Also, college enrollment – which dipped during the pandemic – will not recover until 2022, the report states. It won’t be until the labor market recovers and the demand for skilled workers picks up that colleges will see a surge.

“The Borderplex region is in the initial phase of a slow return to economic normalcy,” the report concludes.

Visit the BorderReport.com homepage for the latest exclusive stories and breaking news about issues along the United States-Mexico border.

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