El Paso Economy In Crisis

by JJ Childress
March 4, 2009

With the Dow and S&P 500 ending at their lowest point in twelve years, the nation’s economic situation is beginning to look grimmer everyday. Nationally, the unemployment rate is at its highest in 17 years; jumping from 4.8% in December of 2007 to 7.2% in December of 2008. Undoubtedly, everyone is witnessing the dire effects of the recession, but how is El Paso’s economy being affected by the contraction?

For the first time in 35 years, El Paso’s unemployment rate was below the national average at 7%; its’ 1.5% annual increase was also lower than the national increase of 2.4%. The number of people employed in El Paso also rose from 278,400 in December of 2007 to 281,000 in December of 2008. El Paso also garnered recognition by being ranked the 5th best housing market in the country by Forbes magazine and 9th best city for job creation by Bizjournals.

Local economists have pointed out that El Paso experienced a slow down in sales in December of 2008, when usually the final quarter of the year is strongest from retail sales. Manufacturing is falling across the board throughout the national and global economy and since the El Paso/Juárez region’s imports/exports are heavily reliant on the manufacturing industry, the results will be seen soon. Although the first quarter numbers are not out yet, many feel that the recession has finally hit El Paso and is expected to follow the national recession until the end of the year.

The extent of the recession and the impact it will have on the local economy is difficult to determine because El Paso is in a unique position right now. The influx of 20,000 soldiers and their family’s, as well as the government spending that will follow their accommodation is certainly going to continue to stimulate the local economy. Also, the violence in Juárez has prompted an influx of 10,000 people from our sister city to El Paso, which will concentrate spending on this side of the border.

Juárez violence has also slowed border traffic, which has further strained some businesses in El Paso. However, the recent deployment of 3,200 troops to Juárez has shown a plummet in the city’s murder rate. Mexican officials are optimistic that they are slowly regaining control over the city. If stability continues to improve in Juárez, border traffic will again prompt regional spending.

Ultimately, leading economic indicators for the city provide mixed results. El Paso will see a noticeable slow down in its economy in the coming year, but the unique situation in El Paso offers tremendous growth potential in the next 3 years. When the economic dust settles, El Paso will be in better standing than other national cities and will emerge in a stronger position to leverage further economic expansion.

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