Economic consequences minimal in U.S. while death toll rises

 McALLEN – Some hotel reservations were canceled, retail sales fell and fewer people crossed the area’s international bridges when war broke out between the region’s dominant cartels in late February.

The economic consequences of Reynosa’s bloodshed is nothing compared to the human cost, but with now daily reports of gun battles in what was once a relatively quiet area of the border, the toll on the area’s economy could be substantial.

"Economically it is effecting us," Mike Perez, McAllen’s city manager said. "It’s just another dip we’re going to have to work through."

The number of people crossing the Hidalgo-Reynosa International Bridge fell 15 percent the last weekend in February at the onset of the recent outbreak in violence, said George Ramon, the bridge’s director. Ramon, who is also the director of the city’s new Anzalduas crossing, said that by Monday traffic returned to normal.

In a border region like the Rio Grande Valley, bridge crossings are an indicator of economic health or as Ramon is fond of saying, "as bridge traffic goes, so goes the economy."

"That tells me that the economy is still moving, and that yes there’s fear, but it doesn’t stop trade and commerce," Ramon added.

When bridge traffic declines so do retail sales, generally, and early indications are that retail sales did fall that weekend as fewer Mexican nationals crossed, Perez and other city leaders have said – sales tax statistics, which indicate the health of retail sales, are released two months late and thus have not registered even a temporary drop.

Then in early March, the U.S. Consulate in Monterrey said American citizens should avoid driving the highway from Monterrey to Reynosa, the same road wealthy Mexican shoppers take to spend millions in the Valley every year. Reports of impromptu checkpoints operated by drug cartels and the car jacking of one U.S. citizen prompted the advisory. So far, that advisory, despite the dire warnings, has not led to a significant drop in bridge traffic.

Sonia Garza, the director of sales for McAllen’s Staybridge Suites, said concerns of road violence led to a few room cancellations. Mostly, she said, those that canceled were women who travel north without their husbands for a weekend of shopping.

"And the husband feels they shouldn’t go by themselves," Garza said.

Her hotel, which offers extended-stay rooms, caters to a business clientele, some of whom come to visit Reynosa’s maquiladoras. She said while the level of awareness of violence has increased substantially as has interest in the daily news among those people, so far there companies have not been discouraged from venturing south.

"If it continues it’s going to effect companies," she added.

Typically, when violence has flared up in the past in Reynosa, officials on both sides of the border have been apt to say they were isolated incidents and the only victims were law enforcement, military or the cartel gunmen. And for the most part, a flare up in violence would be superseded by periods of calm.

And usually those officials would complain that stories of violence were often exaggerated and that they would color the entire border as lawless and violent. But official response to the recent flare up has been different.

The Valley’s economy is already fragile and suffering from recession duress. What is normal for bridge traffic and retail sales in 2010 would be abnormal if compared to years before the recession. There is a palpable fear that if the violence continues the economic consequences could be substantial.

But yet the effect has been dulled. Perhaps, some said, it’s because the violence isn’t as bad as it seems. Or maybe it’s because after more than three years of rampant drug violence, most Mexicans have adjusted to fear and life in a time of drug war.

But on the other hand, it is the unintended economic consequences that could offset some of the damage. Reportedly, more Mexican Nationals have been eyeing property in the Valley to build a home and raise a family, realtors have said.

Hector Cavazos, a McAllen realtor, said Mexican buyers have actually helped sustain home sales – at far lower levels – for much of the recession. It’s not necessarily the violence driving them north, it’s their country’s even worse economy and this country’s better schools, he added.

Still, Cavazos said he "wouldn’t be surprised" if the violence did push more people to move to the Valley.