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Local consumer spending shows an increase, El Paso Federal Reserve official says


Consumer spending in Las Cruces is now higher than it was before the pandemic, Federal Reserve Bank of Dallas, El Paso Branch, Senior Vice President in Charge and Senior Economist Roberto A. Coronado, Ph.D., told the Mesilla Valley Economic Development Alliance’s (MVEDA) virtual forum on June 1.

Coronado said consumer spending in Las Cruces is 4.2 percent higher than it was when the pandemic began in mid-March 2020, and up 4.8 percent for the state. He said the “substantial fiscal stimulus injected into the U.S. economy” because of the pandemic may help keep consumer spending up.

The figures Coronado presented in his update on the Las Cruces economy and his predictions for its future – what MVEDA President and CEO Davin Lopez called “the crystal ball … for the economy of southern New Mexico” – were a mixed bag of good and not-so-good, hopeful and uncertain.

Coronado said Covid-19 has been the region’s number one economic indicator for the past 14 months.

The pandemic also has impacted mobility among Las Cruces residents, Coronado said, which he said was 26 percent below where it had been before the pandemic started. But, like other economic measures, it has begun to pick back up, he said.

The federal stimulus has boosted income levels, Coronado said, which has helped create a “very strong spike” in retail sales. And, despite supply-chain interruptions caused by the pandemic, the services and manufacturing sectors of the local economy are improving, he said.

Coronado said unemployment in Las Cruces has “increased substantially in the wake of the panic,” and now stands at 7.9 percent, compared to 6.7 percent in Texas, 8.1 percent for New Mexico as a whole and 9 percent for the rest of southern New Mexico. The national unemployment rate is 6.1 percent, he said.

The local housing market is very strong, Coronado said, even though supply disruptions have caused price increases. The cost of lumber, for example, has tripled or even quadrupled in the last few months, he said.

The increased demand for homes may be coming from investors “buying mortgage-backed securities,” he said.
“To what extend has that stimulated some of the pent-up demand for housing?” Coronado said, and is it “crowding out” families who want to buy their first homes?

“We’re tracking that,” he said. “There may be more to it that we need to start thinking about.”

Coronado said supply-chain interruptions caused by Covid-19 and the resulting increase in the price of some goods could boost inflation. He said interest rates likely will “remain at the current level for quite some time,” with spikes possible in 2022 or 2023.

New Mexico as a whole is one of the slowest growing states since the onset of the pandemic, Coronado said.
That is partly because of its “dependency on the energy sector,” which “has been extremely hard hit in this pandemic,” he said. The state also has suffered because of a Covid-induced reduction in travel and tourism, which are major parts of New Mexico’s economy, Coronado said.

“My hope is that as things continue to improve, we’ll see maybe a stronger comeback,” he said.

Lopez said the June forum is the last one MVEDA will hold virtually, with the lunch gatherings returning in-person in July.

Visit www.mveda.com and www.dallasfed.org/elpaso.aspx.