Posted on 12/02/2007 1:13:35 PM PST by SwinneySwitch
Experts expect rise in retail sales due to exchange rates
The dollar is steadily losing favor as the preferred currency in the world, but there could be a silver lining to the greenback’s decline.
While a weak dollar is certain to have implications on the broader U.S. economy, the Rio Grande Valley is more directly impacted by the relative strength of the Mexican peso against the dollar.
The peso has enjoyed a period of relative stability over the last several years, hovering around 11 pesos to the dollar, which is good news for Valley retailers. They count on Mexican shoppers to bolster sales, particularly during the holiday season.
“If it weren’t for Mexican nationals I don’t think we’d be growing as fast as have been,” said Misael Conde Jr., co-owner of Gavel Boots & Shoes.
Conde and his father run seven stores in the Valley and Mexico, including a location in Brownsville’s Sunrise Mall.
A week into the holiday shopping season, Conde said sales at the mall store during Black Friday weekend were up 35 percent compared to the same week last year.
He attributed the increase to Mexican shoppers.
“Our major business, especially at the mall, comes from Mexico,” Conde said. “Where the Brownsville resident comes looking for specials, Mexican nationals are looking for brands. As long as it fits they’ll buy three, four pair.”
Gavel Boots & Shoes isn’t the only store that benefits from Mexican nationals, who spent roughly $3.6 billion in Texas last year, according to the Gov. Rick Perry’s office of Economic Development and Tourism.
And a 2005 report from the Federal Reserve Bank of Dallas put the economic impact of Mexican visitors on the border at $3 billion, including both direct and indirect spending.
Their spending supported more than 64,000 jobs in the border region.
Sunrise Mall’s marketing department estimated that between 35 to 40 percent of its traffic is from Mexico, hailing from cities as far as Tampico, Ciudad Victoria and Monterrey.
Long lines at the border
Despite favorable economic conditions, the Texas Border Coalition, an organization comprised of border mayors, county judges and communities, claim traffic jams at ports of entry threaten to spoil the shopping season.
In a letter sent to President Bush and member of Congress, Eagle Pass Mayor Chad Foster wrote that “the growth in border delays threaten an untenable impact.” If action isn’t taken, he says, “it becomes catastrophic to U.S. citizens and our international business and trade.”
Foster, who is also chairman of the coalition, said the short-term goal is to persuade lawmakers to increase the number of inspection personnel at ports of entry.
Ultimately, however, more must be done to upgrade the infrastructure, which Foster characterized as inadequate to meet the mounting volume of cross-border traffic.
Between Brownsville and Laredo there are 14 international bridges. There are plans to build more — the Donna and Anzalduas international bridges — but that’s not enough, says Foster.
“Once you see a cashier overwhelmed you send in the supervisors to facilitate quicker trade,” Foster said. “After that you send in management. Right now we’re just playing catch-up.”
A recent Government Accountability Office report appears to support Foster and coalition claims.
The GAO report, obtained by The Washington Post, criticized U.S. Customs and Border Protection for placing undue emphasis on policing the remote stretches between ports rather than at the ports themselves.
To drive home the point, the GAO reported that around half of the estimated 12 million undocumented immigrants in America entered at a legal port of entry.
Furthermore, it added, between 1,600 and 4,800 more officers and agricultural specialists are needed to meet current demand.
But, customs agents insist they are doing their best under the circumstances.
Rick Pauza, spokesperson for U.S. Customs and Border Protection, said agents are responsible for balancing legitimate trade, travel and enforcement work.
During peak travel periods, such as at Christmastime, CBP increases personnel and opens additional lanes to accommodate traffic.
“We work with what we have,” Pauza said. “But, we only have ‘x’ number of lanes available per port of entry.”
CBP also posts wait times on its Web site — cbp.gov — for every port.
The agency’s response to would-be critics of traffic delays is that CBP is already working to upgrade and expand port facilities.
In addition, the agency wrote, “we would add lanes if we could….but in many sites we cannot.”
Shoppers on a mission
Expect long lines at the border to continue, at least over the holidays. But that shouldn’t be significant deterrent for shoppers, according Jesus Canas, economist with the El Paso branch of the Federal Reserve Bank of Dallas.
Following the terrorist attacks of Sept. 11, traffic on the Texas-Mexico border was reduced to a trickle.
The Federal Reserve studied the impact of the decreased flow on retail sales and found that the exchange rate has a bigger impact on retail spending than do long lines at ports of entry.
“Apparently waiting does not affect retail sales,” Canas said. “People might cross less often, but they will buy the same amount when they do cross.”
The Federal Reserve did its part to ensure the peso will remain strong relative to the dollar in the short term when in September and again in October it lowered its interest rate from a high of 5.25 percent to 4.5 percent.
On the other hand, the Mexican Central Bank raised its interest rate from 7.25 to 7.5 percent during the same period.
“If the exchange rate remains below 11 pesos per dollar during December, this Christmas season is likely to be one of the best in many years for retailers,” said Rafael Otero, chair of the University of Texas Brownsville School of Business. “If the exchange moves slightly above 11 pesos per dollar I expect this Christmas season will still be a good one, although not as good.”
Brownsville Mayor Pat Ahumada doesn’t share Otero’s optimism.
Ahumada, a member of the Texas Border Coalition, railed against traffic jams at the border, blaming politicians in Washington for having scant understanding of the border economy and for setting detrimental policies.
“It goes against NAFTA,” Ahumada said. “I still expect we’ll see a good turnout, but I think we are going to lose revenue that we shouldn’t have lost.”
Valle Ping!
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Are the money manipulators (”The Fed”, the international bankers, etc.) getting ready to introduce the Amero?
That would be hilarious, wouldn’t it? All those Chinese and Arabs left holding worthless paper. LOL
Wet backs working in the USA will be demanding to get paid with Peso’s before long!! The politicians in the USA will oblige I am sure!! Hell!! Hillary will even tip the wet backs in Peso’s
US$ earned by Illegals and sent “home” to Mexico don’t buy as many pesos. It’s time for Illegals to move “home”.
Let me know when the COBOL programmers are hired out of retirement, and you’ll have your Amero. Ain’t happening.
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