EDINBURG, Texas - The second panel for the Texas Tribune’s program titled “Preserving the RGV’s Economic Miracle” looked to local governmental bodies for analyses into the Rio Grande Valley’s current economic environment.
Matthew Watkins, editor-in-chief of the Texas Tribune, was joined by Edinburg Mayor Ramiro Garza, RioPlex Executive Director Mario Reyna, and Julia Coronado, president and founder of MacroPolicy Perspectives, LLC and member of the Federal Reserve Bank of Dallas Academic Advisory Council.
Watkins kicked off the discussion by first noting the Valley’s recent inclusion in the Dallas Fed’s regional analytics last year. Economic data for metropolitan areas like Austin, Houston and San Antonio have been published monthly for decades, and now quarterly reports focused on the Valley are being disseminated as well.
“The RGV is a major region and, as has just been noted, it's growing very fast, so that growth warrants attention,” said Coronado.
The burgeoning economy that first got the attention of the nation’s central bank is exhibited in the RGV’s inaugural economic indicators third quarter report of 2024. Job growth was shown to have increased by 4.2%, the unemployment rate was at 5.8%, and average hourly earnings grew by 7.9% from the previous quarter. The concern prompting the preservation of the “RGV’s economic miracle” came in the second quarter report of this year. Job growth slowed to 2.6%, the unemployment rate spiked to 6.4%, and average hourly earnings growth plummeted to -1.7%.
Watkins deferred to Coronado for insight into the downturn.
She identified three “disruptors” deeply impacting the region: tariffs, immigration restrictions and federal budget cuts.
During the first Trump administration, the trade wars with China ultimately benefitted the region as nearshoring brought many companies to Mexico and some right to our doorstep. Now, the Trump administration’s combative approach to tariff negotiations with our leading trade partner is inhibiting the economic growth it helped foster.
Immigration enforcement and restrictions have also played a role as fear over one’s legal status has kept many from working, receiving medical treatment, or even crossing the border to shop in the region. The number of travelers to the Valley has decreased by 8.6% since last year, and the number of conveyances carrying goods has declined by 8.3%.
Completing the trifecta are cuts to federal programs, departments and services. Close to 70% of jobs in the Valley are in service, with 30.2% representing education and healthcare; 19.7% representing government, and 17.8% representing trade and transportation – sectors contingent in whole or in part by federal regulation and funding. As leaders deal with these cuts and digest the new rules laid out in the One Big Beautiful Bill Act, Coronado explains that the Valley, compared to Texas (0.4% job growth) and the U.S. (0.3% job growth), is faring better than the numbers suggest.
“So, I think, you know, the RGV is not necessarily dramatically experiencing something different from the rest of the economy,” said Coronado. “The whole economy is growing about half the rate it was last year, reflecting these three challenges. But, you know, the RGV has been at the epicenter of those tailwinds to growth and is now at the center of those frictions that are hitting the economy.”
Garza agreed, saying that he looks to other localized indicators like sales tax revenue, bank deposits and building permits to get a better “pulse” for the area.
“There’s so much about our region that it’s very complex,” said Garza. “It’s almost like what happens outside of our area – it takes a while to feel the effects here in our region. It really does … So, I think there’s been – I will call it, you know – there was a pause because of some of the changes at the federal level. People were trying to figure out what that meant for the area, but things have gone back and adjusted … I think we’re going to see a shift probably the next quarter, maybe jumping back to what the first quarter was like. But, you know, we’ll see what happens.”
As the head of RioPlex, which promotes the Valley and northern Tamaulipas for business investment, Reyna gave a few examples of what he is seeing on the ground. For one steel roll importer, the tariffs have left him with a “lot of free time” as he figures out other ways keep his business afloat.
“There’s obviously a huge tariff there,” said Reyna. “And, so, he says ‘I don’t know how much longer we can do this.’ So, he’s trying to do other kinds of transportation.”
For another, a warehouse full of Takis tortilla chips sits untouched, unable to be shipped without the business taking a huge loss. Reyna mused that if consumers cannot get the goods they are used to from Mexico, they will look for alternatives stateside and, eventually, change their buying habits. He says businesses should be preparing for this.
“If we cannot bring it in, we have to build it somehow here,” said Reyna. “So, that’s going to take place.”
As tariffs batter companies operating on both sides of the border, Reyna says the Valley is primed for more nearshoring efforts. He used car manufacturing as one example of an industry that may provide such opportunities. Per USMCA, 40% of the value of a passenger car and 45% of the value of a light truck must come from facilities with an average hourly base wage of at least $16 per hour. Reyna says with a lower cost of living, the region could be the perfect location to meet those regulations.
“So maybe $15 (sic) is too much in Mexico, maybe $15 is not enough up north, but maybe $15 works here,” said Reyna. “And, so there's a bunch of very dedicated individuals that are involved in creating an automotive cluster here, so that's going to happen. So, yes, things are happening, but at the same time, if something happens, something else is happening here to contribute to whatever is not coming across.”
While planning tariff mitigation is crucial for a business’s survival, Coronado says that cutting off our No.1 trading partner is not realistic strategy.
“This idea that you're going to close the border and de-globalize is also something that is just not practical in a global economy,” said Coronado. “At the end of the day, we are very interconnected. It's not feasible for companies like a giant automaker to produce everything from the steel and the parts, all within the borders of the United States. Multinational companies have to operate across borders. People have to move across borders for jobs and situations. So, this is not going to end … But right now, we've got massive disruption in the sense that policies changed very significantly on these fronts, and if you knew exactly what they were, you could maybe adapt and move on. But they're still in a very significant state of flux, lots of uncertainty, lots of sort of shifting sands.”
Moving forward to what can be done to preserve the Valley’s economic boom, Watkins turned to Garza to get some perspective. He explained that correcting the negative impression many have about the region is a good first step. Decisions made at the state-level are often based on that impression, which leaves the Valley to fend for itself.
“We just want our fair share,” said Garza. “I mean, it sounds simple, but we're always having to play catch up. I'm going to say it that way. In terms of the investment that is made in our area – whether it's transportation, whether it's education, access to health care – you know, I think obviously, unfortunately, a lot of what's happened has been politicized in terms of the border area. When I go around the country serving with other mayors in different capacities, I always get asked, ‘how are things down there?’ You know? And I tell them, ‘Well, our community is just as safe as yours,’ you know, because there’s a misconception about our area, about what happens here. A lot of people don't understand or realize how much we contribute, you know, to the state economy, to the national economy.”
Despite the national noise surrounding tariffs and immigration, Garza says he and local leaders keep pushing ahead. When asked if he could change anything right now to help the area, he chose something practical: creating a straight corridor from Interstate 69 Central to the rest of the state.
“We're probably the only area with a million people that is not connected, you know, to directly to an interstate,” said Garza. “… It costs more for our companies here to bid on projects, for widgets or anything that they do, when they price things to OEMs [original equipment manufacturers], to manufacturers, because they're going through a U.S. highway system. Through an interstate, it's a nonstop with service roads. They can be more competitive. So, I think just that, from that standpoint, that would help our area.”
To close, the panelists were asked what people should learn from the Valley. Ever the Valley-champion, Reyna answered, lauding the investment in education and infrastructure that has led to many regional advantages.
“We have everything in the right place,” said Reyna. “You know, we have the right location to do all the things that we need to do. We have ports here, not too far from us. We have a spaceport. We have young people … and within a five-year period, we've graduated over 120,000 people with a college level credential. So why wouldn't anyone want to come here when we have all this talent? And, so, you know, every system, every educational system, is moving forward ... So, I see a lot of opportunity for everybody here in the Rio Grande Valley.”
