Deep South Texas is expected to see economic growth again this year, although the increases in activity may be a little smaller than the numbers for 2018, according to an economic forecast compiled by Salvador Contreras, director of the Center for Border Economic Studies at the University of Texas Rio Grande Valley.
“Texas had a strong 2018,” Contreras said. “This year may not be as strong but we will have a good amount of economic momentum going into the year. There is plenty of evidence that the state and our region will have a good year.”
Contreras predicted that Cameron County will see growth in the one percent to two percent range. The Hidalgo County economy also has expectations to expand at a rate of almost three percent. “We believe that Hidalgo County will do quite nicely relative to the performance of the entire state,” he said. “There is a good amount of evidence to suggest that the region is, in fact, going through some sort of growth spurt.”
Factors in the local economy
A number of factors drive the economic benchmark of gross domestic product for the Valley. It is led by government and then followed by the combined areas of government, health care and social assistance. Retail trade is the third largest sector in terms of GDP. “We can say a quarter of the economy in the RGV is somehow related to the government sector. Think about everything from municipalities all the way to Border Patrol,” Contreras said.
Retail trade accounts for between 10 percent and 12 percent of GDP in the Valley. That sector has been tracking upward since a lackluster performance in 2017. “Last year was a different story,” he said. “We saw four percent growth in Cameron County and we saw almost seven percent in Hidalgo County.”
Contreras said he thinks concerns over violence and other factors in Mexico in 2017 may have had an effect. This deterred shoppers from crossing the Rio Grande to spend money. “Whatever kept people away, if you believe there is a Mexican story, that story went away and they decided in 2018 to come here in droves.” He said all the indicators point to a solid year in 2019 for the retail trade.
Typically, half of the Valley’s retail sales take place in McAllen, Harlingen and Brownsville. Cities like Edinburg, Weslaco and Pharr also contribute significant sales numbers. Smaller cities in the region have seen strong year-over-year sales growth as well. “There is a lot of concentration in where the sales take place, but the growth in retail sales appears to be more evenly distributed across the RGV,” Contreras said.
Other areas such such as construction and manufacturing have expectations to be flat or see small decreases in some parts of the Valley. “We believe construction, for example, in Cameron County is going to shrink by one percent,” he said.
“Overall, the story is the state should do quite well,” Contreras said. “And the economic forecast for the region looks quite strong. There’s a lot of details in the weeds, as they say. It’s not going to be nice growth across the board but we should see a good amount of economic activity in a number of sectors across the region.”