A recently published economic forecast anticipates historic per capita incomes for residents of El Paso and Las Cruces in the next two years, as well as cautious financial stability in the Paso del Norte region.
The University of Texas at El Paso Border Region Modeling Project published “Borderplex Economic Outlook to 2025” last month. Its predictions are optimistic for El Paso and Las Cruces, as well as Juárez and Chihuahua City, Mexico.
The report’s lead author, Tom Fullerton, UTEP professor of economics, talked to El Paso Matters about several aspects of the 36-page document that covers demographics, employment, personal income, residential and commercial construction, aspects of transportation, and water consumption.
For example, in 2024, per capita income is projected to increase in El Paso and Las Cruces to $45,900 and $45,600, respectively, and to grow slightly higher the following year. This is the first time in regional economic history that workers in both cities are expected to earn more than $45,000 per person. In comparison, the national per capita personal income is projected to be $71,100 this year.
Fullerton added that the affordability index in El Paso, which has gone down the past three years because of higher prices and mortgage rates, should increase. The affordability index increases as household income strengthens relative to mortgage payments. He said the increase will not make up for the losses since 2020, but it will be better news for first-time home buyers. Speaking of which, the price of a median home in El Paso is expected to reach $250,000 this year and $260,000 in 2025.
“Personal income growth is still expected to exceed the rate of inflation next year, which means standards of living are improving and they’re projected to increase again in 2025,” Fullerton said.
The professor, who has produced these guides since 1998, co-authored the recent report with his son, Steven Fullerton, a UTEP research economist. The meticulously crafted report involves the compiling and inputting of historical data of the U.S. and Mexican economies into an enhanced 275-equation computer model. This year’s model includes northbound border crossings into Santa Teresa to include cargo truck shipments, vehicle and pedestrian traffic, as well as a more in-depth look at Las Cruces real estate.
The report, a collection of tables and written material for context, is a guide for leaders in the fields of finance, real estate, construction, hospitality, manufacturing, retail property management, as well as representatives from local governments and utilities who use the information as they formulate future plans.
Among those who regularly purchase the report are Elisabeth Downs, senior field research analyst with CBRE, a national company focused on commercial real estate, and David Torres, redevelopment manager for the City of El Paso’s Department of Economic Development. Both are former students of Fullerton and earned their master’s degrees in economics from UTEP. Each called the report unique because of its scope and relevance.
Downs said she is mostly interested in the report’s data points that affect industrial real estate on the border. They include information about wages, bridge crossings, employment and non-residential construction. She uses the report to augment CBRE’s own research on local markets. She noted how it provided recent data that is sometimes hard to find.
“What is incredibly useful is having that forward look, where the data may be headed, and, therefore, where the market may be headed,” she said in an email interview. “These reports have provided outside perspective, robust data and a big picture look at the region.”
Torres, who worked on several of the economic outlooks while a graduate student, said he refers to it several times a year. The report’s short-term and long-term forecasts help him to analyze economic trends tied to labor, housing and commercial development.
The redevelopment manager, who has worked for El Paso Water and El Paso Electric, said the report provides information that is easy to understand and utilize. He called it a great planning tool that helps with decisions about future demands for housing and utilities, and which industries are doing well and which ones need help.
“Having a (resource) like this is vital,” Torres said during a video interview. “It’s very helpful in the planning process.”
In general, the models predict a slight increase in unemployment and higher education enrollment, an overall small hike in pedestrian traffic at the border, more personal and business bankruptcies, less expensive gasoline, and a continuation of higher airfares.
The report also anticipates a decrease in water consumption in El Paso County each of the next two years, unless the drought continues.
“If the drought persists, then our forecasts may end up being too optimistic,” Fullerton said.
While the report is focused on the region, the author said there are some national and international X-factors that could skew his report’s forecast.
Domestically, he said election years typically increase economic activity that creates a safety net for the national economy. He expects deficit spending to decrease, especially if both political parties agree to more compromises.
The international concerns are with global conflicts, especially in the Middle East. He said an escalation of the dispute between Israel and the Palestinian militant group Hamas could shut down the shipping lanes in the Red Sea. That would raise costs of doing business throughout the world, which would lower profitability margins and could spark a global recession.
“There’s a lot of risks out there,” Fullerton said. “It’s always good to hope for the best and prepare for the worst.”
To purchase a digital version of this book online, click on this link. Those who prefer to pay by check, should send $30 to Border Region Modeling Project – CBA 236, UTEP Department of Economics & Finance, 500 W. University Ave., El Paso, Texas, 79968-0543.