Las Vegas analyst: Mexico border closing would hurt economy

Marines install concertina wire, above, as pedestrians leave the United States for Mexico at the San Ysidro port of entry Friday, Nov. 16, 2018, in San Diego. (AP Photo/Gregory Bull)

The closing of the U.S. border with Mexico would be detrimental to the business climate in the southwestern United States, says one local analyst.

Financial analyst Mike PeQueen said last week at the Henderson Chamber of Commerce’s annual economic insight presentation that closing the border, as President Donald Trump has threatened in his demands for a border wall, “would not be positive for the desert Southwest.”

That's especially true for Las Vegas tourism. The city welcomed about 1.1 million visitors from Mexico in 2017, the most-recent year that statistics were available, according to the Las Vegas Convention and Visitors Authority. Only Canada sends more visitors to Las Vegas each year.

Trump has since backpedaled on his threats — at least for one year, he insisted.

“We’re going to give them a one-year warning, and if the drugs don’t stop or largely stop, we’re going to put tariffs on Mexico and products, particularly cars,” Trump said. “And if that doesn’t stop the drugs, we close the border.”

If the border were to close, PeQueen said, the food pipeline from Mexico to the U.S would be interrupted (think fresh produce products like avocados). Many workers also cross the border every day to get to or from work, and parts for certain products come from Mexico. All of this would influence the economies of border states, which would in turn affect the entire Southwest.

“Aside from the food we get from Mexico, there would be a lot of jobs at stake,” said PeQueen, the managing director and partner at HighTower Advisors. “States like California, Arizona, New Mexico and Texas, we depend on those economies for our own health. It would be a remarkably disruptive situation.”

PeQueen was mostly bullish on the outlook for the U.S. economy, though he said the status of America’s trade relationship with China is being watched closely by economists.

“We’ve had nine consecutive up years now,” PeQueen said. “That’s not typical for our cyclical economy. People are always asking me when that down is coming. I think the answer is, to start off with, you need to get it out of your head that whenever a dip in the economy comes, it’s going to be anything like what happened during (the Great Recession). That was once in a hundred years. At this point, the leading indicators are not telling us that there’s a recession ahead.”

PeQueen said the health of the Las Vegas economy is in many ways more dependent on the global economy.

“Three of our large employers in the valley — MGM Resorts, Las Vegas Sands and Wynn Resorts — get a significant amount of their profit from China,” PeQueen said. “We need them to do well. Global growth is still decent, but slowing.”