I have the impression that the economic deterioration Mexico is experiencing is not being sufficiently appreciated. The occasional positive data point, changes in international trade patterns, and the undesirable strength of the peso prevent us from seeing the quicksand.
As we have commented many times, what we are suffering today is not simply bad luck. It reflects a profoundly negative economic model that began with the cancellation of the airport’s construction, was reinforced by the reversal of the education reform and, in practice, the energy reform, and has finally deepened with the elimination of any counterweights to centralized power. Taken together, incentives for investment gradually disappeared until only those with ties to power are willing to “risk” their resources.
Although this was to be expected, the magnitude of the blow increased notably due to the need to win the 2024 election at any cost. To that end, useless projects were built that now lose money (and cost lives), and cash was also handed out freely. The objective was achieved, but as of June 2024 the flows dried up. The economy entered negative territory just as the new administration took office, in October of that year, and the only thing that has prevented an official declaration of recession has been Trump’s impact. When he won the election, U.S. companies decided to buy everything before he imposed tariffs, as he indeed did. Those are the changes in international trade I referred to.
With investment now falling at an annual rate of 10%, according to the latest data, and with international trade no longer able to offset that decline, everything depends on Mexican consumption. I believe this is the most worrying issue, and it has not received the necessary attention either. The strengthening of the peso during 2025 allowed consumption of imported goods to grow, which once again masks the underlying movement. In the end, people consume according to their income, and if incomes do not grow—or even decline—sooner or later that will be reflected in their purchases. Perhaps not in December, when celebrations are required, and when one even tries to temper the pessimism already evident in consumer confidence. After all, that’s what the credit card is for.
But we are having problems with employment. Just in the last weeks of the year, Ms. Sheinbaum was celebrating that Mexico is (almost) the country with the lowest unemployment—a foolish claim that nearly all her predecessors have also celebrated. Open unemployment in Mexico measures nothing relevant. That is why, for decades, INEGI has published several other rates to provide a better picture of the labor market.
During 2025, up to the latest data we have, the population over 15 years of age would have grown by one and a half million people, but those willing to work not only did not grow at the same pace—they declined. In other words, more than one and a half million Mexicans decided not to participate in the economy. Despite this, another half million had to leave the formal economy. In doing so, they had to accept an income reduction of more than 40%, because that is the gap between the two economies. The impact of these two movements implies a 3% drop in the wage bill, which should be reflected in lower consumption.
For this year, there is no evident reason why investment or international trade would change direction. Without that, given the trend in the labor market, a recovery in consumption cannot be expected either. In other crises, the government applied “countercyclical policies” that are now unimaginable, since it has no money even to maintain the level of spending to which it bound itself through its obsession with not losing power.
This weakness, in the face of the geopolitical whirlwind, bodes nothing good.