When the US sneezes, Mexico catches a cold

The title of this post is a famous quote (though I don't know who said it) that a friend of mine used the other day when we were talking about the relationships of the Mexican and US economies.

We had been chatting about the conversation Kelly and I had in Queretaro last week with a couple of Americans who were thinking that Mexico would be a better place to live if the US economy does take a nose dive in the future.

I see how deeply intertwined the two countries are. In every place we have been, and especially in the smaller and poorer towns, many of the young and middle-aged men are or have been working in the US. Quite a few women too. They send a good chunk of their income back home. If work is harder to come by or pays less in the US, those towns will feel the difference.

But then my friend pointed out some differences between the Mexican and the US economies:

• For one thing, Mexicans use credit very little. Mortgages are rare here and houses are typically owned outright. Some middle-class Mexicans in cities are buying cars on credit, but overall it's very much a cash economy. So the kinds of crushing debt loads that many Americans live with are a rarity here.
• They are used to economic crises here in Mexico. The last big one was in 1994. People know how to deal with them. The kids may not stay in private school, the house construction will slow, but by and large people will get by.
• Mexican culture makes it natural for people to help each other out. This chiefly occurs through family ties, but also in a community context.

So if the US economy does come up with a big sneeze sometime, it sounds like Mexico may only catch the sniffles a while.