Remittances in Retreat: Eleven Straight Months of Declines Raise Red Flags for Consumption and Jobs

The sustained drop in remittances reflects a more fragile labor environment in the United States and puts pressure on Mexican households that rely on these funds.

Remittance flows to Mexico kept their negative trend and posted eleven consecutive months of declines, according to data from the Bank of Mexico (Banxico). In February, the number of transfers fell 3.2% year over year and, in dollar terms, the country received $4,468.2 million (USD), its lowest level since February of the prior year—a period that typically feels calendar effects because it has fewer days.

Beyond the seasonal factor, recent behavior is being read as a sign of cooling in Mexican workers’ ability to send money from abroad, in a context where U.S. economic activity and the labor market have shown bouts of moderation. Financial-sector analyses have noted that, along with slower job creation and shifts in unemployment indicators, stricter migration scrutiny also plays a role—tending to increase caution and the cost, both economic and emotional, of operating and moving around normally.

In February, the average remittance was $395, 3.7% higher than in the same month of 2024. This increase in the average transfer size suggests that some senders are offsetting with larger amounts, but not enough to reverse the overall decline: fewer transfers and limited growth per sender end up weighing on the total.

The macroeconomic importance of remittances for Mexico is broad: in addition to supporting the consumption of millions of households, they often serve as a buffer in regions with high informality and limited formal job creation. For that reason, a prolonged streak of declines can translate into weaker momentum in local retail, services, and light construction—especially in states where these resources make up a larger share of disposable income.

Impact on Local Consumption and the Stability of Household Income

When remittances weaken, the first transmission channel is usually day-to-day consumption: food, rent, transportation, healthcare, and education. In many communities, these resources don’t just supplement income—they partially or fully replace it. A multi-month adjustment can force cuts in discretionary spending, delay big-ticket purchases, or increase the use of informal credit. In an environment where inflation has shown stickiness in certain categories—particularly food and services—the loss of purchasing power can be felt more sharply, even if overall prices cool compared with peaks from prior years.

There are also implications for small businesses that depend on a steady flow of cash in receiving neighborhoods and municipalities. Fewer remittances usually translate into lower sales and, as a result, inventory and employment adjustments. This mechanism matters in a country where domestic activity depends heavily on consumption and where informality remains a structural feature of the labor market.

Exchange Rate, U.S. Inflation, and Risks Heading into 2026

The exchange rate can cushion or amplify the effect in local currency. If the peso depreciates, each dollar sent goes further in Mexico, helping partially offset a drop in amounts. However, that FX “help” comes with risks: a depreciation tied to risk-off episodes can also bring greater financial volatility and pressure on inflation expectations. On the U.S. side, an inflation rebound—for example, from higher energy prices linked to geopolitical tensions—can reduce senders’ real income and limit their ability to remit, even if they remain employed.

Looking ahead to 2026, the most likely scenario for remittances will hinge on three variables: the health of the U.S. labor market, the cost of living (inflation), and the intensity of migration measures that affect job stability and the willingness to use formal channels. If employment stabilizes and inflation eases, transfers could return to a steadier path. By contrast, if a more challenging labor market combines with higher energy and housing costs, flows could remain under pressure, with impacts varying by region within Mexico.

In sum, the eleven-month decline in remittances points to an adjustment that goes beyond seasonality: it reflects a less favorable environment for workers in the United States and foreshadows pressure on consumption in receiving areas. The trajectory of employment, inflation, and the exchange rate will be key to gauging whether this dip reverses or becomes a longer-lasting trend.