Is the U.S. Slump Spreading? Part 1

Yes. Remittances to Latin America are dropping.

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Immigrants' families back in their home countries are feeling the pinch of weaker U.S. growth.

A new survey by the Inter-American Development Bank shows America's faltering economy, plus renewed enforcement of immigration policy, means less cash is being sent back to Latin American countries in the form of remittances.

Just 50 percent of Latino immigrants are sending money home regularly, compared with 73 percent a year ago, according to the survey.

Remittances to the region are expected to total a whopping $45.9 billion this year, but the larger worry is an end to growth in those flows. That has serious implications for nations that rely heavily on large infusions from workers in the United States.

Cash from abroad is an outsize piece of gross domestic product in places like Haiti (35 percent), Honduras (25 percent), and Nicaragua (17 percent), according to the bank. (Figures are for 2007.)

Even in healthier economies like Mexico, where remittances make up 3 percent of total GDP, the ramifications of less cash heading south could be cause for worry. Economic reforms currently underway will most likely face increased opposition as the local economy weakens and remittances—worth $23.9 billion last year—waver. In 2007, remittances to Mexico rose just 1 percent, and they have fallen in the early months of 2008.

Meanwhile, the Economist notes that the falling U.S. dollar means lower real wages for guest workers in places like the Persian Gulf, where most currencies are pegged to the greenback because oil is priced in dollars. Migrants from places like Bangladesh and India are seeing pay packets shrink as soaring oil prices spur inflation at a time when U.S. woes are dragging linked currencies down.