The effect of Hurricane Otis on card payments in Mexico

Using weekly cumulative transaction data from debit and credit card payments, we examine the impact of Category 5 Hurricane Otis, in late October 2023, on consumers’ spending patterns at municipalities of state of Guerrero, Mexico. We employ an event study design to estimate dynamic and heterogeneous effects across the two most economically significant municipalities in the state: Acapulco and Chilpancingo. Our results show that Acapulco, the epicenter of the hurricane’s destruction and the largest contributor to card-based transactions in the region, experienced a sharp and persistent decline in both, the volume and value of card payments, likely reflecting severe disruptions in economic activity and infrastructure damage. In contrast, Chilpancingo, located approximately 100 kilometers from Acapulco and less directly affected, registered a temporary but significant increase in card transactions, likely driven by displaced demand from evacuees and reconstruction-related spending originated in Acapulco. This spatial heterogeneity underscores the role of geographic proximity and infrastructure resilience in shaping post-disaster spending patterns. Furthermore, by analyzing transaction data at the merchant category level, we identify retail sectors, such as department stores and self-service retailers that demonstrated resilience or even growth during the recovery phase, due to increased demand for essential goods. In contrast, service-oriented sectors, particularly those dependent on tourism, such as restaurants, gas stations, and hotels, experienced prolonged reductions in transaction activity. Our findings mainly contribute to the growing literature on real-time economic monitoring by leveraging high-frequency financial data to provide granular insights into spending behavior during and after extreme climatic events.