Puerto Rico Economic Pulse ©

December 2005: The Roaring Super-Market in Puerto Rico

Grocery Shopping has staying power

With the arrival of the Sam’s Clubs, Costco and the reinvention of Kmart and Walmart to include groceries, many would have thought that was the beginning of the end for the local traditional chain-supermarket industry in Puerto Rico. Surprisingly enough, statistics show that mostly locally-owned chain supermarkets are stronger than ever. Although large and comprehensive studies have yet to be conducted in this industry, limited information indicates that the aforementioned stores have kept a good pace of annual growth. We call them the “purists” since for the most part they have kept themselves from crossing the line to sell many products beyond food items. Find out what seems to be their success formula and how their prospects look like going forward.

Puerto Rico Economic Pulse ©

November 2005: The Dawn of a New Agreement

A brief on CAFTA-DR agreement and implications for Puerto Rico

After a tough battle in the US Congress, CAFTA-DR got a long awaited approval. This new agreement is another page in the revolution of free trade, started by NAFTA in 1994 and fueled by subsequent bilateral treaties between the US and other countries. Now, it is Central America’s turn, a region battered by war, poverty and natural disasters, but engaged in a process of political and economic reconstruction. Will this new trade block enhance or restrain trade with Puerto Rico? Are there opportunities or risks for us? In this issue, we analyze the potential implications of CAFTA for Puerto Rico in a not so distant future.

Puerto Rico Economic Pulse ©

October 2005: Fiscal Mess in Puerto Rico

Or is it an opportunity?

Credit rating agencies are carefully scrutinizing PR’s finances. For the next few months, S&P and Moody’s will be once again evaluating the liquidity of the central government, in order to determine if yet another credit downgrade is in order for PR. This situation already occurred in May of this year and is not new, proving true that “those who forget their history are doomed to repeat it”. Puerto Rico faced a similar situation in 1975 and tough decisions were taken to correct the mess. The island is once again in the middle of a fiscal mess, with public debt taking center stage. Find out what is the history behind our public debt and why it is necessary to find solutions to this problem now.

Puerto Rico Economic Pulse ©

September 2005: Getting to Know the Neighbors

An outlook of the Caribbean countries

The world does extend beyond Puerto Rico and the US. Just a few miles from our island, a scattered group of large, small, and tiny islands offer an amazing world; an interesting mix of cultures, languages, races and economic systems. The history of the Caribbean is the history of regrettable failures and also of very successful economic experiments. Viewed for a long time just as tourist destinations, some of our tiniest neighbors in the Caribbean have many lessons to offer. After many years of scarce interest in the rest of the Caribbean, the time has come to become acquainted with our neighbors. This issue provides a first outlook of the region and challenges of upcoming agreements for Puerto Rico.

Puerto Rico Economic Pulse ©

August 2005: What’s New in Medicare

What will Medicare Advantage mean for Puerto Rico

Starting 2006, Medicare will have a new structure to assist seniors and disabled patients in covering health care costs. We are entering the new era of Medicare Advantage with extended coverage, subsidized prescription drugs, and emphasis on prevention. Some of the drawbacks are a more complex program that requires informed patients, and as in the old version, some out-of-pocket expenses. Medicare Advantage aims to improve the quality of lives of our seniors while reducing PR government expenditures in health care via the health care reform plan. In this issue, find out how this program will impact Puerto Rico.

Puerto Rico Economic Pulse ©

July 2005: The Hidden Side of the PR Population

An overview of migratory movements in PR

Migration is maybe one of the most dynamic components in any society. Inflows and outflows of people shape culture, ethnography, religion and the economy overall, and change in a short time what otherwise would take many years. Migration impinges on the foremost economic factor: human capital. Notwithstanding the importance of migratory movements, policymakers in Puerto Rico resist to give them the priority they deserve. In this issue we address this unknown side of our society. We will explore this world, the world of people coming to our island but also those Puerto Ricans who are looking for better luck in other lands. Find out how migration is shaping Puerto Rico’s present and future.

Puerto Rico Economic Pulse ©

June 2005: Digging into the Construction Industry

Is the future bright for this sector?

The 90’s were golden years for construction in PR. Investment in public infrastructure projects, a housing explosion, and a strong increase in commercial and industrial buildings by the private sector injected $16.6 billion in this economy. However, as big projects were near completion, the construction boom was over. For the first time in a decade, construction investment shrank, employment in the sector fell and housing, not government projects, took center stage as the driving force behind the industry. Today, as the Governor and the Legislature struggle to approve a new budget, this sector is finding ways to remain on the positive side. Find out how the new Network City can instill new vigor and reshape this industry in the near term.

Puerto Rico Economic Pulse ©

May 2005: Disentangling the Puzzle of Inflation

Scanning inflation measures in Puerto Rico

Are high prices a mirage in Puerto Rico? Last year, inflation reached its highest level in PR since 1980. An adverse combination of external and internal factors is draining our pockets, and no truce appears in sight. Besides the problems posed by high prices, the PR Consumer Price Index (CPI) is quite flawed and barely can predict a trend in prices. Since 1993, inflation in PR and US are moving apart, a weird behavior that seems to defy economic laws and has left the PR economy without one of its foremost indicators. It is time to enter this fascinating and entangling world of inflation. Join us in this travel to learn how to deal with this puzzle and find a cure for this misbehaved index.

Puerto Rico Economic Pulse ©

April 2005: The Budget Blues

Analysis of public expenditures in PR

The same story as in 2002: the PR Government is short of money and is scratching all pockets across the island. Once again, the Government has decided to balance the fiscal equation by raising taxes. The authorities refuse to trim an already huge budget. The question still remaining is: will we eventually find a cure to the wounds of the public budget? In this issue, we address the other side of the equation and analyze the way the PR Government spends the taxes we pay and other resources. We will travel backwards in time to confront the real source of our fiscal woes.

Puerto Rico Economic Pulse ©

March 2005: Whatever It Takes

A review of the PR economy in fiscal 2004 and forecasts for 2005 to 2007

Fiscal 2004 closed with the highest rate of growth since 2000. Although far from spectacular, the economy performed well with significant gains in many aspects. However, the happiness will not last too long since the economy is expected to decelerate slightly this year. The PR economy will operate in a global context featuring growth, but also a big uncertainty stemming from the island’s huge public debt, trade deficit in the mainland, and a battered dollar. The Puerto Rico economy will have to fight its way, through a structural deficit and new increases in taxes. Find out how the economy will perform through 2007, what setbacks it could face, and what will it take to overcome them.