Puerto Rico Compass ©

Q3 2009: Time Is Running Out for Recovery

Economic indices in Q3 in PR confirm a trend

Stimulus programs provide some relief to deal with the sharp downturn in PR. The federal program CARS (Car Allowance Rebate Program) or cash for clunkers, boosted auto sales in the island but only during August. However, this growth is not sustainable in coming months. Our quarterly indices continue to be negative. The positive effects of ARRA (American Recovery and Reinvestment Act) and LSP (Local Stimulus Plan) are as yet unobserved. Only 18% of the federal stimulus and 5% of the local stimulus have been disbursed. Fixing the $3.2b government deficit has required bitter medicine, including payroll savings, reduction in operational expenses and contracts, as well as government health plan savings, among others. This led to $1.2 million in savings as of October. Come November 6 of this year, 21,807 public employees will lose their jobs. Time is running out for government and the private sector to start the recovery.

Puerto Rico Economic Pulse ©

September 2009: Connecting the Dots – Part I

A view in retrospect of the financial and economic crisis

Five years ago, nobody could predict that in 2009 the most important concerns would be the loss of jobs and increased foreclosures. Nowadays, the financial crisis that started in the US has spread around the world. Unemployment in the US reached 9.7% in August 2009. Sale of houses in the US fell 25% per year since 2005. The Dow Jones Industrial average dropped to 6,547 points, similar to 1997 levels. Many financial and non-financial companies have filed for bankruptcy and almost all states in the US have large deficits. What are the roots of this debacle? Is it a real estate bust gone terribly wrong? Is it financial exuberance with a large dose of greed and creativity? How did it spread so quickly? This and other issues are addressed in this month’s issue of PR Pulse.