4th Quarter 2011

Charting the Year in Puerto Rico
What the economic indices tell us in 4th Quarter 2011

Nowadays, recovery is the most wanted outcome in the US and PR. Usually, signs of early growth show up in consumer spending, housing, and construction. This time around, these sectors have been the last to recover in the US. Instead, the US economy is showing signs of recovery on the production side. Manufacturing and business investment have led the way, driving down the unemployment rate. For some economists, that improvement may finally lead to improved consumer spending in the US. The relevant question for us is whether PR shows signs of a production side recovery or if trends in consumer spending, housing, and construction in the island speak of a consumer side recovery? HCCG’s indices for the 4thQ can provide some answers and chart the performance of CY 2011.

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3rd Quarter 2011

We Are Not There Yet
An analysis of 3rd Quarter 2011 economic indices in PR

Puerto Rico’s third quarter indices reveal a mixed picture. The economy is not yet out of recession but there are some positive signs. However, there are already rumors of another recession brewing in the US as a result of the unresolved debt hangover in Europe and its efforts to save Greece and the continent’s debt-burdened banks. Still, the idea that the island has hit bottom is a possibility but, as we have indicated in prior issues of Compass, this will depend not only on internal but also on external factors originating in the US and other global economies. There is increasing dissatisfaction with escalating electricity prices and persistently high unemployment. This issue tracks the 3Q of the PR economy and highlights some trends.

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2nd Quarter 2011

Are We Heading into Recovery?
An analysis of 2nd Quarter economic indices in PR

Fiscal discipline has led to a very disappointing performance of all economic sectors, including the government. The second quarter economic indices suggest that the process of recovery is still a long way. During this quarter, manufacturing, construction, and banking continued to pull the outlook of the leading index. On the other hand, some mild gains in employment levels improved the coincident and consumption indices. We face some tough balancing acts among growing tourism, stagnant manufacturing, stale construction, a cautious consumer, and a healing banking sector. Puerto Rico still faces tough headwinds ahead not only internally but also externally with the US debate on its debt ceiling and potential default. What has been learned so far? Fiscal deficits can be cured with a medium-term plan for deficit reduction but cutting back spending viciously in the short term at a time of private-sector retrenchment has been a mistake.

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1st Quarter 2011

We Hope and Wait
An analysis of 1st Quarter indices of the PR economy

Economic indices are hitting a soft patch as business and consumers struggle to cope with rising energy and food costs as well as continued concerns regarding further weakening of the global economy. Both here and in the US mainland, economic news continues to dampen optimism regarding a quick and substantial economic recovery. The consumption rebound of 4Q 2010 with healthy new car sales bottomed again this quarter. We hope for less job losses in manufacturing and other economic activities but the reality of this quarter is otherwise. We hope for less rising energy costs and less federal spending cuts but the debate in Congress continues to unravel for political gain. And we wait locally for the start of the Public Private Partnerships, the expected positive effects of the tax and permitting reforms, and more lending from banking.

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