Puerto Rico Compass ©

Q1 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.

Puerto Rico Economic Pulse ©

March 2011: A Lost Decade at the Start of the 21st Century

An overview of the PR economy in 2010 and forecasts

In FY2010, PR experienced its 4th straight year of negative economic growth. This is the worst recession in PR history since the beginning of the national accounts in 1947. In fact, the only period when PR has experienced consecutive years of negative growth in the past was between 1981 and 1983 when GNP shrank annually at 0.6%, 2.6% and 2.6%, respectively. Besides this three-year recession, PR has only had negative growth for single years in 1975 (-3.3%) and again in 2002 (-0.3%). The current recession officially started in FY2007 when real GNP grew at –1.2% and worsened in subsequent years with annual rates of –2.8%, -4.0% (revised) and –3.8% (estimated) between FYs 2007-2010. The hit on the economy has been so hard that real GNP in FY2010 is now 3% below its FY2000 level. This issue reviews the contributions of consumption, investment, government and net exports to the past and future growth of the PR economy.