Puerto Rico Compass ©

Q3 2008: Collapse in the Financial Markets

Quarterly economic indices analyze the PR economy

The financial system throughout the world is on the brink of disaster. A downturn in the US economy plus an unregulated derivative market related to housing has caused failures in financial markets globally. For many, a future recession is imminent. How did this occur? Business and individuals had a positive outlook on the US economy. A housing bubble emerged and mortgage credits were provided to people who could otherwise not afford the units they bought. This speculative housing bubble started a boom in the construction sector. The bubble finally burst. Banks were less liquid than before. A credit crunch halted the boom and contaminated the rest of the global financial system. The collapse has just started. Financial bailouts by governments have been approved but it is yet too early to determine if they will succeed. Against this background, where is the Puerto Rico economy headed?

Puerto Rico Compass ©

Q2 2008: A Second Quarter Meltdown in Puerto Rico

Quarterly economic indices tell the story

Puerto Rico’s second quarter has been characterized by media news regarding bankruptcies, food and gasoline price spikes, foreclosures, car repossessions, unemployment, companies leaving Puerto Rico, and job losses. Construction continues to pull the economy downwards while a cautious banking sector continues to tighten credit. This credit crunch halts consumer expenditures and investment. Meantime, local politicians engage in Byzantine debates in order to win the next election rather than suggest and find the means to finance countercyclical economic policies. We have relied on relief from the federal government and the Federal Reserve. It is time for us to lend them a hand and leave this trough.

Puerto Rico Compass ©

Q1 2008: Living in Recessionary Times

If our six economic indices were alarm lights, we would have five red lights blinking. The worst performances occurred in the construction and consumer indices. This last indicator is worrisome since consumption is a big chunk of GDP and affects directly other sectors. An economy in recession, high-energy prices, and job losses plus the uncertainty generated by an upcoming election are some of the causes. Find out what measures have been taken by consumers to mitigate recessionary effects, how Fed interest rate cuts could generate some relief for investors, and what positive factors need to take place in order to overcome this recession, which refuses to disappear in coming months.

Puerto Rico Compass ©

Q4 2007: When Will the Recovery Begin?

As discussed in the previous Compass, the HCCG Coincident Index showed a continuation of the recession that started in Puerto Rico since Q3 2006. The last quarter of 2007 depicts negative figures again, but the magnitudes have improved in most of the indices. The leading index dropped in Q4, and the banking index depicts timid growth. Find out how tourism and exports bring hope; how the Puerto Rican consumer survived the holiday season; and what issues concerned households at the end of 2007. A closer look at these indices will indicate how this election year affects the economy and addresses the question that concerns all of us: when will the recovery begin?

Puerto Rico Compass ©

Q3 2007: Are We Still in the Eye of the Storm?

The signs of storm in the indices of the last quarter were true. The six HCCG economic indices for 3rdQ of 2007 show the worst performance since the 3rd Q of 2001. The causes are both, external and internal. Among the external factors are the US economic slowdown, weakening of the manufacturing sector, financial market turbulence, specially in the subprime lending sector, and escalating energy prices. Internal factors include recession in the island’s construction and manufacturing sectors, delays in extension of the Incentives Law, and the loss of confidence of the Puerto Rican consumer. Find out what factors could return Puerto Rico to economic recovery and growth.

Puerto Rico Compass ©

Q2 2007: Is the Recession Over in Puerto Rico?

Living in Recessionary Times

Not yet. Puerto Rico’s economy is showing vital signs and the system is still far from claiming the start of economic recovery. It appears the economy has begun to show some minor positive signs for the next three months, but still it remained in recession in the second quarter of 2007. Construction continues to pull the economy downwards while banking still holds the fort. Puerto Rico Compass, a proprietary tool of HCCG, has recently revised the methodology and data of the indices. Find out how the new six quarterly economic indices of PR Compass gauge the overall performance of the economy.

Puerto Rico Compass ©

Q1 2007: Puerto Rico Out of Balance

A review of Q1 of 2007

Although the economy remains in recession, its current wobbly condition has hindered some sectors but presented opportunities for other sectors. Yet, the lack of growth continues to hamper the island and the risk that it will spill over to all sectors, threatens equilibrium. Six economic indices, ranging from the overall performance of the economy, banking, manufacturing, construction, consumption, and a leading economic index point to an economy that struggles to stabilize during the 1st Quarter of 2007.

Puerto Rico Compass ©

Q4 2006: The Puerto Rico Economy is Still in Distress

A Review of Q4 of 2006

Puerto Rico’s economy is still far from claiming the beginning of a recovery. The leading index signals a positive 0.9% growth in Q4 of 2006. However, other indices, such as manufacturing continued falling with –0.7%, consumption and the coincident indices plunged –0.9% while banking posted 1.8% and the leading index surged to 0.9% growth. Although four of the six indices depict a negative trend, the island’s economic scene remains less volatile but still hampered by political gridlock.

Puerto Rico Compass ©

Q3 2006: Puerto Rico Weathers the Storm

A Review of Q3 of 2006

Although the economic horizon remains cloudy, its descent appears to have begun to stabilize during the 3rd Quarter of 2006. In this rapidly changing world, consumers are now demanding quicker more efficient service from businesses. PR Compass provides a comprehensive picture of the PR economy by computing and analyzing six quarterly indices. This tool provides real time data and analysis relating to PR’s economic environment. During this quarter the coincident index fell –0.4% compared to the same quarter in 2005. The local fiscal crisis seems to have been overcome. The banking index grew 3.1% indicating resiliency in this sector. Manufacturing fell –2.3% with no recovery in sight. Consumers feel the burn with –2.5% in the index. Construction followed suit with –0.6%. For the next six months, the leading index stabilizes at –1.6%.