Puerto Rico Economic Pulse ©

December 2002: Coping with 2002

An analysis of Puerto Rico’s top economic news during the year

A tough year is ending. The saga of 2001, a year marked by terrorism and battered stock markets, has lasted more than expected. PR’s economy has not been indifferent to a jolted US economy and a phantom of recession and deflation hanging all over the world.It has been a hard year for the island, featuring higher excise taxes, less tourists, higher unemployment, and a great effort by the government to crank the economy by investing in public infrastructure. Find out what were the foremost developments of this year, what happened to important sectors, such as manufacturing and construction, and a search for a vision for the next decades.

Puerto Rico Economic Pulse ©

November 2002: Our Older Puerto Ricans – Part II

On the economic and social implications of an older population

As in other parts of the world, Puerto Rico’s population is growing older. Dramatic structural changes in population pose a big challenge to the public sector and overall society.  Social security programs, health services, public finances: the effects of these changes will touch every component of our society. In this issue, we focus on the evolution of the older segment of population, people aged over 65. We briefly portray our elderly people and analyze the implications of having an older population. Find out whether gender has an impact on this group; how wealthy or poor they are; who bears the burden of an aging population. Will PR be able to meet some of the challenges lying ahead.

Puerto Rico Economic Pulse ©

October 2002: PR Looks in the Mirror – Part I

On the most relevant findings of the 2000 Census of Population in PR

Conducting a Census is the best way to portray a country. It lets us know where we come from and where we are going, what we are and what we need. The 2000 Census of Population sheds light on the most important socioeconomic features of Puerto Rico, in some cases confirming already well known trends, but also disclosing unknown facts. Find out how age poses economic as well as social challenges; how demographics impact housing and car sales. This edition examines some of the most recent and relevant demographic issues Puerto Rico faces and their implications for the Island economy in the short as well as the long run.

Puerto Rico Economic Pulse ©

September 2002: How Can the US Economy Recover?

An analysis of US business fixed investment during the 1990’s

For the US economy, the booming 1990`s have gone and the ensuing short recession is now almost over. On the whole, analysts are persuaded that there is a strong causal link between business investment on information technology and labor productivity. The thinking is that cheaper computer capital replaced more relatively expensive non-computer capital to the extent that the production process allowed. Is that so? Have computers been the whole story of the 90`s investment expansion? And to what extent has business investment activity been quantitatively and qualitatively different from past cycles? Will investment drive the US recovery? Let`s examine these questions.

Puerto Rico Economic Pulse ©

August 2002: Carmania in Puerto Rico

Trends in the Puerto Rican Car Market

As of 2001, there were over two million motor vehicles registered in Puerto Rico, equivalent to 1.7 persons per vehicle. According to industry experts, Puerto Rico is a perfect place to introduce new products. Although sales of new vehicles have grown at an annual rate of 1% between 1995 and 2001, the levels of the last two years exceeded those of 1995. Despite an economic slowdown, local consumers bought 123,000 new units, similar to the level of 2000. Find out why the love affair of Puerto Ricans with cars. How is the car market distributed among car makes? Will this trend be sustainable in light of the new car excise taxes, effective July 2002?

Puerto Rico Economic Pulse ©

July 2002: A Tough and Kind Rival

The Evolution of Euro and its Consequences for Puerto Rico

Euro has completed its first stage. Three years after being launched, the European currency seems to leave behind a stormy start and its second stage is under way. National currencies of the member countries have been withdrawn and notes and Euro coins have come into circulation. Undoubtedly, the U.S dollar has found a tough rival which poses a serious challenge as the predominant worldwide currency. This issue of Economic Pulse briefly reviews the evolution of Euro since its birth, the dimensions of its market, and the consequences for financial markets. Find out how this process will affect Puerto Rico. It is time to demonstrate that the positive effects of this new giant far outweigh its potentially negative consequences.

Puerto Rico Economic Pulse ©

June 2002: The Bitter Side of Development

Macroeconomic and Fiscal Impact of Population Trends

As the 2000 population census has confirmed, Puerto Rico is undergoing a demographic transformation. Following the pattern of developed countries, the Puerto Rican population is aging. In this article we will address this interesting phenomenon, which is a clear proof that development is not just about prosperity and also has its bitter side. Let`s briefly review the evolution of the island`s population over the last half century and analyze its economic and social consequences in the short as well as the long run. Find out how an aging population can exhaust fiscal revenues; how health and other related services will be more demanding on already finite resources.

Puerto Rico Economic Pulse ©

May 2002: The Challenging Budget Picture

Economic Impact of the Budget – Part II

Revenues are key to a budget. Without them there can be no budget, and how to obtain them particularly in times of economic constraints such as now, presents a challenge. The previous issue analyzed how the Government of Puerto Rico got into a structural imbalance. Combined with the economic slowdown, this situation has generated a shortfall of revenues. Both the Executive and Legislative branches have been proposing new sources of revenues. A key issue in the proposed budget for fiscal 2002-03 is how to obtain $596 million in additional revenues. The bulk of the discussion focused on proposed significant increases in excise taxes on alcoholic beverages, cigarettes, and selected types of autos. Find out how increases on alcoholic beverages will impact the economy and how the government refused a better alternative.

Puerto Rico Economic Pulse ©

April 2002: The Moving Target, Part I

An Analysis of the PR Government Budget for fiscal year 2003

Last February, Governor Calderón unveiled her Consolidated Budget for Fiscal Year 2003. It calls for significant increases on excise taxes on vehicles, alcoholic beverages, and cigarettes. All these measures will impact economic activity, you and I as taxpayers and consumers. Puerto Rico is not the only jurisdiction fighting budget deficits. According to a March report by the Association of State Budget Officers, 40 of the 50 states are facing shortfalls in their revenues. Thus, healthy fiscal budgets, here or in the states, will lag a year or more behind economic recovery. Find out how the budget is spent, where the money comes from, what are the priorities, and how the problem of debt financing has affected it.

Puerto Rico Economic Pulse ©

March 2002: The Road Back to Recovery

An Analysis of the Puerto Rico Economy and Outlook for 2002 and 2003

Fiscal year 2001 marked the beginning of an economic slowdown in Puerto Rico. After a decade of high growth rates, the economy cast clear signs of decelerating. The performance of the Puerto Rico economy was not divorced from the US economic cycle. The Island posted the lowest real growth since 1992. But the worst was still to come. The tragic events of September 11 put both economies on the verge of recession, thereby backing the belief that the Island economy is tied to the US. Find out what happened in 2001 and whether the economy is in a recession in 2002? And, after all, is recovery ahead for 2003?