Puerto Rico is facing continuing economic woes — and that’s no surprise. Every territory that has become a state — 32 so far — has seen serious economic improvement after being admitted as a state. Just having voted for statehood, however, doesn’t bring economic improvement.
Puerto Rico is heavily in debt and continues to lose population to the states. Infrastructure issues are getting worse and the government, currently the largest employer in the territory, is fighting with the Fiscal Oversight Board about furloughs and bonuses. Restructuring of debt is taking place in a somewhat disorganized and contentious way. Continued political uncertainty makes the Island less appealing to investors.
But there are some encouraging numbers showing up.
Unemployment, for example, has fallen from 12% in February to 9.8% in July of 2017. This number is roughly double the figures in the 50 states, but it is the best number in over a decade for Puerto Rico. Employment, in the sense of the total number of people employed in the civilian workforce, has dropped since January, but the population has also dwindled considerably in that time.Employment has actually increased in several industries: information technology, health services, education, and hospitality have all seen single digit growth since January 2017. (All data from the National Bureau of Labor Statistics.)
The Government Development Bank’s Economic Activity Index report is generally negative, showing an overall drop in economic activity of 2% for the fiscal year that ended in July 2017. Apart from an uptick in 2012, Puerto Rico’s economic activity has fallen every year since 2007. There is no reason to expect a swift turnaround.
However, some leading indicators are beginning to look up. Concrete sales, for example, a number that shows the likely pattern for new construction in the future, are up by 2%. Hotel registrations increased in the first half of 2017 by .9%. Retail sales for the fiscal year are up by 2.8%.
These numbers are just glimpses of hope for Puerto Rico’s economy. Residents have taken to the streets to protest the austerity measures being mandated by the PROMESA Oversight Board, which is currently suing the governor. The poverty rate is at 46% — more than twice the level in the poorest states. And the recommendations of the bipartisan task force on Puerto Rico’s economic growth continue to be largely ignored by the federal government.
Yet there are some rays of hope in these latest numbers. They may reflect optimism in response to the prospect of statehood for Puerto Rico, or the business-friendly attitudes of the current governor and resident commissioner. But they could also be the first glimpse of the light at the end of the tunnel.