Aug 28, 2019

How little we know about Puerto Rico's economy

Illustration: Sarah Grillo/Axios

Even as it braces for another potentially devastating storm, Puerto Rico is the only U.S. territory whose economic data isn't fully measured by the Commerce Department.

Why it matters: It remains impossible to quantify how much the island's economic growth was stunted by Hurricane Maria's epic destruction 2 years ago — and it won't be easy to gauge any comparable impact from Hurricane Dorian.

What's happening: In March, the Commerce Department said its Bureau of Economic Analysis would "produce new economic data for Puerto Rico this year that could lay the groundwork for later estimating the island’s gross domestic product."

  • So far, everyone has been relying on numbers generated by the island's government, which haven't "been updated for many years and do not follow the latest international guidelines for producing national economic accounts," the Commerce Department said.
  • Puerto Rico last year sought to combine its Institute of Statistics with another agency "amid accusations that the government was trying to manipulate economic data as it struggles to attract investment amid a 12-year recession," per AP.
  • A "more modern set of [economic] statistics" could be used to "better inform policymaking related to recovery efforts," researchers at the BEA wrote in a release.

Driving the news: President Trump, whose track record on hurricane response to Puerto Rico has been heavily criticized, approved an emergency declaration for the island this week.

  • On Wednesday, as Hurricane Dorian approached Puerto Rico, the president tweeted that the island was "one of the most corrupt places on earth."
  • Trump added, without offering evidence: "Congress approved Billions of Dollars last time, more than anyplace else has ever gotten, and it is sent to Crooked Pols. No good!"

To be sure, Puerto Rico has been the center of massive government corruption, compounded by bankruptcy, instability and piles of debt — all made worse by natural disasters the island hasn't been able to bounce back from.

Puerto Rico's local government releases different measures of economic growth than what's typically gathered by U.S. government agencies. Some economists have characterized the island's data as "seriously deficient."

  • The Commerce Department now says it plans to compile the components that would potentially make up an estimate of Puerto Rico's GDP, paving the way for an official GDP number sometime down the line. But it's not clear when, as the Miami Herald reported.

What we do know: Official data we do have about the state of Puerto Rico's economy paints a bleak picture:

  • The unemployment rate is 8.1% — more than double the rate in the U.S. nationally.
  • Limited opportunity for employment is prompting residents to leave the island at a rapid pace. In 2018, Puerto Rico's population saw the biggest year-over-year drop in almost 70 years — leaving it with the fewest number of people since 1979, according to Pew Research.
  • 44% of residents live at or below the poverty line, according to U.S. census data.

The bottom line: The lack of information on Puerto Rico's economic growth "has made it challenging for policy makers and businesses to engage in short- and long-term analysis and planning that is critical for developing Puerto Rico’s economy," BEA staff wrote in a budget request to Congress this year.

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