Economic Indicators by Inteligencia Económica, Inc. U.S.  Puerto Rico is a non-mirror tax code possession. Success! There was an error processing your request. PLEASE TURN OFF YOUR CAPS LOCK.  The federally mandated Financial Oversight and Management Board for Puerto Rico has set aside an additional $160 million in an emergency fund and halted all debt restructuring proceedings for the Commonwealth’s central government until further notice. The trend will be to increase remote work. The proposals cited here are not a comprehensive list to help Puerto Rico cope with the pandemic’s health and economic impacts. Puerto Rico carries more debt per capita than any state in the United States. This scenario could be reflected in Puerto Rico, since everything that happens in the United States has a direct effect on the local economy. As federal policymakers consider additional policies to address the health emergency and economic fallout confronting the nation as a whole, they should consider taking strong measures that account for the Commonwealth’s particular circumstances.  See “Puerto Rico: Information on How Statehood Would Potentially Affect Selected Federal Programs and Revenue Sources,” Government Accountability Office, March 2014, https://www.gao.gov/assets/670/661334.pdf. Similarly, Puerto Rico residents cannot access the EITC or the Child Tax Credit like residents of the states and the District of Columbia can. The public health measures being taken in response to the COVID-19 pandemic have produced a sharp contraction in economic activity and a marked rise in unemployment, the breadth and duration of which remain to be seen.  Javier Balmaceda, “Puerto Rico on Verge of Implementing an EITC,” CBPP, December 10, 2018, https://www.cbpp.org/blog/puerto-rico-on-verge-of-implementing-an-eitc. However, it proved unsuccessful, and former Governor Ricardo Rossello moved the … The results indicate that it will be a short, sharp recession for the first half of 2020, as the coronavirus pandemic severely restricts economic activity. The results indicate that it will be a short, sharp recession for the first half of 2020, as the coronavirus pandemic severely restricts economic activity. Losses started around the beginning of the island’s economic recession in 2006 and have continued since then. Puerto Rico's leaders warned of dire consequences if it were taken away, but the tax incentive was phased out over a decade beginning in 1996, and the economy entered recession in 2006. Please avoid obscene, vulgar, lewd, "There is a significant reduction in spending and we are already seeing layoffs in different industries, companies and private universities, so Puerto Rico's economy is going to weaken and there will be little investment in business. And with 43 percent of its residents and 57 percent of its children living in poverty in 2018, before the current health and economic crises hit, Puerto Rico must now contend with the pandemic — and must do so while having much less access to the anti-poverty programs that are available in the rest of the country. NABE President Constance Hunter said that the average forecast suggests that conditions will improve by the end of the year with the support of an aggressive fiscal and monetary stimulus. For instance, additional assistance for small businesses would also benefit the Commonwealth. "If there is no vaccine, everything will continue to contract rapidly, because we have no experience with this situation. The 2006 Puerto Rico budget crisis was a political, economic, and social crisis that saw much of the government of Puerto Rico shut down after it ran out of funds near the end of the 2005–2006 fiscal year.The shut down lasted for two weeks from 1 May 2006 through 14 May 2006, leaving nearly 100,000 public employees without pay and closing more than 1,500 public schools.  See letter from the Financial Oversight and Management Board for Puerto Rico, March 25, 2020, https://drive.google.com/file/d/10zjxeNa-5a-3UCIQN8N8ZU1K2_dYRjc3/view. The island’s average household income is about one-third of the nationwide average, and its unemploy… The federal funding for these programs in Puerto Rico is capped at levels that fall well short of what is needed to serve the Commonwealth’s most vulnerable households even under ordinary circumstances, let alone during a crisis when need grows dramatically. The United States then refused to pay the colony's creditors, asserting they held odious debt. Puerto Rico - Puerto Rico - The economy: Puerto Rico’s economy, now based on services and manufacturing, was dominated by agriculture until the mid-20th century.  Brynne Keith-Jennings and Elizabeth Wolkomir, “How Does Household Food Assistance in Puerto Rico Compare to the Rest of the United States?” CBPP, January 15, 2020, https://www.cbpp.org/research/food-assistance/how-does-household-food-assistance-in-puerto-rico-compare-to-the-rest-of. As policymakers consider additional steps nationally to address the pandemic and its economic fallout, they need to take into account the Commonwealth’s unique circumstances.  Puerto Rico, by contrast, never truly rebounded from a recession that began back in 2006 and put the Commonwealth on a path of ever-widening budget deficits, under-investment in critical areas, and largely unsuccessful austerity measures.. However, Negrón does not share this projection if a vaccine that stops the spread of the coronavirus does not appear, so he believes that the economies of the United States and Puerto Rico will continue to decline. Puerto Rico's GDP growth rate has been negative or stagnant since 2006, a recession that will continue in the near future.  CBPP, “How Much Each State Will Receive From the Coronavirus Relief Fund in the CARES Act,” March 26, 2020, https://www.cbpp.org/research/how-much-each-state-will-receive-from-the-coronavirus-relief-fund-in-the-cares-act. Posted February 13, 2020 16:50:26  LaDonna Pavetti, “With Applications Soaring, TANF Needs More Funds, New Rules,” CBPP, April 14, 2020, https://www.cbpp.org/blog/with-applications-soaring-tanf-needs-more-funds-new-rules.  See press release from the Financial Oversight and Management Board for Puerto Rico, March 21, 2020, https://drive.google.com/file/d/1hA99AnTpmuhcAMTIScKL-06j8YXknZG2/view. Despite the abrupt recession, surveyed economists from the NABE were optimistic that the economy will recover in the second half of 2020, growing at a rate of almost 6 percent by the end of the year. ©2015 Center on Budget and Policy Priorities. Meanwhile, Kenneth Rivera, certified public accountant (CPA), anticipated a scenario of slow recovery because the island has been in a fragile economic situation since 2006.  These measures, the most important of which are described just below, are vital for Puerto Rico. Puerto Rico is tied to the United States, so it is moving in the same direction. Puerto Rico’s government should be able to reach many others using platforms such as its Nutrition Assistance Program, which serves about two-fifths of the Commonwealth’s population.  CBPP, “States Start Grappling With Hit to Tax Collections,” updated May 4, 2020, https://www.cbpp.org/research/state-budget-and-tax/states-start-grappling-with-hit-to-tax-collections. Get an email notification whenever someone contributes to the discussion. Triple Tax Exempt Bonds.  Aviva Aron-Dine et al., “Larger, Longer-Lasting Increases in Federal Medicaid Funding Needed to Protect Coverage,” CBPP, May 5, 2020, https://www.cbpp.org/research/health/larger-longer-lasting-increases-in-federal-medicaid-funding-needed-to-protect.  In contrast, the federal government essentially provides states with open-ended funding for these programs, so more people can be served when need rises. Many non-filers in Puerto Rico are very low-income individuals with little or no access to the internet (or to help with completing even a simplified online form of the sort that the Puerto Rico Treasury is reportedly developing). And while Puerto Rico has adopted its own Earned Income Tax Credit (EITC), that credit provides a fraction of what the federal EITC (which isn’t available to Puerto Rico residents) provides, while the Child Tax Credit is available in Puerto Rico only to households with three or more children.  Of course, not all of the non-filing population will be able to receive the payments automatically, so the Puerto Rico Treasury should also undertake strong outreach efforts to ensure that low-income households receive these funds and get them on a timely basis. Financial Oversight and Management Board of Puerto Rico, “Letter to Gov.  Census QuickFacts: Puerto Rico, https://www.census.gov/quickfacts/PR. that is degrading to another person. Puerto Rico will need both immediate and longer-term tools to fight the pandemic’s health and economic effects and foster a return of economic growth and opportunity. Puerto Rico’s real GNP has declined in seven of the past eight years, with only a slight increase in 2012. person will not be tolerated. GDP has grown very little or declined over the past decade, contracting every year from 2005 to 2017, with an exception in 2012 when the economy grew by a meager 0.03%.  But probably nowhere is the need greater than in Puerto Rico, which unlike other parts of the country entered the pandemic following well over a decade of virtually uninterrupted economic decline coupled with devastating natural disasters and an unprecedented, ongoing bankruptcy process.  Dánica Coto, “US court upholds SSI for Puerto Ricans in key ruling,” Washington Post, April 10, 2020, https://www.washingtonpost.com/world/the_americas/us-court-upholds-ssi-for-puerto-ricans-in-key-ruling/2020/04/10/9e303364-7b78-11ea-a311-adb1344719a9_story.html. The population has shrunk by about 13% in the past decade. Offshore Investing in The Recession: Opportunities in Puerto Rico Homepage > Archive Blog 2020 Whether you’re a serial investor, high net worth individual (HNWI), or just someone who sees now as a great time to diversify your assets in the face of troubling …  These actions were taken in mid- to late March when Puerto Rico was still envisioning lifting strict quarantine and self-isolation protocols on April 12. The measures enacted to date that are most significant for Puerto Rico include: Direct payments (“recovery rebates”) to low- and middle-income families. See “Commonwealth of Puerto Rico Plan for Distribution of Recovery Rebates Enacted by Pub. L. 110-185,” April 8, 2008, https://www.treasury.gov/press-center/press-releases/Documents/pr_stimulus_final_rebateplan.pdf. A federal control board that oversees Puerto Rico's finances filed a long-awaited plan that would reduce the U.S. territory's debt by more than 60 percent and pull the island out of bankruptcy . For a discussion of these provisions in SNAP, see Dottie Rosenbaum et al., “USDA, States Must Act Swiftly to Deliver Food Assistance Allowed by Families First Act,” CBPP, April 7, 2020, https://www.cbpp.org/research/food-assistance/usda-states-must-act-swiftly-to-deliver-food-assistance-allowed-by-families. We are going to see a deployment in expenses due to the entry of federal financial aid, but this rise in demand would not continue," the economist said, stressing that aid is temporary. An email has been sent to with a link to confirm list signup.  (Puerto Rico will use the same eligibility criteria as the federal government, providing payments of $1,200 for most adults and $500 for children under age 17, with these payments phasing out at higher income levels.). Would you like to receive our e-Edition every Wednesday?   Samantha Washington, “Child Tax Credit and Earned Income Tax Credit Lifted 10.6 Million People out of Poverty in 2018,” CBPP, October 31 2019, https://www.cbpp.org/blog/child-tax-credit-and-earned-income-tax-credit-lifted-106-million-people-out-of-poverty-in-2018.  Chuck Marr, Yixuan Huang, and Vincent Palacios, “House Ways and Means Committee Legislation Would Expand EITC and Child Tax Credit,” CBPP, March 2, 2020, https://www.cbpp.org/research/federal-tax/house-ways-and-means-committee-legislation-would-expand-eitc-and-child-tax. We'd love to hear eyewitness Error! The federal EITC is not available to people who live in Puerto Rico, while the Child Tax Credit is only available to families there with three or more children. To reach as much of this population as possible, the federal government should disburse payments directly and automatically (i.e., without requiring the filing of a tax return) to Puerto Rico residents who are beneficiaries of Social Security or certain veterans payments. The declining population, a long-term recession and extensive hurricane damage have left Puerto Rico with a largely poor and elder population, both factors that increase vulnerability to the disease. SAN JUAN, Puerto Rico—Nowhere else in the United States has the recession caused such economic and social upheaval as on this Caribbean island, the home or temporary refuge of 3 million Americans. For instance, the federal government provides Puerto Rico with fixed sums of money — which do not rise automatically when need increases — to finance critical programs such as Medicaid, the Commonwealth’s equivalent of SNAP (known in Puerto Rico as the Nutrition Assistance Program, or NAP), and Supplemental Security Income (known in Puerto Rico as Aid for the Aged, Blind, and Disabled).  Moreover, unlike SNAP, NAP doesn’t automatically expand to meet increased need when the economy turns down. A few clouds. racist or sexually-oriented language. The amount available to the Puerto Rico Treasury to distribute will equal the aggregate benefits that would have been provided to residents of Puerto Rico if a mirror tax system had been in effect, as estimated by the U.S. Treasury.  CBPP, “Policy Basics: How Many Weeks of Unemployment Compensation Are Available?” April 28 2020, https://www.cbpp.org/research/economy/policy-basics-how-many-weeks-of-unemployment-compensation-are-available#ui-map. The economy is going to be very weak," Negrón added. He opined that the current levels of safety and sanitation will impact several generations, altering consumer behavior and brining new opportunities for business reinvention.  Dorothy Rosenbaum, “Latest Coronavirus Response Package Doesn’t Boost SNAP – the Next One Should,” CBPP, March 27, 2020, https://www.cbpp.org/blog/latest-coronavirus-response-package-doesnt-boost-snap-the-next-one-should; and Dottie Rosenbaum, Stacy Dean, and Zoë Neuberger, “The Case for Boosting SNAP Benefits in Next Major Economic Response Package,” CBPP, April 22, 2020, https://www.cbpp.org/research/food-assistance/the-case-for-boosting-snap-benefits-in-next-major-economic-response-package. While the mainland U.S. added millions of jobs following the Great Recession, Puerto Rico never got back on its feet. Starting Sunday, I will basically spend the night in each of the above cities before returning to Puerto Rico.  See press release from the Puerto Rico Treasury Department, May 1, 2020, http://www.hacienda.gobierno.pr/sobre-hacienda/sala-de-prensa-virtual/comunicados-de-prensa/gobernadora-vazquez-garced-anuncia-aprobacion-del-plan-de-distribucion-del-pago-de-impacto-economico-de-1200. In Cleveland, we will check my eyes, but I can tell you the surgery went very well. Over the past decade, well over 500,000 residents have moved off the Commonwealth in search of better opportunities — the equivalent of Miami or Atlanta losing its entire population. Cleveland, Chicago, Dallas, Austin, Dallas, and Back Home to Puerto Rico. "Among Puerto Rico’s greatest economic challenges are chronically high poverty, especially among children, and low labor-force participation. The economy likely remained downbeat at the outset of the new fiscal year—which began in July—after economic activity started to contract in March due to the outbreak of the pandemic and regular earthquakes.  More funding is needed in Puerto Rico to help families afford food and boost overall consumer spending while the economy remains weak.  Chad Stone and Sharon Parrott, “Labor Market Conditions Should Determine Duration, Size of COVID-19 Relief Measures,” CBPP, April 13, 2020, https://www.cbpp.org/research/economy/labor-market-conditions-should-determine-duration-size-of-covid-19-relief-measures.  In 2019, Puerto Rico introduced its own, locally funded EITC, which is helpful.  See videoconference between Puerto Rico Resident Commissioner Jenniffer González and Puerto Rico Treasury Secretary Francisco Parés, “¿Tienes dudas sobre cómo van a distribuir los $1,200?” El Nuevo Día, May 1, 2020, https://www.elnuevodia.com/noticias/locales/nota/tienesdudassobrecomovanadistribuirlos1200-2565626/. In May 2017, the federal board filed Puerto Rico's bankruptcy, the largest ever in the $3.8 trillion municipal-bond market. The economy is quite weak and I think the aspiration should be to return to the way we were before COVID-19 and the earthquakes," Rivera said. Recession Will Have Ripple Effect On Puerto Rico's Economy, Everything that happens on the mainland has a direct effect on the local economy, Brenda A. Vázquez Colón, The Weekly Journal.  For a discussion of fiscal policies effective in fighting recessions, see Chad Stone, “Fiscal Stimulus Needed to Fight Recessions: Lessons From the Great Recession,” CBPP, April 16, 2020, https://www.cbpp.org/research/economy/fiscal-stimulus-needed-to-fight-recessions. 2 Puerto Rico’s population last saw modest increases in the 1990s, and in recent years has experienced accelerating declines.  CBPP, “How Much Will States Receive Through the Education Stabilization Fund in the CARES Act?” April 3, 2020, https://www.cbpp.org/research/state-budget-and-tax/how-much-will-states-receive-through-the-education-stabilization-fund.  Annie E. Casey Foundation Kids Count Data Center, “Children in poverty (100 percent poverty) in Puerto Rico,” https://datacenter.kidscount.org/data/tables/43-children-in-poverty-100-percent-poverty?loc=53&loct=4#detailed/4/any/false/37,871,870,573,869,36,868,867,133,38/any/321,322. "In 2019 we had moderate growth, but the coronavirus has created gigantic challenges at the trade level, so we will see an increase in bankruptcies, unemployment, and the closure of between 10,000 and 12,000 businesses. In Poor Regions, Easing Virus Lockdowns Brings New Risks, Moderna on Track for Large COVID-19 Vaccine Test in July. U.S. media announced that, according to a survey by the National Association of Business Economics (NABE) made to 45 economists, the U.S. is in a recession and will remain that way during the first half of the year. Puerto Rico has been ravaged by economic recession over the past thirteen years. Be Proactive.  Judith Solomon, “Puerto Rico’s Medicaid Program Needs an Ongoing Commitment of Federal Funds,” CBPP, April 22, 2019, https://www.cbpp.org/research/health/puerto-ricos-medicaid-program-needs-an-ongoing-commitment-of-federal-funds. A recession in the United States could affect the exports of manufacturing companies on the island because that is its main market. You have permission to edit this article. The same could happen in Puerto Rico, which has been in a recession for more than a decade, further aggravated by the effect of hurricanes, earthquakes, and COVID-19, with a direct effect on residents and business owners. Yet, Puerto Rico residents do not have access to the same assistance that is available to people facing such challenges in the mainland United States. Puerto Rico has been in recession virtually since 2006, when a federal tax break for corporate income expired, prompting many businesses to leave.  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