- Puerto Rico’s economy is a mess, with unemployment of nearly 9% and more than 4 in 10 residents living in poverty.
- Hurricane Maria dealt a major blow to the island’s tourism sector after it was already in a debt crisis.
- A mass exodus of people from the island also has worsened economic inequality.
- “The total mismanagement of the economy is affecting the quality of life here,” said one economist in Puerto Rico.
Puerto Ricans poured onto the streets of San Juan and other cities this week to protest a government many in the U.S. territory see as corrupt and even contemptuous of residents. Public fury at leaked messages exposing homophobic and misogynistic remarks by Gov. Ricardo Rosselló and his confidantes is igniting deeper unhappiness at the island’s woeful economy, including the slow pace of recovery after Hurricane Maria.
“The whole country is protesting for the same thing, and it’s not just about the things that were said in the chat,” said Chantal Benet, senior economist at local consulting firm Inteligencia Economia, referring to the more than 800 pages of Telegram messages published by Puerto Rico’s Center for Investigative Journalism. “It’s about how the government treated funds it was allocated after Maria and how the death toll was handled. People were already mad because of the government’s lack of interest in helping them after Maria.”
Middle- and lower-income households in Puerto Rico have suffered the most: 30,000 families remain without roofs over their heads as the two-year anniversary of Maria, which battered the the island in September 2017, approaches. The storm also flattened tourism, a critical source of income for the island.
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“The entire tourism sector, which had been doing well, was completely wiped out for the 2017-2018 season,” said Daniel DiSalvo, a senior fellow at the Manhattan Institute who has studied the Puerto Rican economy.
Inequality has risen in Puerto Rico in wake of the storm. Many middle-income families, particularly those with children, fled the island for Orlando, Florida, and other cities on the mainland; those who remained tended to be either too poor to relocate or wealthy enough that they were insulated from Maria’s effects.
“There was a lot of outmigration to Orlando, New York, Connecticut and elsewhere,” DiSalvo, said. “It basically had the effect of exacerbating economic inequality,” he said.
This week’s protests have exacerbated the problems. Citing the unrest, Royal Caribbean on Wednesday diverted two cruise ships — carrying a total of more than 8,000 passengers — from San Juan, dealing a blow to the commonwealth given its reliance on tourism. The Puerto Rico Tourism company estimates the cruise line’s decision resulted in a loss of $650,000 in spending.
Uncharted terrain
“There has never been a political crisis of this dimension,” Gustavo Velez, founder of Inteligencia Economica, told CBS MoneyWatch. We still haven’t recovered from Hurricane Maria, and we are heading toward the second anniversary of the impact of the hurricane. So people are skeptical and cautious, and there is a lot of anxiety.”
“I have clients in retail, restaurants, supermarkets and in most sectors of the economy — we haven’t yet seen an impact on consumer behavior. Other than the two cruise ships, the economy so far is behaving more or less OK,” he said.
While Congress has allocated $42.5 billion in disaster aid for Puerto Rico, the funds have been slow to come in. That is stoking fears that the bedraggled economy could stall.
“The injection of federal money and private insurance money gave the island a boost in economic activity,” Juan Lara, an economist at the University of Puerto Rico told CBS MoneyWatch. “But the economy right now is showing signs of slowing because the money hasn’t been flowing into the economy at the pace we expected it to be,” he said.
“Unfortunately, we are now in a situation where we are entirely dependent on the federal government allowing the money to flow,” Lara said.
Rampant poverty, high unemployment
Other economic data underline to what extent most residents of the embattled island have been left behind.
The median household income for Puerto Ricans in 2017 was $19,343, down 5.5% from a year earlier, according to the latest available Census data. By contrast, median income in U.S. rose 2.6% to $60,336. Income in the District of Columbia, where it was the highest in the country, was $82,372 — four times that of Puerto Rico.
The island, with a population of 3.2 million, has an even lower per capita income of just over $12,000, according to the latest available census data. And its poverty rate is a staggering 44%, compared with roughly 12 in the U.S.
Unemployment figures are also bleak. As of May, Puerto Rico had a jobless rate of 8.5%, more than double the most recent U.S. rate of 3.7%. The lack of employment opportunities have led roughly 600,000 Puerto Ricans to leave the island since 2010, Velez said.
While such trends aren’t new, the dire economic backdrop helps explain why long-held frustrations are now boiling over following the message leak.
“The total mismanagement of the economy is affecting the quality of life here,” Velez said. “The middle- and lower-income classes have really suffered, and that’s the reason why people are still really frustrated — because people were expecting the government to execute all the reforms and measures to get Puerto Rico back to normal and out of its financial crisis, so that’s why there is this social unrest and explosion.”
