Photographer: John Taggart/Bloomberg

Puerto Rico Devastation Largely Invisible in U.S. Economic Data

Don't bother looking in employment or GDP figures
Updated on

A devastating hurricane that flooded Puerto Rico’s cities, left its infrastructure in shambles and wiped out its electricity grid will mostly go unnoticed in U.S. economic data.

The commonwealth, which has been a U.S. territory for more than a century and is home to 3.4 million people, bears virtually no weight on the indicators analysts track to assess the health of the world’s largest economy.

Territorial-level figures on Puerto Rico show a shrinking labor market and economy. But the payroll figures aren’t included in the main monthly U.S. employment report. Its GDP isn’t tallied along with the mainland’s quarterly growth data, which reflect only the value of all goods and services produced within the 50 states and the District of Columbia — leaving out islands and territories (even while reporting some of them separately).

Very limited official data, following years of little funding and a lack of integration between Puerto Rican and U.S. federal agencies, is one of the main reasons, according to Arthur MacEwan, professor emeritus of economics at the University of Massachusetts in Boston. The island still uses 1954 prices to determine gross national product and its components, which “makes it almost meaningless,” MacEwan said.

“It’s hard to get a picture of what’s happening, we know that the economy had been going downward before the hurricane, but we’d like to know a little more than just a direction,” said MacEwan, who also co-wrote a paper submitted to the Congressional Task Force on Economic Growth in Puerto Rico.

Hurricane Maria smashed into the island last month, leaving its frail infrastructure in disarray. Puerto Rico’s battered energy grid alone could cost billions to rebuild. The economy of the U.S. territory, which was already bankrupted by debt, faces another problem: about about a third of Puerto Rico’s GNP — as much as $21 billion — is produced off the books. That makes its economy even more difficult to measure.

The government releases that could offer the clearest look at the economy in the aftermath of Hurricane Maria are weekly applications for unemployment insurance. Yet those figures were estimated by the Labor Department for the week ended Sept. 23, which the department reverts to in cases where it has difficulty compiling full data.

Thursday’s jobless-claims figures for the week ended Sept. 30 may provide a better look at the storm’s impact, while state employment numbers on Oct. 20 are set to show the island’s payroll count for September. But the hurricane’s full effects may take some time to emerge as the territory struggles to process claims that take time for displaced workers to file. The Labor Department says on its website that it’s “reviewing all aspects of data collection and estimation as it pertains to producing and publishing estimates” for Puerto Rico employment.

Data collection and reporting requirements for Puerto Rico should be the same as for the 50 states for a future recovery, MacEwan said.

“It’s really something that would need to be fixed as part of reviving the economy,” he said. “But in the medium term, this is not getting priority.”

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