Puerto Rico’s economy seems to be bouncing back from the effects of Hurricane Maria, an economist with the Federal Reserve Bank of New York said Thursday.
Puerto Rico’s employment declined 4.2 percentage points in the month after Maria but has since climbed a percentage point or two, said Officer Research Economist Jason Bram, referring to the U.S. Bureau of Labor Statistics’ establishment survey data.
While the decline is a steep drop-off compared with what happens after most hurricanes, it pales next to the 29.7% decline that followed Hurricane Katrina in the metropolitan New Orleans area in 2005, he said.
New York Fed President William Dudley said that many in Puerto Rico had backup electricity generators before the hurricane. Bram said use of generators may have mitigated the impact of the electrical outage on the island’s economy.
On Oct. 26 the Rhodium Group released a report that said Maria’s impact on Puerto Rico’s and the U.S. Virgin Islands’ electrical system had created the biggest outage in U.S. history, as measured by the amount of electricity lost in customer hours. The outage’s hours have expanded far beyond that. According to the Puerto Rico Electric Power Authority, on Wednesday 16% of customers still had no public electricity service.
Employment in the U.S. Virgin Islands fell in each month through December, but at lower rates each month. Bram said the Virgin Islands economy seems to be taking longer than that of Puerto Rico to recover.
He noted that on the Virgin Islands the amount of light detected in satellite images at night, which is sometimes used as a measure of economic activity, was in January about 56% of what it had been before the hurricanes. This is despite the fact that nearly 99% of electricity service has been restored on these islands and is much lower than that found in Puerto Rico, which in January was 76% as bright.
In September through November there was net emigration from Puerto Rico of 179,000 people, according to airport statistics, Bram said. From August through November the net emigration was about 160,000 above the trend.
Bram said further recovery on Puerto Rico and the Virgin Islands will be affected by the degree of outmigration, external aid, fiscal reforms and other reforms.
Regarding Puerto Rico Dudley said, “lowering the costs and disincentives to doing business, helping island residents develop and use their human capital, and improving labor market opportunities are all important steps that must be taken.”
Dudley said that the Puerto Rico Oversight Board and the commonwealth government will be making “difficult choices” about fiscal matters in the coming months. “It will be critically important that these decisions put the commonwealth on a sustainable fiscal path going forward.”
“The New York Fed will continue to help in the best ways we can – by providing independent research and analysis, and by leveraging our convening authority to bring together stakeholders to share expertise, explore opportunities, and provide information to those who need it most,” Dudley said.