Although it is uncertain whether Puerto Rico has rebounded from the economic recession spurred by the COVID-19 pandemic, there are several indicators that point to a short-term recovery, an economist explained.
Heriberto Martínez Otero, director of the House Committee on Finance and Budget, explained to THE WEEKLY JOURNAL that, unlike the U.S. mainland and other industrial powers, Puerto Rico releases annual reports instead of quarterly insights. “In Puerto Rico, we have to wait until February or March  for the growth data to come out to know if we ended the recession or not,” the economist said.
However, he noted that there is indeed a recovery, which he attributed to the reactivation of the commercial sector and federal funding, plus accumulated savings that were not spent while business operations were restricted.
“The relaxation of these restrictions, added to the possible savings by families that are again beginning to spend and going to stores and restaurants, is causing a rise in employment and that rise in employment definitely represents that there is already an economic reactivation again,” he stated.
In fact, the most recent data published by the P.R. Department of Labor and Human Resources indicates that the seasonally adjusted employment estimate in June 2021 reflected 980,000 workers. When comparing this figure with the data for May 2021 (978,000), an increase of 2,000 people in the labor market was observed. In relation to June 2020 (971,000), this represents a year-on-year increase of 9,000 people employed.
Martínez added that there are sectors that have yet to take off, naming some tourism segments as an example, although these have been impacted globally and local tourism entities have affirmed that the island is poised to surpass pre-pandemic levels of prosperity in the sector. Moreover, he affirmed that all indicators point to short-term recovery, lest this projection is hindered by another rise in COVID-19 cases or other circumstances.
“I think we are creating jobs, there are job offers that have not yet been filled, and there are going to be a lot of people who are going to move from [receiving] federal funds to look for those jobs. The other important thing is that there are still billions in federal funds, either by FEMA, CDBG-DR or the different rescue plans. So, there is going to be a lot of liquidity in the cooperative system, a lot of liquidity in the local banking system, and a lot of liquidity in the government. That should be positive for the economy for at least the next three to four years,” Martínez asserted.
Shortest Recession in the US
Meanwhile, the recession that began in the U.S. with the onset of the coronavirus pandemic in early 2020, officially ended in April 2020. That makes it the shortest downturn on record, according to the committee of economists that determines when recessions begin and end. Previously, the shortest recession lasted six months, from January through June in 1980.
The U.S. economy reached a peak in February 2020, the National Bureau of Economic Research’s Business Cycle Dating Committee said. The recession began the following month and ended in April. The NBER said the recession ended that month because that is when the economy reached its lowest point in terms of jobs and output. The end of the recession does not mean the economy has fully recovered. It only began to rebound in May 2020, the committee said.
The recovery has continued in fits and starts for the past year and by some measures is nearly complete. The economy’s output of goods and services likely reached its pre-pandemic level in the April-June quarter, analysts estimate.
On July 29, the federal government will release its first estimate of the economy’s gross domestic product — the total output of goods and services — for the second quarter. That will confirm whether the economy as a whole has reached its pre-pandemic level.
While output has likely fully recovered, the U.S. economy still has 6.8 million fewer jobs than before the pandemic. The unemployment rate remains elevated at 5.9 percent, compared with 3.5 percent before the downturn. The fact that output has likely fully recovered while jobs have not will raise concerns that companies have figured out how to produce goods and services with fewer people. Businesses have stepped up their investments in machinery, computers and software, which could enable them to automate some work.
Still, employers are also desperate to hire, and much of the jobs gap could be closed in the coming months. Employers added 850,000 jobs in June, the most in nearly a year, and many economists forecast hiring will remain at those levels in the coming months. Employers slashed more than 22 million jobs in March and April of last year, the sharpest cuts since World War II. But hiring resumed in May.
-The Associated Press contributed to this story.