Puerto Rico’s Economic Plight Reminds Top Banker of NYC in 1970’s

By DYLAN CAMPBELL

Federal Reserve Bank of New York President William Dudley said on Thursday that New York’s recovery from the economic ruin of the 1970’s gave him hope for the future of Puerto Rico.

“New York City went through a similar crisis during the 1970s: its population was declining, the economy was in a five-year recession, and the city had literally run out of money to pay its employees and could not borrow in the debt,” said Dodley at a press briefing on Thursday. “While Puerto Rico’s path to prosperity will not look exactly like that of New York or other cities, history can provide valuable lesson, as well as hope for a better future.”

Like New York City in the 1970’s, Puerto Rico has been facing an economic downturn since 2006, was barred from borrowing more money and struggling with a depleting workforce and failing infrastructure. Their struggles were only worsened by two category five hurricanes in August and September of 2017.

“Hurricanes Irma and Maria did immense damage to Puerto Rico and the U.S. Virgin Islands, severely exacerbating what were already very difficult economic conditions,” said Dudley.

The full extent of the damage and the time it will take for repairs was unknown.   Puerto Rico has still not be returned to full power and the amount of property damage and jobs  and population lost are still “uncertain.”

After Maria and Irma hit Puerto Rico people migrated to the mainland United States to escape the destruction while tourism halted. According to the presentation, 150,000 people have left Puerto Rico including tourists that have not been replaced. The Bank’s research officer, Jason Bram, said the question wasn’t if people will relocate but “the question is how many.”

Of the top five worst natural disasters for local job loss, post-Maria ranks fifth with 4.2 percent job loss. Bram said that these numbers may be underestimated because the stats do not include those that work-off-the-books and those who still have their jobs, but have had hours cut or lost tips.

According to Dodley, the island has hope in its bilingual workforce, access to the U.S. mainland, its multinational corporations and the opportunity to “start from scratch” with its energy source, with an “emphasis on renewable energy.”