It appears that the Puerto Rican spin machine of Governor Luis Fortuño is moving on at full speed, even with current polls showing that 54% of the island thinks Fortuño’s policies are doing harm to the world’s oldest colony, a territory of the United States since 1898.
Today, Fox News Latino (a media organization that we think is one of the most responsible around when it comes to US Latino issues) published an opinion piece by Justin Vélez-Hagan, National Executive Director of The National Puerto Rican Chamber of Commerce. With the headline: Puerto Rico’s Unemployment Rate Plummeting: Proof that Conservative Fiscal Policy Can Quickly Turn an Economy Around?, a casual observer would think that this is a news article and that serious journalism had occurred. Our inboxes were flooded with emails from pro-statehooders who claimed political victory. You see, you crazy socialist Marxist (me), Puerto Rico is coming back! However, if one were actually to read the article, you would note that this is piece is actually an opinion piece that only serves as a sounding board for Fortuño’s fiscal policies.
As the opinion piece states:
Despite the naysayers, protestors, and congressional opponents who doubt the predicted effects, few can argue the current successes of these policies. Since 2008, Puerto Rico’s deficit has dropped by nearly 70%, credit rating upgrades have allowed for increased bond sales and a reduction in interest payments, and new and existing businesses are taking advantage of lower tax rates and a decreased bureaucracy. Notwithstanding these immense improvements that have come as a result of Governor Fortuño’s admittedly conservative philosophies, in order to convince the public that the economy has improved, jobs need to be created.
Puerto Rico may have just provided the political evidence that effectively sways the minds of the public, finalizing the debate surrounding conservative fiscal policy. Since March of this year, Puerto Rico has exhibited the greatest decline in unemployment numbers anywhere in the country, allowing for the creation of more jobs at a faster pace than most of the states. Although Puerto Rico still has the country’s highest employment rate at 14.9% (latest, unrevised June figures), if the trend continues it will be one of the biggest turnarounds in recent economic history.
Easy there, cowboy. Let’s break this down a bit:
- While Vélez-Hagan talks about credit upgrades in Puerto Rico, he (and FNL’s fact checkers) failed to mention that Puerto Rico suffered a credit downgrade by Moody’s on August 8. As Moody’s said on August 8: “The downgrade to Baa1 and the assignment of a negative outlook reflect the commonwealth’s continued financial deterioration of the severely underfunded retirement systems, continued weak economic trend, and weak finances, with a historical trend of funding budget gaps with borrowing. Needed retirement system reforms, in our view, may exacerbate strains on the commonwealth’s economy and budgetary finances in the coming years.”
- According to the US Bureau of Labor Statistics, Puerto Rico actually had a 15.9 unemployment rate in January, 2011, which climbed to 16.9 by March, 2011. As of June, 2011, the unemployment rate is back at 14.9, but it must be said that these are JUNE numbers, two months before US debt ceiling debacles and Moody’s August 8 downgrade. Fortuño’s critical time is NOW, where he must hope that jobs will grow in August and September amid a negative credit downgrade. We think that with a recent credit downgrade, jobs will be lost, not gained.
- Since Puerto Rico does not have a large population, the REAL JOB NET GAIN from January until June was 6.000 jobs. According the US labor statistics, Puerto Rico had 1.081 million employed individuals on the island in January of 2011 and 1.087 million employed individuals in June of 2011. 6,000 jobs gained. Economic miracle? So while Vélez-Hagan talks about unemployment plummeting via percentages, we are really talking about 6,000 jobs gained over the course of 6 months. That is 1,000 net gain jobs per month. And this was before the WAPA poll came out in July that says 54% of all Puerto Ricans disapprove of Governor Fortuño’s policies.
- By the way, one of Puerto Rico’s largest industries and the SECOND LARGEST PERCENTAGE INCREASE IN JOB GROWTH were government jobs. In fact, of the 1.087 million jobs in Puerto Rico, roughly 271,000 of those jobs are government jobs. That is roughly between 25% and 30%. Also, government jobs from January of 2011 until June of 2011 increased 4.3%, second to a 6.6% increase in information jobs. So let us get this straight, Governor, you want to decrease the size of government, but the second-largest job increase has occurred in the government sector?
- Last time we checked, Puerto Rico stil has 191,000 unemployed people out of a civilian labor force of 1.278 million people. Vélez-Hagan’s logic is like saying that his baseball team, which was down 11-0, had just won the pennant because they scored 3 runs in the 7th inning to make the score 11-3.
- Finally, Vélez-Hagan drives a major point with a logic that still confounds us. Yes, Puerto Rico has the largest unemployment rate in the United States (if it were to be categorized as a state), but IF the current trend continues (remember, the unemployment rate rose 1 percentage point in two months before going down two percentage points form March until June, leading to 6,000 net jobs gained) then it will prove Fortuño’s success. If the last few months of fiscal chaos have shown us, THAT IS ONE BIG IF.
- By the way, the industry with the biggest job loss on the island the last six months? Construction. That is not a good sign.