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H.CaleroConsulting Group, Inc.
Puerto Rico 2014 - 2016
Consumers:
A Moving Target
ADJUNTAS
AGUADA
AGUASBUENAS
AIBONITO
AÑASCO
ARECIBO
BARRANQUITAS
CABOROJO
CAGUAS
CAYEY
CEIBACIALES
CIDRA
COAMO
COMERIO
FLORIDA
GUANICA
GUAYAMA
GURABO
JAYUYA
JUANA
DIAZ
JUNCOS
LAJAS
LARES
LAS MARIAS
MANATI
MARICAO
MAYAGÜEZ
MOCA
NAGUABO
OROCOVIS
PONCE
RIOGRANDE
SALINAS
SANGERMAN
SANJUAN
SANLORENZO
SANSEBASTIAN
SANTAISABEL
TOAALTA
TOABAJA
UTUADO
VEGAALTA
VEGABAJA
VILLALBA
YABUCOAYAUCO
Where is Puerto Rico today
Gross Domestic Product 13 $103b
Gross National Product 13 $71b
Population 13 3.6m
Share of Manufacturing in GDP 47%
Income Per Capita 13 $17,413
Total Employment 7/14 0.99m
Inflation 7/14 1.3%
Unemployment rate 7/14 13.9%
Participation rate 7/14 39.6%
2hcalero.comSource: PR Planning Board, US Census Bureau, PR Department of Labor.
It is the worst recessionBase year = 100 (year prior start of recession)
2006-13
82-84
01-02
1975
Years 3hcalero.comSource: PR Planning Board & index by HCCG
Less people, fewer jobs
Total employment (Peak before recession=100)
Months
78 78.4
Investment went down
Investment as % of GNP
Recession
5hcalero.comSource: PR Planning Board
PR exports slowing down
$Billion
6hcalero.com
Trend
Banking performance
Total assets down Total loans fall
Profitability is lowBank delinquency
-38% -22%
$ B
$ M
$ B
The public debt challenge
PR total public debt, $ billion
As of March, 2014 $73.5b
$14 b
$47 b
$24 b $49.2 b
$15 b
$4.1 b
8hcalero.comSource: PR Government Development Bank
$5.0 b
The economy relies on consumption
Consumption as % of GNP, 2013
Excludes mortgage debt
Risk of personal debt as % of
personal income, 2013
Bullet proof real consumptionBase year = 100 (year prior start of recession)
2006-14
82-83
01-02
1975
Years11hcalero.comSource: PR Planning Board & index by HCCG
Current recession & real
consumption2006 = 100
ServicesDurable
Total
Non
durable
Years12hcalero.comSource: PR Planning Board & index by HCCG
PR consumption & disposable
income2006 = 100
Disposable
Income
Consumption
Years13hcalero.comSource: PR Planning Board & index by HCCG
Consumers’ debt
$ million
Families’ financial assets plunged
$ million
15hcalero.com
Falling homeowner’s equity
PR house price index
Total growth = -13%
PRSI continues in recession
Monthly PRSI
Sep 12, 2014
2,190
Loss of $14
billion in wealth
20,208
2014
PR posts mixed results
HCCG quarterly economic Indices, 2Q 2014
Since 2005, PR’s population
began shrinking
Less population while seniors
explodePR population, million
The gates are open in PR
Net migration (emigrants – inmigrants), 000s
Est
’13–’19
-432
’11–’12
-108
-540
Young people are leaving PR
Population by age group 2012, %
Emigrant PR population
Men Women Men Women
Gen Y – those born between 1976 and 2000
Middle class leaving PR
Median income, $000s
Emigrants
Total
population
Years23hcalero.comSource: PR Institute of Statistics
Women are winning
PR population by sex, %
Source: US Census Bureau
Maturing Population
Median Age
Years
Millennials still prevail in 2013
Population by Age Group
Who are the biggest spenders?
US Consumption Expenditures Survey 2013
27hcalero.com
Which groups exhibit most growth
US Consumption Expenditures Survey 2003/2013
% growth
28hcalero.com
Spending Patterns: <25
– They spend more on Housing, Transportation,
and Food
– Compared to other age groups, they spend
more on eating out
– Most growth from 2003 to 2013 has been in
Housing and Insurance
– Least growth has been on Transportation
• This group spends the most
• It includes baby boomers who also
spend the most on Housing,
Transportation, and Food
• Compared to other age groups, they
spend more on entertainment
• Most growth is in Healthcare
• Least growth is in Transportation
Spending Patterns: 45-54
Spending Patterns: 65+
• This group spends mostly on
Housing, Transportation, Food, &
Healthcare.
• Most growth is in insurance and
pensions
• Least growth is on Food
Full recovery will take time…Forecast of US and PR real GNP growth
FY
Forecast
32hcalero.comSource: PR Planning Board & HCCG PR Macroeconomic Model
Years to return to 2005 GNP
Real GNP, $ million
13 years
33hcalero.comSource: PR Planning Board & HCCG estimates
Years to return to 2005 GNP
Real GNP, $ million
4 years
13 years
34hcalero.comSource: PR Planning Board & HCCG estimates
Consumption & Income
History Projected
% change, real 2011 2012 2013 2014 2015 2016
Consumption 1.5% 2.3% 2.4% 2.2% 1.1% 1.6%
Dispos.
Income
1.9% -0.2% 1.6% -0.5% -0.8% -0.4%
Baseline
35hcalero.comSource: PR Planning Board & HCCG PR Macroeconomic Model
Growth of Internet users in PR
Annual Growth = 14%
000s
Source: World Bank, US Census estimates of population
Cell phones enhance mobility
Mobile cellular subscriptions (per 100 people)
Source: World Bank
PR 7% annual growth
2012
Ecommerce continued growth
Ecommerce as % of total sales
38hcalero.comSource: EPA
The rise of social network
US social network users, million
39hcalero.comSource: Facebook & Twitter
How knowledge speeds decisions
Without effective knowledge platform
40
Time
Data gatheringAnalysis
Response
With effective knowledge platform
Time
Data gathering
AnalysisResponse