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H.Calero Consulting Group, Inc. Consumers: A Moving Target Puerto Rico 2014 - 2016 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% VEGA BAJA MANATI TOA BAJA VEGA ALTA ARECIBO MOCA AGUADA SAN JUAN TOA ALTA RIO GRANDE FLORIDA SAN SEBASTIAN CIALES AÑASCO LARES COMERIO CEIBA JUNCOS NAGUABO CAGUAS OROCOVIS LAS MARIAS MAYAGÜEZ GURABO AGUAS BUENAS UTUADO BARRANQUITAS JAYUYA CIDRA ADJUNTAS MARICAO SAN LORENZO AIBONITO VILLALBA CAYEY COAMO SAN GERMAN CABO ROJO YABUCOA YAUCO PONCE JUANA DIAZ LAJAS SANTA ISABEL SALINAS GUAYAMA GUANICA hcalero.com Source: PR Planning Board, US Census Bureau, PR Department of Labor. 2 It is the worst recession Base year = 100 (year prior start of recession) 1975 01-02 82-84 2006-13 Source: hcalero.com PR Planning Board & index by HCCG Years 3 Less people, fewer jobs Total employment (Peak before recession=100) 78 78.4 Months Investment went down Investment as % of GNP Recession Source: hcalero.com PR Planning Board 5 PR exports slowing down $Billion Trend hcalero.com 6 Banking performance $B Total loans fall Total assets down $B -22% -38% Bank delinquency Profitability is low $M The public debt challenge PR total public debt, $ billion As of March, 2014 $47 b $73.5b $5.0 b $4.1 b $15 b $24 b $49.2 b $14 b hcalero.com Source: PR Government Development Bank 8 The economy relies on consumption Consumption as % of GNP, 2013 Risk of personal debt as % of personal income, 2013 Excludes mortgage debt Bullet proof real consumption Base year = 100 (year prior start of recession) 82-83 1975 01-02 2006-14 Source: hcalero.com PR Planning Board & index by HCCG Years 11 Current recession & real consumption 2006 = 100 Non durable Total Durable Source: hcalero.com PR Planning Board & index by HCCG Services Years 12 PR consumption & disposable income 2006 = 100 Disposable Income Consumption Source: hcalero.com PR Planning Board & index by HCCG Years 13 Consumers’ debt $ million Families’ financial assets plunged $ million hcalero.com 15 Falling homeowner’s equity PR house price index Total growth = -13% PRSI continues in recession Monthly PRSI 20,208 Loss of $14 billion in wealth Sep 12, 2014 2,190 2014 PR posts mixed results HCCG quarterly economic Indices, 2Q 2014 Since 2005, PR’s population began shrinking Less population while seniors explode PR population, million The gates are open in PR Net migration (emigrants – inmigrants), 000s ’11–’12 -108 Est ’13–’19 -432 -540 Young people are leaving PR Population by age group 2012, % Emigrant Men PR population Women Gen Y – those born between 1976 and 2000 Men Women Middle class leaving PR Median income, $000s Emigrants Total population Source: hcalero.com PR Institute of Statistics Years 23 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 hcalero.com 27 Which groups exhibit most growth US Consumption Expenditures Survey 2003/2013 % growth hcalero.com 28 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 Spending Patterns: 45-54 • 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: 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 Forecast FY hcalero.com Source: PR Planning Board & HCCG PR Macroeconomic Model 32 Years to return to 2005 GNP Real GNP, $ million 13 years hcalero.com Source: PR Planning Board & HCCG estimates 33 Years to return to 2005 GNP Real GNP, $ million 4 years 13 years hcalero.com Source: PR Planning Board & HCCG estimates 34 Consumption & Income Baseline 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% hcalero.com Source: PR Planning Board & HCCG PR Macroeconomic Model -0.5% -0.8% -0.4% 35 Growth of Internet users in PR 000s Annual Growth = 14% Source: World Bank, US Census estimates of population Cell phones enhance mobility Mobile cellular subscriptions (per 100 people) 2012 PR 7% annual growth Source: World Bank Ecommerce continued growth Ecommerce as % of total sales Source: hcalero.com EPA 38 The rise of social network US social network users, million Source: hcalero.com Facebook & Twitter 39 How knowledge speeds decisions Without effective knowledge platform Data gathering Analysis Response Time With effective knowledge platform Data gathering Analysis Time Response 40 Heidie Calero personally offers your clients, your management, or any special group, a live presentation on how the economy is performing. We use the latest available statistics and include our forecast on inflation, GNP growth, retail sales, and unemployment, among others. We use state-of-the-art presentation equipment, and professionallydesigned slide shows. The meeting is then, interactive and lively. We guarantee the presentations are easy to understand, avoiding economic jargon, and illustrating graphically the most complex concepts. These conferences are free for the subscribers of our newsletter Puerto Rico Economic Pulse. Ask for a live presentation. 416 Ponce de León Ave. suite 1111, San Juan PR 00918 T. 787.756-5715 F. 787.756.4078 [email protected]