Puerto Rico board’s population number shown to be too pessimistic

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The U.S. Census released a population figure for Puerto Rico that revealed the Puerto Rico Oversight Board’s population assumption to be too pessimistic.

On Tuesday the Census Bureau reported Puerto Rico’s population on April 1, 2020 at 3.29 million. In the fiscal plan the board approved Friday, the board estimated the island’s population to be 3.03 million on July 1, 2019. In the fiscal plan the board projected Puerto Rico’s population is going down over time.

The Census figure is 8.4% more than the board’s number. The Census figure was based on an actual count and the board’s number was an estimate.

The board uses its estimate of the population and its projections for continued population decline in the fiscal plan’s projections of Puerto Rico government revenues to support bonds over the next several decades. It projected that the government will start running deficits in fiscal 2038 unless additional measures are taken beyond those in the fiscal plan.

Tuesday’s Census number for July 1, 2020 was down 11.8% from the July 1, 2010 Census figure for the island. It was also down 15.7% from the modern population high of 3.89 million, which the Census estimated for July 1, 2004.

The Census count also exceeded its own estimate for the April 1, 2019 population of 3.19 million by 2.9%.

Since the island’s population probably declined in April 1, 2020 from April 1, 2019, the Census’ estimate for April 1, 2019 was wrong, said Mario Marazzi Santiago, Puerto Rico economist and member of the U.S. Census Scientific Advisory Committee. Marazzi Santiago said he was speaking of his own views and not those of the committee.

Marazzi Santiago said he wasn’t surprised by the numbers.

After Hurricane Maria hit in September 2017 many commentators said there was a major emigration from the island. “Hype” made population estimates smaller than what turned out to be the case, Marazzi Santiago said, adding that w
hile some people left the island after Maria, some of them came back.

The decline in the island’s population stems both from net migration and a low birthrate, Marazzi Santiago said. Even if the Census overestimated the decline, the decline is continuing and will continue.

“Puerto Rico’s population loss and declines in working-age residents will compound the economic challenges caused by very weak labor force participation and low levels of educational attainment compared with the mainland,” said Moody’s Investors Service Associate Vice President Pisei Chea. “Puerto Rico’s long-term economic prospects will depend on its ability to reverse these long-running demographic trends and encourage new employers to set up shop by providing an educated workforce.”

The COVID-19’s expansion of stay-at-home work may persist after the pandemic. This may make living in Puerto Rico while working for state-based positions easier and more common, Marazzi Santiago said.

In other news on Puerto Rico’s economy, the Economic Development Bank for Puerto Rico said the island’s Economic Activity Index was up 0.7% in January from December, and up 0.4% in February from January. The bank released the report Tuesday.

The February index value was down 2.3% from a year earlier.

In the Tuesday report, the bank said it had been too pessimistic in its estimates of the index in fiscal 2020 and the first six months of fiscal 2021. In its annual revision to the index, the bank said the index dropped 1.9% rather than by 2% in fiscal 2020 compared to the prior fiscal year. In the period July through December 2020, the index fell 5.4% rather than 7.1% from a year earlier.

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