What Puerto Rico's problems mean for the US economy
Here's SocGen's Aneta Markowksa on Puerto Rico as it moves closer to default.
Will it impact the US economy?
The Commonwealth of Puerto Rico is a US territory. As such, it is directly overseen by the US federal government, but unlike states it does not share sovereignty with the federal government. Importantly, Puerto Rico is excluded from US economic statistics and is neither a part of GDP nor employment data. There may be some cost to the US government through various aid and entitlement programs which would serve as automatic stabilizers in the event of a deep economic contraction in the Commonwealth (e.g. Puerto Rico residents are eligible to receive the same Medicare, Medicaid or unemployment insurance benefits as US residents). Of note, the Commonwealth is also part of the Federal Reserve system and belongs to the Second District overseen by President Dudley. The New York Fed has been warning about Puerto Rico's deteriorating fiscal situation for some time (e.g. here).
- I spent $2,000 for 7 nights in a 179-square-foot room on one of the world's largest cruise ships. Take a look inside my cabin.
- Saudi Arabia wants China to help fund its struggling $500 billion Neom megaproject. Investors may not be too excited.
- One of the world's only 5-star airlines seems to be considering asking business-class passengers to bring their own cutlery
- From terrace to table: 8 Edible plants you can grow in your home
- India fourth largest military spender globally in 2023: SIPRI report
- New study forecasts high chance of record-breaking heat and humidity in India in the coming months
- Gold plunges ₹1,450 to ₹72,200, silver prices dive by ₹2,300
- Strong domestic demand supporting India's growth: Morgan Stanley