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H.Calero

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%

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H.Calero

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  1. H.Calero Consulting Group, Inc. Consumers: A Moving Target Puerto Rico 2014 - 2016

  2. Where is Puerto Rico today GrossDomesticProduct 13 $103b GrossNationalProduct 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% Unemploymentrate 7/14 13.9% Participationrate 7/14 39.6% T OA VEGA BAJA BAJA MANA TI VEGA SAN AL T A JUAN ARECIBO T OA RIO AL T A GRANDE FLORIDA MOCA AGUADA SAN SEBASTIAN CIALES GURABO CEIBA AGUAS AÑASCO LARES UTUADO BUENAS JUNCOS NAGUABO COMERIO CAGUAS OROCOVIS LAS MARIAS BARRANQUIT AS JA YUY A CIDRA MA Y AGÜEZ ADJUNT AS MARICAO SAN LORENZO AIBONIT O VILLALBA CA YEY COAMO SAN Y ABUCOA GERMAN Y AUCO CABO PONCE JUANA ROJO DIAZ SALINAS SANT A GUA Y AMA ISABEL LAJAS GUANICA Source: PR Planning Board, US Census Bureau, PR Department of Labor.

  3. It is the worst recession Base year = 100 (year prior start of recession) 1975 01-02 82-84 2006-13 Source: PR Planning Board & index by HCCG Years

  4. Less people, fewer jobs Total employment (Peak before recession=100) 78.4 78 Months

  5. Investment went down Investment as % of GNP Recession Source: PR Planning Board

  6. PR exports slowing down $Billion Trend

  7. Banking performance Total loans fall Total assets down $ B $ B -22% -38% Bank delinquency Profitability is low $ M

  8. The public debt challenge PR total public debt, $ billion As of March, 2014 $73.5b $5.0 b $4.1 b $47 b $15 b $24 b $49.2 b $14 b Source: PR Government Development Bank

  9. The economy relies on consumption Consumption as % of GNP, 2013

  10. Risk of personal debt as % of personal income, 2013 Excludes mortgage debt

  11. Bullet proof real consumption Base year = 100 (year prior start of recession) 82-83 1975 01-02 2006-14 Source: PR Planning Board & index by HCCG Years

  12. Current recession & real consumption 2006 = 100 Non durable Total Services Durable Source: PR Planning Board & index by HCCG Years

  13. PR consumption & disposable income 2006 = 100 Disposable Income Consumption Source: PR Planning Board & index by HCCG Years

  14. Consumers’ debt $ million

  15. Families’ financial assets plunged $ million

  16. Falling homeowner’s equity PR house price index Total growth = -13%

  17. PRSI continues in recession Monthly PRSI 20,208 Loss of $14 billion in wealth Sep 12, 2014 2,190 2014

  18. PR posts mixed results HCCG quarterly economic Indices, 2Q 2014

  19. Since 2005, PR’s population began shrinking

  20. Less population while seniors explode PR population, million

  21. The gates are open in PR Net migration (emigrants – inmigrants), 000s ’11–’12 -108 Est ’13–’19 -432 -540

  22. Young people are leaving PR Population by age group 2012, % Emigrant PR population Men Men Women Women Gen Y – those born between 1976 and 2000

  23. Middle class leaving PR Median income, $000s Emigrants Total population Source: PR Institute of Statistics Years

  24. Women are winning PR population by sex, % Source: US Census Bureau

  25. Maturing PopulationMedian Age Years

  26. Millennials still prevail in 2013 Population by Age Group

  27. Who are the biggest spenders? US Consumption Expenditures Survey 2013

  28. Which groups exhibit most growth US Consumption Expenditures Survey 2003/2013 % growth

  29. 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

  30. 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

  31. Spending Patterns: 65+ • This group spends mostly on Housing, Transportation, Food, & Healthcare. • Most growth is in insurance and pensions • Least growth is on Food

  32. Full recovery will take time… Forecast of US and PR real GNP growth Forecast FY Source: PR Planning Board & HCCG PR Macroeconomic Model

  33. Years to return to 2005 GNP Real GNP, $ million 13 years Source: PR Planning Board & HCCG estimates

  34. Years to return to 2005 GNP Real GNP, $ million 4 years 13 years Source: PR Planning Board & HCCG estimates

  35. Consumption & Income Baseline Source: PR Planning Board & HCCG PR Macroeconomic Model

  36. Growth of Internet users in PR 000s Annual Growth = 14% Source: World Bank, US Census estimates of population

  37. Cell phones enhance mobility Mobile cellular subscriptions (per 100 people) 2012 PR 7% annual growth Source: World Bank

  38. Ecommerce continued growth Ecommerce as % of total sales Source: EPA

  39. The rise of social network US social network users, million Source: Facebook & Twitter

  40. How knowledge speeds decisions Without effective knowledge platform Data gathering Analysis Response Time With effective knowledge platform Data gathering Analysis Response 40 Time

  41. 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 professionally-designed 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 00918T. 787.756-5715 F. 787.756.4078 hcalero@hcalero.com

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