Almost two years after hurricanes Irma and Maria wreaked havoc on Puerto Rico and the U.S. Virgin Islands, the two territories’ economies have moved in very different directions. When the hurricanes struck, both were already in long economic slumps and had significant fiscal problems. As of mid-2019, however, Puerto Rico’s economy was showing considerable signs of improvement since the hurricanes, while the Virgin Islands’ economy remained mired in a deep slump through the end of 2018, though signs of a nascent recovery began emerging in early 2019. In this post, we assess the contrasting trends of these two economies since the hurricanes and attempt to explain the forces driving these trends.
In the nine months that have passed since Hurricanes Irma and Maria ravaged the Caribbean, much interest has been focused on Puerto Rico and its roughly 3.3 million American citizens, who weathered the largest blackout in U.S. history. However, far less attention has been paid to the U.S. Virgin Islands, even though St. Thomas, St. Croix, St. John, and a number of smaller islands suffered comparable devastation. This is partly attributable to their much smaller population: the U.S. Virgin Islands (“Virgin Islands”) is home to roughly 105,000 people—1/30th Puerto Rico’s population. Even so, this territory is also part of the United States and the New York Fed’s district. In this post, we examine roughly six months of economic and related data on the Virgin Islands’ economy to better ascertain the extent of disruption and subsequent recovery from the devastation of Hurricanes Irma and Maria.
An examination of the fallout from Hurricanes Irma and Maria on the economies of Puerto Rico and the U.S. Virgin Islands was the focus of an economic press briefing today at the New York Fed. Both U.S. territories were suffering from significant economic downturns and fiscal stress well before the storms hit in September 2017, raising concerns about their paths to recovery.