Morrison

The anxiety among Jamaicans here at home about the United States' economic crisis is mostly about how it has been affecting us through the decline in remittances and the American travel market, our largest source of tourists. Not much has been said regarding the impact on the living conditions of the more than 1.5 million Jamaicans and people of Jamaican descent residing there who, like many Americans, are now out of work or are more vulnerable to rising unemployment and poverty.

The heavy social costs which the US recession has inflicted are so widespread that we should be concerned, however, about our less well-off relatives, especially in the hardest-hit states, who must be feeling the effects. Not surprisingly, we hear more frequently these days of cases where Jamaicans are remitting funds to their families in America who are struggling to cope with the hard times. Unfortunately, their struggles are becoming harder, based on the findings of a recently published report by the US Department of Agriculture.

According to the report that surfaced last week, in 2008, as the US economy shrank, the number of children living in US households where food at times ran short increased by a whopping 42 per cent - that is, moving from 12 million in 2007 to 17 million last year. Americans of all ages also experienced the sharpest rise in food scarcity in recent memory, as nearly 15 per cent did not consistently have access to adequate food in 2008, compared with about 11 per cent in 2007.

economic machine still losing speed

News that the US economy recorded growth in the July-September quarter, indicating that the recession is technically over, will not alter the popular perception that the economic machine is still losing speed. Indeed, as job losses, foreclosures and tight credit conditions persist, it is highly likely that the number of Americans living with "food insecurity" will increase. This prognosis is supported by data for 384 'metro areas' across the USA whose employment levels, industrial production, housing starts and home prices, are monitored by Moody's Economy. These data indicate that only 100 of the 384 areas have started to recover, but none is yet in the expansion mode. The economies of the other 284 areas are still declining, but at a slower pace.

In Florida, which has the largest concentration of overseas Jamaicans, none of the 22 metro areas has yet started to recover. Likewise, all areas of the states of Connecticut and Maryland, where there are sizeable Jamaican communities, are still in the grip of the recession. The states of New York where only two of 13 metros are on the rise, Georgia with five of 15, New Jersey with two out of 10, and Pennsylvania three out of 16, are seeing faint signs of recovery, but it will be many months before recessionary conditions recede.

In the near term, Jamaicans who live in these 'slow-recovering' states, particularly the metro areas where they mostly tend to settle, are, therefore, going to be hard-pressed to find jobs. As they focus on trying to make ends meet, their ability to help relatives here will be stretched, and even those who are employed will have to cope with stagnant incomes. Hence, the recovery in remittance flows from the USA will take time. The prospects for Jamaicans who are accustomed to migrating to the USA in search of jobs, especially in times when the local economy is under pressure, are also going to be more difficult. On average, well over 15,000 have done so each year in the past 40 years.

encouraging signs

But there are some encouraging signs for at least one sector of the local economy: tourism. Globally, the rate of decline in international arrivals has slowed considerably in recent months (from 11 per cent in May to three per cent in August), and the World Tourism Organisation (UNWTO) is projecting that arrivals will see a moderate recovery of one to three per cent growth in 2010. Luckily for Jamaica, Canada, which has been our most dynamic market in recent years and the source of increased tourists in the height of the recession, is one of the first economies where the unemployment rate has begun to decline. This market is, therefore, likely to remain buoyant next year.

While the local tourist industry had to depend on strong growth in Canadian visitors to offset the fallout in the US and European markets this year, it can look to the start of a recovery in Europe in 2010 to provide some momentum. This could come, in part, from the strategic partnership now being finalised with TUI, the European travel industry giant which is geared to accelerating arrivals from continental Europe and especially Germany.

The partnership with TUI, a part-owner of Riu, which was an initiative of former tourism director Basil Smith and Pat Samuels, JTB's regional director for Europe, has been boosted by improvements in road, airport and other tourism infrastructure, and the diversifying of our product. The burnishing of the Jamaica brand by the huge success of our athletes at the Beijing Olympics and Berlin Games, where TUI undertook a joint promotion programme, has also enhanced the island's market appeal.

The difficult economic conditions in the US and UK markets will, however, continue to exert pressure on hotels to discount rates, although the soon-to-be-opened Secrets St James' resort and the Palmyra Resorts should arouse interest in new travel segments. On balance, we can expect some improvement in the sector, which should assist the macro-economy, but the impact of the recession will still be felt on employment and the financial situation of operators.

Dennis Morrison is an economist. Feedback may be sent to columns@gleanerjm.com.