New Jersey Labor Force and Puerto Rico Audit

May 2nd, 2016

New Jersey Labor Force and Puerto Rico Audit

This week we review our proprietary Geo Score and highlight which States are improving and which are not.  We also report on Puerto Rico’s recent filing regarding the status of its ’15 audit.

April DIVER Geo Scores

This morning, we released the most recent DIVER Geo Scores for States, counties and cities. The DIVER Geo Score represents a relative score of the economic health of a U.S. State, county or city. Based on a scale of 0-10, with 10 being the best, this data is updated monthly and is calculated from multiple economic and demographic factors related to three primary data categories—employment, income and housing.

The DIVER Geo Scores are available here.


Florida once again tops the list of most improved State economies over the last year. Many of the other States on the list of top performers have appeared on the list for several months.  A notable exception is New Jersey.

New Jersey’s economy has been a laggard for several years.   A large contributor to New Jersey’s apparent recent strength has been its employment markets.  During 2015, the unemployment rate in New Jersey averaged 0.3% higher than the national rate; during 2016, the rate in New Jersey has been 0.3% lower.


While New Jersey’s unemployment rate has been improving, the story is not quite as positive as the top line statistic seems to indicate.

The labor force has been growing slower in New Jersey than nationally.


We estimate that the unemployment rate in New Jersey would be approximately 0.5% higher if its labor force growth had kept pace with the national rate.

Puerto Rico Sets a Low Bar for Disclosure and Still Misses

Our own disclosure: we used the same headline above last year to describe Puerto Rico’s approach to disclosure.  It still fits.

Last week, the Commonwealth officially filed notice that its ’15 audited financial statements would not be filed in time to meet its 305-day after fiscal year end commitment.


Source:  DIVER Underwriter

This is not news. The last year that Puerto Rico filed its audits on time was ’11.  The audit was late by 138 days after the 305-day deadline in ’12 and 60 days after the deadline ’13.  A draft of the audit has been released for ’14, but the final audit should probably not be expected soon.

These delays likely derive from poor systems, overly complex financial structure and its current fiscal difficulties.  A goal of any potential solution to Puerto Rico’s problems should be to address these issues and increase financial transparency.

The 305-day after fiscal year end deadline used by Puerto Rico is extraordinarily generous.  Over 80% of the issues in our database have a “Fiscal Year End Plus” basis for disclosure obligations by the Continuing Disclosure Obligated Party.  Of these approximately 90% contain commitments to file audited financial statements within 270 days of fiscal year end.


Have a great week,

Michael Craft, CFA