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Despite $2B federal grants in 2021, Guam missed its shot at further rebound

Updated: Jan 2




By Mar-Vic Cagurangan


Despite receiving $2 billion in federal assistance in 2021, Guam's economy expanded only at a rate that is “comparable to its past growth performance over a longer time period,” indicating a squandered opportunity for further recovery, according to a local economist.


Between 2010 and 2019, Guam had an average growth rate of 1.2 percent per year.


“It is interesting that Guam’s economy performed similarly to how it had done in the past 10 years after decreasing 11.4 percent in 2020, which in itself tilts the probability toward positive growth the following year, i.e., it is more probable for the economy to increase than decrease in 2021,” Dr. Claret Ruane wrote in an economic report released Dec. 31.

Claret Ruane

Of the $2 billion in federal pandemic assistance funds that rolled into the local economy in 2021, at least $1.3 billion has actually been spent that year.


“When viewed in this context, some might say that the opportunity for a stronger economic rebound in 2021 was missed,” Ruane stated in her report prepared in her capacity as a private citizen.


Ruane attributed Guam’s 1.1 percent economic growth in 2021 to the federal pandemic relief funds, which induced a 3.3 percent consumer spending increase compared to 2020.


The federal aid also enabled local businesses to increase their spending by 6.8 percent and GovGuam by 5.8 percent.


According to the Bureau of Economic Analysis’s Nov. 2, 2022 report, “Territorial government and consumer spending were supported by federal payments authorized by the Coronavirus Aid, Relief and Economic Security Act of 2020; the Coronavirus Response and Relief Supplemental Appropriations Act of 2021; and the American Rescue Plan Act of 2021.”


The three federal Covid assistance packages provided nearly $4 billion in federal funding to Guam and assisted local families, businesses and government units and employees during the pandemic, Ruane said.


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The report also noted that Guam's poverty situation has not turned the corner, showing a pattern that “remains the same.”


The poverty rate estimate for Guam was lower in 2005 than it was in 2019.


However, Ruane noted that Guam’s poverty rate “is more than double the national average of 10.8 percent and is higher than Mississippi’s, which is the highest poverty rate among the 50 U.S. states.”


In 2019, at least 25.6 percent of households on Guam had incomes below the federal threshold for a family of four, Ruane said, citing data from the U.S. Census Bureau.


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Ruane noted that federal spending has always been a major contributor to Guam’s economy. Since 2013, federal spending for the territory had an annual average of $2.1 billion, accounting for 36 percent of the local economy


“During the pandemic, its contribution increased to $3.3 billion in spending or 57 percent of Guam’s economy in the calendar year 2020, increasing further to $5.4 billion in spending or 88 percent of Guam’s economy in CY2021,” Ruane stated in the report.



While the remaining balances on federal grants are dwindling, fresh funds have already started streaming into Guam through the Infrastructural Investment and Job Act. Guam also stands to receive more money from the Inflation Reduction Act or IRA 2022. Both federal programs are non-related to the Covid-19 pandemic.


Guam has a $193 million allocation from the $1 trillion Infrastructural Investment and Job Act, which was signed on Nov. 15, 2021. As of Nov. 30, 2022, Guam has been awarded $117.55 million, of which 5 percent has been spent.


The IRA 2022, which was signed on Aug. 16, 2022, authorized a budget of $370 billion to take “leadership in confronting the existential threat of the climate crisis and set forth a new era of American innovation and ingenuity to lower consumer costs and drive the global clean energy economy forward.”


“It is not yet clear what amount Guam expects to receive from the IRA 2022,” Ruane said.


However, the Department of the Interior earlier announced that the IRA 2022 provided $15 million in funding for climate change technical assistance to Guam, American Samoa, the Northern Mariana Islands, the U.S. Virgin Islands and Puerto Rico.”


(The above article is the first in a series based on the 2022 Guam Economic Report prepared by Dr. Claret Ruane and released Dec. 31, 2022.)



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