Be it shipping, tourism, small business, banking, autos, insurance, manufacturing, retail or construction, all industry sectors have been—and continue to be—smashed by the terrible combination of a local recession, huge increases in local utility rates and soaring worldwide energy costs.

At the time of selecting a financial institution, Puerto Rico’s small and midsize companies (Pymes, by their Spanish acronym) consider “efficiency” and “image” as top attributes. In 2007, 65% of Pymes chose their financial institutions based on efficiency and three of every five chose their bank based on image.

Puerto Rico government bond issues will reach the unprecedented amount of $15.6 billion this fiscal year, ending June 30, 2008.

Since accounting troubles surfaced at some local banks in 2005, financial institutions in Puerto Rico have had it tough, facing continuous headwinds such as loss in stock value, rising interest rates, reduced profit margins, a criollo recession that has increased delinquency rates and foreclosures, a worrisome real-estate slowdown and now record energy and operational cost increases.

Overall, retailers interviewed by CARIBBEAN BUSINESS are surviving the recession the only way they know how: by tightening up, becoming highly efficient and being very resourceful. The silver lining in all of this, if there is one, is that the situation has opened up opportunities for families to spend more time at home and engage in more dialogue.

Manufacturing has been faced with many challenges on the island, but none like the high cost of energy, something that is unanimously considered in the industry as negatively affecting competitiveness.

Battered by the economy and fearful of the future, Puerto Ricans are discarding traditional impulse buying in favor of more rational consumerism, a trend certain to influence how companies market their products, according to recent research examining the effects of the present economic situation on consumer behavior.

As with any other industry operating in these difficult economic times, the local cargo shipping industry has had to look for cost-saving efficiencies wherever it can for both land and sea operations. But the No. 1 factor and challenge facing the industry is rising fuel costs, something that for the time being has no end in sight.

Contrary to most consumer industries, the local technology industry seems to be doing well despite the recession, CARIBBEAN BUSINESS has learned. For the most part, technology-based companies are on the cutting edge of efficiency applications, many of them operating in mainly paperless environments yielding important savings; telecommuting is helping many stay-at-home employees and even enabling entrepreneurs to jump-start their own businesses with a minimum investment.

American Airlines (AA) and American Eagle (AE) announced last week drastic reductions to their 2008 domestic flight schedule (including Puerto Rico) due to record fuel prices and the perspective of more increases in the months to come.

Michael Janeway, former editor of the Boston Globe and Atlantic Monthly and currently professor of journalism at Columbia University, wrote an op-ed piece in the New York Times last week on the Democratic primary that will be held in Puerto Rico next Sunday. He entitled the column “Puerto Rico’s Moment in the Sun.”

In our front-page story of Nov. 22, 2007, we anticipated that if Puerto Rico did not wake up promptly it might have to kiss good-bye even the hope of someday having a thriving tourism industry. The stagnation that has afflicted its development in the past years was placing at risk the cornerstone upon which the entire tourism industry is built: airline service. No planes, no tourists: no tourists, no tourism industry.