Nov
19
Several key economists issue Hawaii economic forecasts this week, and I can tell you right now, don’t expect them all to say the same thing.
To the extent that they do, you can take that part of their forecasts to the bank. Our local economists are, on the whole, more competent than some of the eggheads who regularly predict the future on cable.
The UH Economic Research Organization will put out its forecast Friday, and First Hawaiian Bank consulting economist and HPU professor Leroy Laney issues his crystal ball Thursday, but first out of the block is Pearl Imada Iboshi and the gang at the Hawaii Department of Business, Economic Development & Tourism. And their forecast, issued Wednesday, isn’t all that bad.
The DBEDT report predicts that this year will turn out to have had very slow growth in Hawaii, and 2009 will be the same. Expect others to predict recession, but DBEDT doesn’t, at least not in the Commerce Department definition of one, which is two consecutive quarters of negative growth.
You may still experience a personal recession if your boss says the company can’t afford to give you a raise, or you get laid off from your first job, or the company where you have your second job decides it needs to cut back your hours.
For example, my third job is filing economic reports to an all-news radio station in Washington, D.C., part of a sponsored series of features. The last time I heard, the contract with the bank that sponsored the series was due to run out at the end of December. Unless it renews, I may lose that income.
DBEDT predicts overall Hawaii personal income — adjusted for inflation — will have fallen two tenths of a percent this year and will fall another four tenths next year. This reflects a few thousand people facing personal recessions, not a tiny reduction in income experienced equally by all.
Most Hawaii residents will be okay, but more than 10,000 households could have serious financial problems. This means I could come on and say something upbeat that is perfectly true, but it will ring hollow if you have a cousin who’s worrying about losing the house.
The DBEDT report has good news about inflation. Inflation was 4.9% in 2007 and it’s probably around 4.2% this year. DBEDT thinks it will be just 2.6% in 2009, which it pretty darn good considering that there was a time when it thought 2009 prices would inflate 4.2%.
The state’s inflation numbers are based on the consumer price index in Honolulu, so we all have to extrapolate from that. And it’s based on a marketbasket of goods and services that don’t necessarily reflect your own situation. Consider, as an example, how much it affects your spending if you pay off the car, or if your rent goes up.
DBEDT says Hawaii real GDP, the sum total of goods and services, the bottom line of all economic activity measurable in dollars, grew 0.3% this year and will be absolutely flat in 2009.
Please note that this is not the same as saying there is and will be no recession. You could have a two-quarter recession, underway now and lasting until spring, followed by a little bit of growth, and it could still work out to the annual numbers DBEDT predicts.
So far, though, so good, relatively speaking.
Unemployment is lower than on the mainland.
Home prices are holding more of their value than on the mainland.
Tax revenues are down less than 2% from last year according to a separate new state report.
Construction activity has only slowed a little.
Military spending continues apace.
High-tech companies are doing well.
In a state with heavy reliance on imported oil, the fall of oil prices is even more important than in some other states.
If it doesn’t get worse, we will have been very lucky this time around.
Comments
Leave a Reply
Posts
