Hawaii’s economy simmers; Abercrombie says it sizzles

The elections are coming and that is a good thing.

Yes, elections divide the community, force you to make decisions and almost always disappoint.

But, who cares? What elections do is give us a great and booming economy.

For this economic theory to work, you need a little drama. When a new governor first cracks open the budget books, there is great horror.

Remember former Gov. Linda Lingle’s somber statewide announcements that the Democrats had spent all the money and she was cutting everyone’s budget?

And remember Gov. Neil Abercrombie’s cries that our budget canoe was about to "huli" because it was actually Lingle who spent all the money?

After four years of Lingle, the GOP governor was able to announce that the economy is roaring with a $700 million surplus and, as she said, "You can have it all."

And after one term of Abercrombie, not only is our little canoe rock solid, he says it is floating on a surplus of $844 million.

All you need for the economy to right itself is an incumbent running for re-election.

That theory will be tested this afternoon when the Council on Revenues meets to come up with new tax revenue projections.

The campaign assurances from Abercrombie claiming that this is one heck of an economy may need some footnotes.

It is a good economy unless you recall that in January, the Council on Revenues cut its forecast for growth in fiscal year 2014 from 4.1 percent to 3.3 percent.

"The Council believes that the economy is still growing, but not at the same rate as expected before. The Council’s main concern and the reason for lowering the forecast for FY 2014 was the apparent slowdown in tourism," the economists wrote (http://goo.gl/MfLR85).

The economy is great — but even Abercrombie’s own Department of Business, Economic Development and Tourism economists see a "slightly reduced projected growth rate due to continued modest tourism growth but identified potential in construction."

Essentially, the local economy is simmering in a Crock-Pot, not the deep fryer.

"The current forecast for 2014 real gross domestic product for Hawaii is a 2.6 percent growth, lower than the 2.8 percent forecast last quarter. Real GDP growth rates in future years are expected to be at the 2.2 percent range," the state’s economists reported.

State tax figures show that collections are all down (http://goo.gl/GqqDNO).

The general fund is down 3.4 percent from a year ago. Jobs, however, are good (http://goo.gl/Sq2byh).

There are those, however, who see dark clouds, not a silver lining, in the job numbers.

The February edition of the Economic Research Organization at the University of Hawaii says the job numbers are not a source of cheer.

"The statewide unemployment rate has fallen steadily since 2012. But this is mostly for the wrong reason: a large number of people have been exiting the labor force, while there have been only marginal gains in employment," the report said (http://goo.gl/BPl527).

Noting that government costs will go from being "a substantial drag to a marginal contributor," UH economists say the bright spot is increased construction.

Of course, Hawaii lives in a boom-bust world of either too much construction or not enough building.

Lingle won re-election with a 61 percent margin of victory. Those are figures out of Abercrombie’s reach, but the governor can still hope that his slow-cooker economy catches fire.

Richard Borreca writes on politics on Sundays, Tuesdays and Fridays. Reach him at rborreca@staradvertiser.com.