Hawaii, like every other state, has been waiting to exhale ever since the financial system teetered on the brink and the economy plunged into a recession, an abyss out of which it’s only begun to climb. And while the current economic outlook is not exactly rosy, prospects look far more promising here than in most other states.
The challenge for the islands and their leaders will be taking encouragement from these signs without taking their eye off the bottom line: The need for fairly austere budgeting practices will be with us for a while, given that Hawaii’s tourism-based economy depends on things improving elsewhere in the country as well.
The reason why economists are at least breathing a little easier is that they like the look of three graphs showing different views of the state’s rebound. The graph depicting the overall economy shows Hawaii starting a gradual climb from a steep decline, roughly in the shape of a tilted L. Charting the tourism recovery produces a U shape, with the fortunes of the industry skittering along the bottom until a more sustained rise appeared in the past year. The home sales graph is V-shaped, bouncing up on a fairly steady upward trajectory.
The news on tourism has been particularly hopeful, including increased airline "lift" — a boost in the capacity of airlines to bring passengers here — as well as data showing that spending by visitors is on the upswing, too. This is a welcome report for all the businesses depending on the ripple effect from that spending.
It’s also a relief to government officials, who must be anticipating a boost from the next projection from the state Council on Revenues, on which spending plans in the coming legislative session will be based. The most recent report in September showed tax revenue projected to grow by 2 percent. It would have been four points higher except for the fact that 2009 tax refunds were postponed until the current fiscal year, reducing cash available for this year’s spending.
This suggests that things have stabilized in Hawaii economically and that people who are employed ought to be able to spend with less worry of further upheaval during the holiday shopping season and beyond.
As much as people here should take heart in the cautiously optimistic signs, other states are facing more distressing news. The National Conference of State Legislatures issued a report last summer updating the budget outlook in various states. Among its various measures, the report shows that 34 states’ tax categories have produced revenues at, or, more commonly, below estimates. The impending end of stimulus payouts makes the fiscal situation in many states marginal, and this certainly can’t fill consumer hearts with confidence.
Consumer confidence, and the leisure spending that it inspires, is what buoys a tourism economy like ours.
It’s prudent to project that continuation of the state’s promotion to visitor markets worldwide will help sustain the long-term recovery. So would a sensible but willing approach to spending. It’s good to hear pledges from the state’s new administration that restructuring of government to more efficiently attain its goals is the plan, rather than simply creating new departments and adding to the bureaucracy.
Though not here yet, that bright spot ahead may in fact be the light at the end of the tunnel when Hawaii taxpayers will be able to exhale at last.