Home sales are down. New vehicle sales are down. And bankruptcies are up.
The state’s chief economist says there is no recession just around the corner — but not all economists agree.
Recessions can threaten children’s nutrition.
Recessions decrease opportunities and increase poverty — which hurts businesses, as people spend less.
Despite worrisome signs — State Chief Economist Eugene Tian’s most recent economic forecast was positive.
“The good news includes the construction building permit for the private construction, is increased by 8.7 percent for the first four months. We also increase by 700 people in the construction industry. And our tax revenue has been increasing.”
Tian says as of next month, the national economy will have been in growth-mode for ten years — and he sees that continuing, for the nation and for Hawaii.
“Hawaii’s economy will be growing at about 1 to 1.4 percent into the next few years.”
Something else that is growing — is unemployment.
Paul Brewbaker is the former chief economist at Bank of Hawaii — and now heads his own firm.
“A broad indicator is the unemployment rate and in Hawaii, in all four counties, the unemployment rate has been rising for a year and a half.”
Most of our recent economic downturns have followed periods of rising unemployment.
“Under these conditions, a defensive attitude is probably more prudent than an aggressive or offensive approach to economic planning, for career changes, or starting new businesses and whatnot.”
However, Brewbaker warns that limiting spending and investments is not the answer.
“The problem with pulling back on your spending or investments is that, that’s exactly what will precipitate economic recession.”
The potential impact of the tariffs in the US-China trade war has not been factored into the new DBEDT report.
Trade policy is the number-one concern of the nation’s business economists, with 40 percent of the National Association of Business Economists surveyed, calling it the biggest risk to the U.S. economy.
Brewbaker says, “There’s no reason for it, there’s no real benefit possible from it, by the time an agreement is reached, we’ll have lost so much that we’ll probably never make up for what was lost, and there’s the strong possibility that those conditions could deteriorate further.”
More than 40 percent of business economists believe a recession will hit the U.S. next year.
Despite his positive outlook, Tian, the state’s chief economist, says it is always good to save up for a financial rainy day.
“I think it’s always a good idea to plan for a rainy day even when the economy is booming, is in the good times, is always but don’t, I don’t think we should worry too much, just relax.”
The state’s next forecast, that will include any trade war impacts, will be released in August.