In Hilo, Hawaii, some people stayed up all weekend watching the never ending media coverage of the Wall Street bailout package. Those living on military retirement or other government pensions in Hilo don’t seem worried but people depending on self managed IRA retirements are becoming extremely upset as they watch their portfolio values endlessly drop.Since Bush's declaraion of a global economic disaster last week, gasoline prices in Hilo have dropped and the cost of fruits and vegetables at Hilo’s farmer’s market have gone down. At Hilo’s fish market there is a surge in the supply high grade tuna, salmon and there seems to be a lot more fish.
The interest rates paid on CDs at the local banks in Hawaii have gone up and there has been no run on the banks here in Hilo. Unlike the people on the mainland impacted by their Washington Mutual credit cards no longer being accepted, in Hilo the economy is mostly cash based.
In the last three months tourism has dropped sharply across Hawaii. Figures being published for hotel occupancy rates across the State show drops of 26% to 40%. On the Big Island tourism brought in $11 billion last year so if this downturn continues it will mean $2.8 billion to $4.4 billion less income to Hawaii County or $19,000 to $30,000 per resident. A drop of this magnitude will result in dramatic changes to the local economy.
What is unclear is what the changes will be. We know of some changes already, such as less power consumption on the island. In a discussion with local electric company employees this past weekend they said power consumption is down due to less tourists using AC in their hotel rooms. The Hawaii tourism board supports hundreds of projects and groups to entertain tourists and we suspect the funding for these will be reduced.
As hotel and tourist related jobs disappear perhaps agriculture will again gain importance on the Big Island and employ those that will be laid off by this downturn in tourism. We’ve said before that the tourism business on the Big Island profits mainland hotel and power companies more than the local economy. Perhaps we are overly optimistic, but we think that as the people of Hawaii reinvent the local economy, even if the resulting economy is smaller, it could be more beneficial and offer a higher quality of life to the people that live here.
3 comments:
higher quality of life trumps booming economy any day of the week ... maybe this "crisis" will lead people to spend more time worrying about their happiness index, which in the end is more important than any index on wall street ...
Some nit-picky details:
1) My WaMu debit card still works. My direct deposit and auto-pay are functioning fine. All WaMu cards will be replaced by Chase cards eventually. Risk will be reassessed, and credit holders of WaMu may see a change in their credit limits.
2) Gas prices here in Hilo are still one dollar over-priced. The last time oil was under $100/barrel, gas was just over $3.00.
3) Tourist season is over, so the availability of fish should go up. Supply and demand dictates that the price should go down.
4) We still live in a bubble. This one is the Hilo bubble. The outside world need not exist, because Hawaii is very nearly self-sustaining.
Finally, thank you for taking a side and being consistent. I really do appreciate your thoughts and insights.
I too agree that Hilo will be fine through this global shitstorm. One tidbit that I have always kept in the front of my mental filing cabinet is that Hilo has the highest savings rate per capita of any place in the state. I am not sure if that is still true but suspect it is. Since agriculture is still the main economy here, I suspect that we will experience an annoying, and maybe protracted downturn much like the 10+ years after the demise of Sugar. The economy never had enough time to even get back on its feet through the housing frenzy bubble of 2004-06 and now here we are again. We will weather this and continue to exemplify an economy that may prove to be a model for the rest of the fubbed up world.
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