BY TOM CLEVELAND – In this era of globalization, it is easy to get caught up in the financial headlines from distant shores. The daily diatribes that emanate from Europe can be overwhelming, sometimes suggesting that economic peril waits just around the corner. For residents of Hawaii, however, our economic futures are heavily dependent on both Eastern and Western “currents”, as 2011 was quick to reveal. Hawaii is presently recovering at a moderate pace, in line with favorable economic data for the United States as a whole. Improvement in Japan is also needed for a stable recovery.
Amidst the turmoil in Europe and the gradual slowdown in activity in Asia, most notably in China, the gradual recovery that is taking place in the United States has been the news story that has somehow ended up on the cutting room floor. Private sector job growth has had a 22-month run of positive figures, hard to deny even in an election year. Consumer confidence is returning, industrial production is picking up, and unemployment levels are finally declining. Studies of previous recessions and their related recoveries have suggested that a full recovery will not be possible until 2013, regardless of the tenor that political rhetoric in an election year may portend.
In Hawaii, unemployment stands at 6.5%, lower than the national average of 8.6%, and ranks “Number 12” on a comparison with the other 49 states. These figures were as of last November, and expectations are that December data will show slight improvement once again. Growth in the economy is what will increase hiring domestically, and growth in Hawaii is tied to increasing tourism and improvement in the real estate sector. Current projections support gradual growth over the next few years and an increase in disposable earnings, the key factor that drives demand in the housing industry. Time is required, but a return to pre-recession levels across the board is in the foreseeable future.
Although the economy in Hawaii did not shrink as much as on the national scene, its recovery has been muted somewhat by the devastation that took place in Japan back in March. The horrific earthquake and accompanying tsunami wreaked havoc upon the local economy, stalled the national energy grid, and brought export trade to an abrupt halt.
For those that follow forex news or participate in the currency markets as a forex trader, it has been inconceivable that the Japanese Yen would strengthen as a result of these natural disasters. The repatriation of assets to Japan has kept demand for the currency high and delayed the rebuilding effort that is required. Hawaii will benefit when this situation reverses in a significant way.
As 2012 unfolds, there are many positive considerations to take into account when forming an outlook for the twelve months ahead. Here is a brief list:
- Jobless claims are in decline, but still remain above 4th quarter 2007 levels;
- Hawaii has matched the turnaround in the national economy, and Real GDP growth is expected to surpass the national pace going forward;
- Hawaii benefits from its proximity to Asia where growth continues, but at a slower rate. The Hawaiian economy did not severely contract, and it has resumed a path of steady growth;
- Hiring is improving, and nearly one half of jobs lost during the recession have been recovered;
- The heavy exposure to construction and real estate will remain a challenge, but new home building is expected to recover gradually while commercial real estate conditions are also stabilizing.
“Steady as it goes” will be the Hawaiian catchphrase for 2012.
Tom Cleveland is a writer and currency analyst for Forex Traders, an online resource for the foreign exchange market and currency news. He has over 30 years of experience in executive management, corporate governance and business development, having served as CFO for various Visa International entities from 1980 until his retirement in 1999.