Good economic news must be used carefully
Are Happy Days here again? Or, are we simply at the tail end of a decade of Sad Days?
It all depends on whose numbers you are looking at, and whether your long view is forward or in a rear-view mirror.
A recent report out of the U.S. Commerce Department said Hawai'i had the worst economic performance in the nation during the 1990s, as measured by the annual percent change in gross state product.
That probably doesn't come as much news to struggling Islanders, but it does put hard numbers on a long and painful story. While some states such as Arizona and Nevada were experiencing growth rates averaging 7 percent during the big Mainland boom, Hawai'i actually saw a decline in its gross state product of minus 0.3 percent. We were the only state to show a decline.
That's the rather dismal decade-long picture for Hawai'i. But the short-term view is much different. Growth on the Mainland is slowing, in some cases severely, while Hawai'i is in the middle of a modest recovery.
State estimates project growth in Hawai'i of about 2.8 percent this year, a full percentage point higher than the overall estimate for growth in the gross national product.
So, they're slowing; we're growing.
The lesson in all this is to recognize that bad times and good times are cyclical. That means staying away from making decisions based on the economic news of the moment.
We had too much of that in the go-go years of the first three decades following statehood. There were times when economic growth in Hawai'i was wildly ahead of the national average. Money was rolling in and we were spending it at the same pace.
While much of that spending was needed, some of it simply set expectations and spending obligations at a level we could not possibly sustain over the long haul.
The result has been painful and politically difficult retrenchment in government, accompanied by major shifts in the spending patterns of the private sector.
Today's modest improvement in our economic prospects particularly when compared to national expectations does not, and should not, signal a change in our long-term expectations.
Our best bet is to plan for continued modest economic growth and a relatively flat economy. That means we won't see any of the wild highs of the past, but if we are careful, we can avoid putting ourselves through another decade of dismal lows.