WAIKAPU - Bank of Hawaii Chief Economist Paul Brewbaker used what he called a technical economics term to describe the outlook for business next year: "It's gnarly."

Usually on his visits to Maui, Brewbaker speaks to business groups. Tuesday his audience was the Maui Non-Profit Directors Association at Maui Tropical Plantation. After giving them a downbeat assessment of the next few quarters, he did try to leave the group with a couple of positive ideas.

The first was that over time, housing prices in Hawaii go up. That means, buy when they are down, as they are now.

He used the example of the early to mid-1990s, after the first Gulf War threw Hawaii's tourism-based economy into a tailspin.

Local people tend to think they can never own a home here, Brewbaker said. Yet those who scrambled to find a mortgage lender 15 years ago did well a few years ago.

"There will be a moment to buy," he told the representatives of 69 helping organizations. "If you want to help low- and middle-income households, get them into a house somehow."

Second, encourage younger people to establish IRA or 401(k) accounts. For baby boomers like himself, Brewbaker said, stocks are a sad story right now. But history says they will come back, and once they hit bottom - whenever that is - the bounceback will "turbosupercharge" earnings. People young enough to wait that long can benefit by acting now, he said.

As an example, he gave the Standard & Poor's 500 stock average, which began to be computed in 1943. Despite all the ups and downs since, $10 invested in S&P stocks in 1943 would be worth $850 now. At last year's peak, it was up to $1,200.

As for managing a nonprofit, Brewbaker suggested a couple of things to think about.

One is related to the surprising fact that although the economy has been contracting for 12 months, worker productivity is up.

In most, but not all, recessions, productivity declines as employment declines.

The reason it isn't doing that in 2008, Brewbaker said, is that private businesses have retrenched so much. Their sales have fallen but they have eliminated workers even faster, so that the average income per employee - which is how productivity is measured - has risen. It's not much, but it has gone up.

He did not suggest that nonprofits lay off people, but he recommended that nonprofit executives adopt the same mindset of doing the same job with less.

The public sector - federal, state and county governments - assigns work to and supports nonprofits because they are more efficient than government agencies, Brewbaker said.

Since there is no chance that public sector support will rise, nonprofit managers must tailor their output to circumstances, which means delivering the same service with less, expecting especially that state and county government will not contribute as freely because counties and the state are not allowed to have unbalanced budgets.

With tax revenue projections down and going lower, they will be forced to cut back, Brewbaker said.

The second suggestion was that this might be a time "to start thinking about a capital campaign." Brewbaker said he was not recommending starting one but thinking about a strategy.

The same "turbosupercharge" effect that he expects to help young working people with their long-term retirement financing could affect capital contributions, too. Donations of equities made today, when valuations are down, should look much bigger within a few years.

As for overall economic conditions, Brewbaker said volatility measurements are off the charts. Usually when he or other economists make forecasts, they hedge that they could be off by a few percentage points either way.

Of late, the measurements of credit risk that financiers use to estimate volatility suggest swings of 70 percent, even 80 percent.

"I don't think it's going to calm down soon," he said.

* Harry Eagar can be reached at heagar@mauinews.com.