Many economists were warning that the 2008-2009 will be a “double dip” recession because of the mounting federal, state and local debts in the U.S.
2010 was not a “banner year” and expectations were that 2011 would be a better one. Did you realize what happened in the first quarter of 2011?
- Momentous changes are occurring in the Arab world including change in regimes, bloodbaths and large increases in oil prices. This in turn makes the recovery of the world economy from the long 2008-2009 recession harder. (See trend below.)
- Then a few days ago the world’s third largest economy was hit with (perhaps) 10,000 deaths and well over one trillion dollar bill in damages.
- Japan, a country of about 127 million people accounts for about 16% of the annual tourist revenues of Hawaii and Japan’s debt situation is actually worse than USA’s (at least the federal portion of it.)
- Australia is now expending over $6 billion to cover the damages of extensive floods in late 2010.
- New Zealand’s second largest city was hit by a strong earthquake on February 22 causing 166 deaths and damages estimated at $11 billion, or 7% of the country’s GDP.
- Australia, population 22 million and New Zealand, population 4 million account for 1% of of the annual tourist revenues of Hawaii.
The direct impacts of these to Hawaii will be more expensive energy, more expensive air fares and much fewer visitors from Japan and from economies that are strongly linked to the economy of Japan, and fewer visitors from Down Under
Higher consumer basket prices and lower revenues and taxes from the tourist industry are a given. Expect that the second half of 2011 will be a mild (at best) recession for Hawaii.