Lost in a Cold Economy

Chelsea Tomita
April 16, 2009
Filed under News

Declining sales and falling prices mark the coldest economy since the Great Depression of the 1930s. For Mr. Paul Brewbaker, the cold economy manifested itself in the form of a snow-covered Merchant Street.

Mr. Brewbaker, senior economics adviser for the Bank of Hawaii, was only somewhat shocked by the snowy scene before him. Given the unstable state of the world, Mr. Brewbaker has come to accept that things he once viewed as impossible are now very possible, however it is “important to see things the right way.”

As it turns out, producers were simply filming an episode of Lost, and the snow was a part of the scene they were shooting.

In a presentation sponsored by the ‘Iolani Alumni Association, panel members Mr. Brewbaker, Mr. Robert Saracco (First Vice President for Merrill Lynch), and Ash Matar (owner of a shuttle service), assessed the current state of our economy. The panel educated the audience with their insights on different aspects of the economy, including the housing market, visitor numbers, and the allocation of investments.

Despite the collapsing economy, Mr. Brewbaker was able to crack jokes throughout his presentation. “Hawaii is perfectly in sync… like the boy band,” Brewbaker said in his comparison of new home construction in Hawaii to the rest of the nation.  

Falling new home construction is one cause of the nationwide housing market decline. An orderly collapse in the housing market has homeowners worried about the effect it is having on the value of their homes.

However, Mr. Brewbaker assured audience members that the effects of the declining housing market are actually “less intense here” than in the mainland. In fact, Mr. Brewbaker believes that there is actually “more opportunity” in Hawaii’s housing market.

Elaborating on the idea that it is “important to see things the right way,” Mr. Brewbaker explained the misrepresentation of Hawaii’s visitor counts. When the media publishes articles claiming such things as a 17% decline in visitor arrivals, a widespread panic washes across Hawaii residents affected the by the tourism industry.

However, this information is often an inaccurate representation because the media fails to take seasonal adjustments into account. “With seasonal adjustments you see things you wouldn’t usually,” Mr. Brewbaker said.

“Whatever you read in the paper, don’t have a cow,” Mr. Brewbaker said. He used Easter weekend to explain to the audience how visitor counts could be misrepresented without seasonal adjustments. Last year Easter took place earlier than usual on March 23. Without seasonal adjustments, visitor counts for the week of March 23 in 2009 compared to that of 2008 would appear to fall significantly.

Despite the globally synchronous recession, Mr. Brewbaker thinks there are some positives. Cheaper airfares and falling oil prices present a “silver lining” to the dark cloud of recession.

With the future of the economy still uncertain, one can only hope that our lost economy will soon be found.