Tech worth $3B in Hawaii economy

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Permalink Reply by Brooke Fujita on August 21, 2008 at 12:56am

@Russ:

This is a very interesting report. I would really love to hear from others in HI just how resilient the tech industry is, given that it seems the sinking US economy has yet to reach bottom (imho).

For example, let's say that I was considering to return back home to Honolulu (which actually is a true statement): If I were to do so, when could we see the economic situation in Hawaii start to rebound? Would the tech industry recover faster or slower on the whole?

Anyone care to make a few predictions?

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Permalink Reply by Cameron Souza on August 21, 2008 at 8:33am

This is very good news!

I wonder what percent of this is military. Probably 50% or more.

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Permalink Reply by John on August 21, 2008 at 10:48pm

Hi Brooke,

I think the biggest threat to the Hawaii economy and the tech industry is the price level of gas. Depending on the price of gas, this has the potential to not simply be a cyclical process but a long term drop in economic activity.

Look at the rapid switch from SUVs to hybrids, the fall of the American motor companies, the move to 4 day work weeks, housing price falling faster in outer lying suburbs. All of these are very specific responses to the rise in gas prices. Unless gas prices drop or substitutes are found, these look to be long term, permanent drops/shifts in the economy.

I think the scary thing for Hawaii is that our location makes us the 'SUV' of geographical regions. The drop in tourists is already steep and, unless gas prices drop, this will not recover for a long time. In other words, I don't think this is simply a normal cyclical contraction that will naturally resolve itself in 12 - 24 months. It may not come back for year, depending on gas prices.

I think the tech industry will obviously be affected. How much so certainly depends on the sector as technology is a very broad and diverse segment in an of itself.

Cheers,

John

Brooke Fujita said:

If I were to do so, when could we see the economic situation in Hawaii start to rebound? Would the tech industry recover faster or slower on the whole?

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Permalink Reply by Brooke Fujita on August 23, 2008 at 5:24am

Hey there, John, shouts to you from Hokkaido, Japan:

Very good point you make on the issue of rising gasoline prices bringing on long-term affects. That is also definitely the case here in Japan. I expect that while slow, there will have to be more social changes as people and businesses here adjust to the fact the oil and oil-based fuel products will continue to rise in price, and will likely never go back down.

Which brings me to Cameron's question on the percentage of IT related to Hawaii's ties to the US military. I would expect that Cameron's right, greater than 50% sure seems to be spot on. Whatever it may actually be, you could go so far as to say there is a dependence relation here.

So then I wonder: how are rising fuel prices affecting the military when they spend their IT dollars?

John said:

Hi Brooke,

I think the biggest threat to the Hawaii economy and the tech industry is the price level of gas. Depending on the price of gas, this has the potential to not simply be a cyclical process but a long term drop in economic activity.

Look at the rapid switch from SUVs to hybrids, the fall of the American motor companies, the move to 4 day work weeks, housing price falling faster in outer lying suburbs. All of these are very specific responses to the rise in gas prices. Unless gas prices drop or substitutes are found, these look to be long term, permanent drops/shifts in the economy.

I think the scary thing for Hawaii is that our location makes us the 'SUV' of geographical regions. The drop in tourists is already steep and, unless gas prices drop, this will not recover for a long time. In other words, I don't think this is simply a normal cyclical contraction that will naturally resolve itself in 12 - 24 months. It may not come back for year, depending on gas prices.

I think the tech industry will obviously be affected. How much so certainly depends on the sector as technology is a very broad and diverse segment in an of itself.

Cheers,

John

Brooke Fujita said:

If I were to do so, when could we see the economic situation in Hawaii start to rebound? Would the tech industry recover faster or slower on the whole?

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Permalink Reply by John on August 23, 2008 at 6:46am

'I wonder: how are rising fuel prices affecting the military when they spend their IT dollars?"

I don't think fuel prices will have a very direct effect on military spending.

The bigger issue there seems to be the global war on terror (gwot) and the country's willingness to fund it. In the last recession, it was military spending related to this that strengthened Hawaii's economy and provided an engine of growth.

I think this will growth in spending will slow and perhaps even contract. Mainly because the country seems to be losing confidence in how the war has gone but perhaps also because with a slowing economy and housing bailouts, we may not be able to spend as freely on military matters.

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