State economist Eugene Tian estimated that federal spending cuts from sequestration would cost the state of Hawaii about $462 million in direct loss, and a total of $684 million due to the ripple effect that the reduced federal spending would cause. However, Tian noted that Hawaii's economy has rebounded enough over the past year to mitigate the effects of sequestration and still believes that the state'd gross domestic product (GDP) would increase by 2.4 percent in 2013. This increase is due to a stronger construction industry and a booming visitor industry. State budget director, Kalbert Young, added, "My interpretation, at the top macro-level, is that sequester is not going to be as significant as originally feared." However Young noted that "at the micro-level" there could be still be significant impact on certain individuals, businesses and nonprofit organizations.
Hawaii economists were especially worried by the effects of sequestration due to the large military presence in the islands. According to Eugene Tian, the federal government accounts for approximately 15.3 percent of the state's economy and 13.7 percent of wage and salary jobs. This equates to approximately $20.8 billion annually in the state, out of which $10.5 billion is from salary, wages and procurement contracts. As a result, when sequestration cuts were announced, many economists were extremely worried about how this would effect the state as a whole.
Source: Honolulu Star Advertiser, 8-10-2013, www.staradvertiser.com
Posted by Jeff Uyemura-Reyes, Broker-in-Charge, REALTOR®
Global Executive Realty, LLC
www.myhawaiihomesearch.com
www.myhawaiicondo.com
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