No cause for panic: Hawaiʻi’s economy is OK
A quarter of slow growth is no reason for lawmakers to forgo important economic justice measures like raising the minimum wage.
The recent headline “Hawaiʻi’s economic growth is the lowest in the nation” likely caused some policymakers and business owners to worry about the state of our economy. A deeper look into the data tells a different story than that headline suggests: Hawaiʻi’s economy is far from last place among states, and it’s important for policymakers to know this when deciding how best to invest in Hawaiʻi’s communities during the upcoming legislative session.
Taking a look at the report from the Bureau of Economic Analysis (BEA) that the above article refers to, the first thing to know is that the economic growth data jumps up and down from quarter to quarter. That’s why it’s important to look at the quarters together to get a better sense of what’s really going on.
Figure 1. The economic growth rates (as measured by gross domestic product, or GDP) of both Hawaiʻi and the overall United States have swung wildly back and forth over the past five quarters.
When you look at all of 2018, the United States grew at a 2.9 percent rate, while Hawaiʻi grew by 2.4 percent, tied for 26th place in the nation. That 2.4 percent growth rate is actually good news. The BEA revised Hawaiʻi’s GDP in their report, bumping it up by 1.9 percent for 2018. That beats out our 2017 GDP by 0.4 percent.
Measuring economic growth is complicated, so it’s common for the BEA and other government statistical agencies to revise their numbers as more data comes in—often many months later. Which goes even further to show that we shouldn’t worry over just a quarter’s-worth of data, especially if it’s very recent. As this example shows, looking at a wider time frame—and even just waiting a while for the data to settle—can lead to a completely different economic outlook.
