So the headline in the Honolulu Star Bulletin is, “Isle Business Optimism Lowest In 8 Years. Oh no!  What does that mean? It must be time to jump ship.

Fewer than a quarter of Hawaii companies are optimistic that the economy will improve this year, although only 18 percent expect it to get worse.

Ok?  Lets get this straight. The stock market went nuts in the late 90’s, which people and businesses did far beyond well and made money, and lots of it.  If you have read “The Next Great Bubble Boom” Harry S Dent compares the Internet and the rapid growth of technology, creating a more global marketplace (The flattening of the World, as Thomas Friedman would call it) to the roaring twenties, which, with the creation of electricity brought about the assembly line and revolutionized how we did business. 

That’s a pretty bold comparison, but one that essentially says we have had one hell of a changing marketplace that has resulted in economic growth like we have almost never seen before, except for almost a century ago. 

8 years of extremely strong growth and, as everybody knows we are leveling off, and the response is,

The latest Business Banking Council survey of more than 400 local companies showed that more than half expect no change in the economy, while 18 percent feel it will get worse this year.

Well, no kidding.  It is no surprise that we are leveling off after some unbelievable growth.  It isn’t realistic to expect this same impressive growth to be sustainable over the long haul, but the headline doesn’t accurately paint the right picture. 

Over 50% of Isle Businesses Expect No Change In the Economy.

Doesn’t sound as catchy does it?

Now the key item to look at here is what I have mentioned before.  Inflation.  Increased business costs that essentially cause no economic growth.  Inflation is a little higher than expected this year, so lets keep an eye on it and see how it plays out.

Despite the drop in optimism, local economists expect Hawai’i’s economy will continue to expand over the next few years, though at a slower pace than recent years because of softening job and income growth, the home-building slowdown and near-flat visitor arrivals. The state Department of Business, Economic Development and Tourism projects that the local economy next year will grow 2.5 percent adjusted for inflation.