For the general public, including many who have little presence in the stock market, last week’s financial earthquake on Wall Street produced some queasiness, if not full-scale anxiety.
The stock market is not the “real” economy, the saying goes, but it’s connected. When people witness any major sign of instability, they tend to clasp their money more tightly — and when consumers don’t consume, businesses can falter. From that point, the broad ripple effects, with recession looming, are easy to imagine.
The underlying cause for worry, of course, are the comprehensive tariffs the Trump administration imposed on imports from countries across the globe. And the uncertainty surrounding this event — will the trade war escalate, or recede? — simply adds to the nervousness.
Experts agree that it’s wise to consider any major purchase carefully, but that panic is unwarranted. And if residents care about the local economy as they should, logic suggests that spending focused on supporting that economy would be the ideal course. Consumer spending accounts for two-thirds of the economy, after all.
Hairline cracks in the local business foundation are starting to show. As the federal administration unveiled its major global plan last week, the preliminary shocks from earlier tariffs were already being felt by mom-and-pop businesses, Tina Yamaki, president of the Retail Association of Hawaii, told the Honolulu Star-Advertiser last week. For example, she said, business owners were seeing the prices of Chinese goods rising.
For their part, businesses in various sectors have been curtailing their spending or rethinking financial decisions, said Sherry Menor-McNamara, CEO and president of the Chamber of Commerce Hawaii.
These are serious threats. According to a February report from the University of Hawaii Economic Research Organization, the cuts in federal jobs and spending, on top of the tariffs, have raised the risk of a Hawaii downturn.
The problem seems massive, beyond the reach of consumers, but there are things to be done to keep things more stable, both for individual concerns and to help sustain the community.
Those who do own stocks in some form are cautioned against panic selling. For most modest investments, especially for those in the midst of their working years, there is time for the funds to rebuild. Even those who are nearing retirement have some time for recovery of a nest egg meant to last for years. Selling during a crash can lock in losses, experts say, so focus on long-term goals instead.
Beyond financial strategizing, there are the weekly and monthly necessities to buy, of course. The cost of daily essentials has gone up, and for most people, that’s the prime signal of economic distress.
Shopping more carefully for bargains can ease the sticker shock. And it would make sense to consider local brick-and-mortar businesses for many household expenditures.
That’s because there’s a local multiplier effect that results from those purchases: These businesses employ people who also spend their pay locally. In one 2020 analysis of federal grants to the state, UHERO estimated that the loss of every dollar in salaries is a loss of $1.50 in overall economic activity.
So keeping the jobs, and keeping those salaries circulating locally, remain the paramount objectives.
Spending is everyone’s concern, but slamming on the brakes is ill-advised. Mayor Rick Blangiardi said this applies to city budgeting, too, adding that his team would proceed with current plans and then adapt.
“Keep Calm and Carry On,” that old wartime maxim, is good advice. So is “Think Globally, Act Locally.”
