Ever since the credit crunch began in August, some economists have become concerned a national recession may be nearby. With the lousy jobs report this week, those concerns have become exacerbated and we thought our readers might be interested in what exactly a recession is and how it might impact Maui's real estate market. The traditional measure of a recession is two or more consecutive quarters of negative GDP growth. They are characterized by falling production, increasing unemployment, lower consumer spending and lower national investment. The Federal Government often tries to respond by cutting taxes and/or increasing spending while the Federal Reserve tries to stimulate activity by cutting interest rates.

If this scenario were to come to pass, one would usually expect a decline in Hawaii and Maui tourism, a slower pace of construction and development and a more generally reserved approach to buying real estate from those interested in doing so. If this happens, this cannot but have a deleterious impact on the price of Maui real estate. But we believe that even if the US falls into a recession, Maui has some mitigating factors:

• Buyers of Maui real estate are in the top 1/2 of 1% of earners and wealth holders. They are likely to be less impacted by a recession than thew average wage earner;
• The Canadian economy, particularly Alberta, will continue to be strong due to $90+ oil prices; and
• Maui remains one of the premier resort and retirement options for the wealthy.

Will Maui and Maui real estate feel a national recession if it happens? Yes. Our expectation would be that the major resort areas will be significantly less affected than other areas. Check back here for frequent updates.