There are Angels

With all the hate, doom and gloom, and frustration in the world, I thought I would start this weekend off with a positive story.

 

On Tuesday I took my wife’s car to pick our son up from school.  I took her car because she was low on gas and I offered, since I was going to town, to fill it up at the Costco gas station.  We live in East Oahu and her fancy car told me I had 24 miles to empty – plenty for the task at hand.  As I hit the freeway at 3:00 that afternoon I found myself in bumper-to-bumper traffic.  The Goggle app paired with the car said it would take 38 minutes for the last 3.9 miles of my journey.  As I watched the miles-to-empty slowly tick down, it reminded me of the Seinfeld episode where Kramer takes a car for a test drive – driving well past empty.

 

I gotta hand it to technology.  I made it to Costco in 37 minutes, and I still had 12 miles to empty.  My celebration of not running out of gas was short lived, for it was at that point I realized I had left my wallet at home.

 

Panic struck like I had never felt before.  What was I going to do?  I certainly didn’t have enough gas to make it back home.  I had no spare change in the car, and nothing but my cellphone.  I sheepishly approached the attendant and told him of my plight.  He cracked a big smile and stuck his Costco card in the pump for me to use.  When I explained my issue was not having a dime on me, he said that none of the guys there carry any cash, and that cameras are everywhere.  He asked if I had Apple Pay.  Being an android user, I did not.  I didn’t have Samsung Pay installed either.  I tried using Venmo and PayPal, even my local bank’s app, but none allowed for wireless payments.

 

It was at that point of deep despair and frustration that a women walked up to me and asked if I was having trouble.  When I explained the situation, she said she’d pay for my gas, and I could Venmo her.  I told her I only needed $5 to get home, but she insisted that since I was there, to just fill up and pay her that amount.

 

Celeste Wong works at the John A Burns School of Medicine, but in my eyes, she doubles as an angel.  I could not thank her enough for such a kind gesture.  If you know Celeste, let her know she not only helped a person in need, but also helped restore my faith in the good in people.

 

Thank you again Celeste!  I not only had to get my son after that fiasco, but it was my wife’s birthday, and I still had flowers to pick up too!  Your help averted a potential disaster.

 

 

 

 

Let the Residents Rebuild

The fire in Lahaina has brought to the forefront issues that have been simmering under the surface for some time.  Specifically, what to do when disaster destroys a structure, but current building codes and zoning laws prohibit rebuilding was there originally.

 

Let’s first identify the real cause of this issue.  The history of building in Hawaii was never done with much planning or thought of the future.  Many of the destroyed structures in Lahaina were built on small lots on streets that can barely accommodate emergency vehicles, even when no cars on legally parked on the shoulder.  Lahaina isn’t unique, as you’ll find neighborhoods on every island that share the same characteristics.

 

To compound matters, many neighborhoods are now classified as being in a special management areas (SMA).  This additional designation requires greater scrutiny from the government before allowing someone to build on a property within an SMA.  The legislature decided to take a proactive stance during this legislative session with SB 1296.  SB 1296 passed and is now waiting for the Governor to sign it into law.

 

SB 1296 aims to do the right thing for people who lose their home to a natural disaster and are located in an SMA.  The bill exempts reconstruction of any lawfully constructed structure that was damaged or destroyed in a disaster from the requirements of a special management area minor permit or a special management area use permit under certain conditions.  This is a great piece of legislation!

 

But a large segment of homes from the Lahaina fire were excluded from this bill.  Specifically, 251 lots on the ocean side of Front Street within the erosion hazard line.  The legislature was concerned about climate change affecting the future of these parcels.

 

State Sen. Karl Rhoads, who co-chaired the conference committee, told reporters that it was incredibly difficult for lawmakers when they ultimately decided to amend the bill to exclude properties on the shoreline.  Before the fire, there were numerous oceanfront homes that likely would have lasted for at least a few more decades.

 

“But now that they’re destroyed, does it really make sense to rebuild in an area where sea level rise is going to make it uninhabitable in the next 50 years?  I think the answer is probably no,” he said.  “This is our chance to retreat without actually knocking down habitable structures, but it’s a very hard decision, and I understand why people who live there would be unhappy.”

 

I’m not shilling for the homeowners affected, but how can our political leaders be so capricious to prevent someone from using their property because of climate change models?  Believe the models or not, even if a property ends up being 5 feet under water in 50 years, isn’t that risk for the property owner to decide to take?

 

If our elected leaders are so concerned about potential risks 50 years down the road, maybe they should look at Hawaii Island and the probability of future lava flows.  I don’t want to scare anyone but Hualalai, the dormant volcano above the Kohala coast has a history of erupting every 200-300 years.  Hualalai last erupted in 1800-1801.  And if you think I’m being dramatic, here’s some excerpts from UH’s Center of Vulcanology:

 

“Although it has been 200 hundred years since the last eruption of Hualalai, it will almost certainly erupt again.”

 

“Hualalai still presents a volcanic hazard as it is near populated areas.  For instance, its summit is only 15km away from the town of Kailua-Kona and a flow as voluminous as the 1800 eruption could cover that distance in a few hours.”

 

 

 

Should the government restrict building throughout the Kona Coast?

 

The answer is no.  And the government should also let those 251 parcels on Maui rebuild what they lost.

 

 

 

 

 

 

And now the week’s economic news…….

 

Economic Reports Fool Markets

This week was packed with major economic data including inflation, the labor market, and overall economic activity.  There were no significant surprises, however, and mortgage rates ended the week with little change.

 

The key Employment report revealed that the economy added 177,000 jobs in April, above the consensus of 130,000, but downward revisions to the results for prior months offset the excess gains.  The unemployment rate remained at 4.2%, as expected.  Average hourly earnings, an indicator of wage growth, were 3.8% higher than a year ago, the same annual rate as last month.  The stock and bond markets looked at the headline numbers and saw growth.  In reality, this was a very weak jobs report.  And if the revisions to prior months readings are any indication, this report will also be adjusted down next month.

 

Gross Domestic Product (GDP) is the broadest measure of economic activity.  During the first quarter of 2025, U.S. GDP fell 0.3%, below the consensus forecast for an increase of 0.4% and down from growth of 2.4% during the fourth quarter.  That was a huge miss.  The last decline was in the first quarter of 2022.  The results were heavily influenced by a 41% surge in imports, as businesses and consumers raced to purchase items before higher tariffs kicked in.  In fact, imports took a massive 5 percentage points off the results.  A slowdown in consumer spending and government expenditure also contributed to the weakness.  Looking ahead, though, the purchases which were pulled forward to beat the tariffs likely will reduce the amount of imports needed in future quarters, raising GDP readings.

 

Fed officials keep a close eye on inflation, and the PCE price index is their favored indicator.  In March, Core PCE was 2.6% higher than a year ago, down from an annual rate of increase of 3.0% last month, and the lowest level since March 2021.  Progress toward the 2.0% target of the Fed has not been easy, and this desired level has not been achieved since February 2021.  The big question is how large an impact higher tariffs will have on future inflation levels.

 

 

 

 

Next Week

Investors will continue to look for additional information about tariff policies.  The next Fed meeting will take place on Wednesday.  Most investors do not expect a reduction in the federal funds rate, but they will be eager for guidance for later in the year.  For economic reports, the ISM national services sector index will come out on Monday and the Trade Deficit on Tuesday.

 

 

Until next week….

 

*** Please note that Freddie Mac publishes their weekly rate report on Wednesday mornings from data received Monday and Tuesday. 

The graph above is intended to shown rate trends, and not “today’s current rate”. ***

 

 

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