Hawaii US Senator Daniel K. Akaka questioned Federal Reserve Chairman Ben Bernanke on Tuesday at a hearing of the Senate Committee on Banking, Housing, and Urban Affairs on the Fed’s Semiannual Report to Congress. Here is part of their exchange focusing on tourism:
AKAKA: Let me add my welcome to Chairman Bernanke to the committee, and to thank you so much for your tireless leadership in these challenging times.
Recent economic events in Europe and China show us how dependent the United States is on the international markets when it comes to our economic recovery.
Despite concerns about the overall rate of recovery, some sectors are beginning to turn around, and we are beginning to see some bright spots, as indicated in your opening statement. Hawaii, for example, had record tourism numbers in May, and nationally we see spending by foreign travelers continue to rise, helping to reduce our deficit.
My questions are, how do you think that current policies and those regarding tourism and exports have affected the recovery? And also, do you have any suggestions on how to further encourage growth in these areas?
BERNANKE: Well, first, Senator, tourism has been something of a bright spot. We’ve seen improvements in tourism, not just Hawaii, but a number of places around the country.
And you mentioned the international trade deficit. People may not appreciate that when a foreigner comes and visits Hawaii, that actually counts as a US export, because we’re exporting the tourism services. And the export of tourism services has actually been growing very quickly, something like 14 percent last year, faster than other types of exports. And so it contributes to our trade balance, as well as to overall economic activity. So it is a positive.
With respect to policies that address it, you know, I think there’s a lot of incentive. We see that individual states, for example, compete with each other to try to attract visitors. But we can consider issues like visa policies. We can, you know, look at any tax or other implications that might affect the cost of tourism.
So, it’s an area where I think there’s a lot of benefit, a lot of scope for economic benefit to Hawaii and the rest of the country. And it has so far been, as I said, a bright spot among the various service industries that we have.