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Economist:
Big Island job
growth 1st in state

High-tech money from the
mainland is credited for
fueling the island's recovery

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By Rod Thompson
Big Island correspondent

HILO -- The Big Island is leading the state in recovering from a decade-long economic slump, although most of the benefits are in West Hawaii, says First Hawaiian Bank consulting economist Leroy Laney.

Noting that he started economic reports for the bank in 1990, Laney said, "This is the first time since I have been doing this presentation that things have looked this good."

Laney's economic report was prepared for presentation to the business community in Hilo today and Kona tomorrow. He was assisted for the first time by University of Hawaii at Hilo economics professor Young-Ki Hahn.

The neighbor islands lead the state in job growth, with the Big Island growing fastest, Hahn said.

Earlier this week, the state reported Big Island unemployment was 7.6 percent last month, a 2.4 percentage point improvement from 10 percent in July 1999. The statewide jobless level was 4.3 percent last month vs. 5.8 percent a year earlier.

Big Island home construction is so strong that all types of skills are needed, from plumbers to grounds keepers, and it may spark a return of workers who left the state a decade ago, Hahn said.

The construction is driven by "the latest newfound riches of the New Economy in the mainland," Hahn said. Unlike Japanese real estate investments in the 1980s financed with mortgages, many of the "New Economy" wealthy are paying cash, he said.

High-technology, meaning fields such as astronomy and aquaculture as well as information technology, is also creating jobs. Statistics are scarce, but First Hawaiian sources estimate 40 percent growth in Internet consultancies and related work on the Big Island in the past year, Hahn said.

"The lack of high-speed Internet access seems to be the biggest missing link," he said.

Tourism is doing well, with average hotel occupancies rising from 60 percent last year to 70 percent this year, he said.

Hahn also mentioned lags. While "help wanted" ads in West Hawaii are nearly as high as in 1990, they continue to decline in East Hawaii, now at just 20 percent of their 1990 level.

But Hahn said the island continues to build infrastructure that will aid East Hawaii.

The $200 million Saddle Road reconstruction, linking east and west, is "poised for groundbreaking," he noted.
A new East Hawaii X-ray facility to kill fruit fly larvae will allow 50 million pounds of papayas and other fruit per year to be shipped to the mainland, he said.
A $60 million federal agricultural research center is planned next to UH-Hilo, and $17 million in additional construction is planned at the school.

Laney, a Hawaii Pacific University professor, predicted that the national economy also will remain strong. It's slowing, but only from "white hot" to "red hot," he said.

The decision of the Federal Open Market Committee not to raise interest rates yesterday is favorable news, and technology companies seem "invulnerable" to interest rate changes anyway, he said.

The "New Economy" of technology does not fit into the normal ups and downs of business cycles, "a big reason we can expect the current expansion to continue," he said. "New orders for tech equipment certainly suggest continued future momentum."