Isle personal income growth falls behind national average
Personal income growth in Hawaii has fallen behind the nation after several years of significant gains, signaling a steady slowing in the local economy.
Personal income grew 1.8 percent to $48.4 billion in the first quarter compared to the 2.2 percent national average, placing Hawaii 30th in the nation, according to data released yesterday by the U.S. Department of Commerce's Bureau of Economic Analysis.
The new data confirms the expectation that the state's economy is leveling off after years of personal income growth that ranked Hawaii above the nation in 2002 to 2005, according to the state Department of Business, Economic Development and Tourism.
"This is really another indication that this pattern of steady slowing is continuing. We see that in jobs, the flattening of the visitor market, the peaking of the housing cycle and here in income," said Byron Gangnes, a University of Hawaii economist.
While the state's personal income picked up from the fourth quarter of 2006, when it grew only 1 percent to $47.5 billion, much of that gain was eaten by inflation, said David Lenze, an economist with the U.S. Bureau of Economic Analysis.
The main contributor to the growth in the first quarter was the construction sector, along with the federal government, military, accommodations and food services, health care, professional and technical services and finance and insurance industries.
Personal income growth in the first quarter was strongest in New York, at 4.7 percent, more than twice as fast as the U.S. average. North Dakota was the only state where personal income decreased, by 0.1 percent.
Year-over-year personal incomes in Hawaii have grown by 6.1 percent, but local economists are forecasting inflation to rise to 4.8 percent this year, bringing the amount of real income gain to 1.3 percent.
For 2007, local economists expect the state's personal income to grow by about 6.2 percent, nearly mirroring the first-quarter year-on-year gain and continuing the pattern of slowing expected over the next several years.
"We're moving away from exceptional growth to a period of more normal growth for the local economy," Gangnes said. "We've clearly been growing faster than we can manage."