Big Island economy expected to slow down
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Hawaii County's economy is still showing strength from the visitor industry and from some aspects of its agricultural industry, but dwindling construction and real estate levels may push it toward a slowdown in coming years.
In his annual assessment of the Big Isle's economy, First Hawaiian Bank economics consultant Leroy Laney cited several developments that would have potentially positive impacts.
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Hawaii County's economy is strong, although slower growth is expected, according to an annual economic forecast by First Hawaiian Bank.
First Hawaiian Bank economics consultant Leroy Laney, who spoke yesterday at the 33rd Annual Economic Outlook Forum, said construction and real estate slowdowns are impacting Big Island economic growth. Some parts of the island's agricultural industry is doing well, while others are struggling. And while tourism is up on the Big Island, hotel occupancy is down, Laney said.
"Hawaii County is seeing many of the same indications of slowdown -- especially in the construction and real estate sectors -- as in other areas of the state," said Laney, who is also a professor of economics and finance at Hawaii Pacific University.
Construction activity on the Big Island peaked in early 2006, and the decline has continued into this year, Laney said. The Big Island's residential real estate prices also have been dropping since a high in 2005, he said.
"In 2006 and 2007, the long-awaited turn in the real estate market began," Laney said. "I frankly believe there are more contractions to come, as the market returns to equilibrium."
As for Big Island tourism, visitor counts are up and occupancy is expected to improve sometime in 2008, when the Mauna Kea Beach Hotel reopens after repairs from the earthquake, he said.
While Hawaii County's 3.1 percent unemployment rate is slightly higher than the state average, the job market in West Hawaii is much tighter, and overall job growth has been running strong, Laney said.
The growing role of the University of Hilo, the second-largest employer in East Hawaii, has been a strong catalyst for the Big Isle's economy. Astronomy in Hawaii County could also pump money into the Big Isle's community but it needs continued community support, he said.
Performance for the Big Island's all-important agricultural industry is all over the map, Laney said. While coffee is anticipating a strong 2007 crop, there's a glut of macadamia nuts and dry conditions on the island have reduced feed for cattle, he said. Also, Laney said the three larger Big Island dairies are struggling because increased milk prices haven't offset higher operating costs.