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Households face rocky road


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POSTED: Friday, December 18, 2009

Weak growth is expected for Hawaii's economy next year; however, local households might not see much benefit, according to a report released today by the University of Hawaii Economic Research Organization.

“;The beginning of local recovery will not quickly yield tangible benefits for many local households,”; UHERO economists said in their most recent report. “;Jobs will still be hard to find for several years, social welfare needs will abate only slowly, and income losses for public and private sector workers will persist for some time.”;

Personal income and visitor arrivals will be better in 2010 than UHERO economists originally expected; however, the construction industry will lag Hawaii's private sector, said Carl S. Bonham, UHERO director.

“;After steep losses, most industries will begin to start adding jobs early next year,”; Bonham said, but he added that the recovery will be weak.

Construction job losses will end by late 2010 with the beginnings of recovery taking hold in 2012 as Hawaii's housing market continues to improve, he said.

While UHERO estimates that Hawaii's visitor arrivals will expand by 3.7 percent, economists said occupancy at Hawaii hotels is not likely to break 70 percent until 2011 and that the average daily room rate will continue languishing through next year.

“;We continue to expect total visitor counts to remain below the 7 million mark until 2012,”; Bonham said. “;More rapid recovery, while possible, is unlikely because of the challenges facing American consumers as they deal with the lingering high unemployment and damaged household balance sheets.”;

Year to date through October, the latest time period available from the state Department of Business and Economic Development, Hawaii's total visitor arrivals had fallen by 5.1 percent, and visitor spending had dropped 13.8 percent, a loss of $1.3 billion in revenue from the same period a year ago.

Through November, Oahu's housing market had lost 22.7 percent of its volume, according to the most recent statistics from the Honolulu Board of Realtors. Single-family home sales had dropped 9 percent for the year, and condominium sales had declined 15.5 percent, HBR said. Likewise, during the first 11 months of the year, the median price for a single-family home had fallen 7 percent, and 6.8 percent for a condominium, HBR said.

While housing, the single greatest investment that most Hawaii residents will make, has likely bottomed out, Bonham said that prices will not recover before 2012.

“;Prices will continue to firm gradually over time,”; he said.

               

     

 

RECOVERY IN SIGHT?

        The latest forecast for the state from UH economists with the percentage change over the previous year:
       

 

       

       

                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
 200920102011
Job growth-3.6%-1.0%+1.3%
Unemployment7.0%7.3%6.7%
Real personal income-0.2%-0.3%+1.1%
Inflation-0.5%+1.4%+1.5%
Visitor arrivals-4.2%+3.7%+3.7%

       

       

Source: UHERO