Private-sector experts agreeBy Russ Lynch
as the state revises its
The state government has issued its rosiest economic forecast in years and private-sector experts agreed with its conclusion that Hawaii's economy is firmly rebounding.
The state revised forecast included a doubling of its jobs-growth estimate of only three months ago. Economists at the state Department of Business, Economic Development & Tourism expect Hawaii's job count to increase 2 percent this year and 1.7 percent next year. In March, they estimated jobs would rise 1 percent in 2000.
"We have not seen this level of growth since 1991," said Seiji Naya, DBEDT director. While the mainland boomed through much of the 1990s, Hawaii's economy stagnated, just recently showing signs of improvement with higher tax revenues and increased visitor counts.
"The solid performance of Hawaii's economy in the first quarter, combined with continued strength on the mainland and improvements in Japan, led us to raise our economic forecast," Naya said. "We are confident that the state should see solid economic progress this year."
The biggest engine of Hawaii's economy, tourism, has seen visitor arrivals continue to surge since the end of the first quarter. This week, the state said total arrivals are on pace for a record year.
In its revised economic forecast, released yesterday, the state said it expects arrivals to increase 3.8 percent this year, while the March estimate called for a 2.3 percent year-over-year increase.
Real gross state product -- the overall inflation-adjusted dollar value of all the goods and services produced in Hawaii, adjusted for inflation -- is expected to rise 3.5 percent this year, DBEDT said. As recently as March, the DBEDT economists were predicting a 2.6 percent rise this year.
Paul Brewbaker, chief economist at the Bank of Hawaii, said actual economic performance figures show that both the government and private-sector economists have erred on the side of caution recently.
"There's been a tendency among us all to be somewhat conservative. The irony is that people have viewed us collectively as too optimistic," he said. So Brewbaker does not see the state being over-optimistic for political or other reasons and he said the state economic data are reliable.
"They have the best crew in town," since the banks have largely given up economic forecasting, and DBEDT also is the original source of many of the figures, such as for tourism, and has a good early look at them, he said. "We've been too pessimistic."
Brewbaker said he was not surprised, for example, to see the state's 3.5 percent prediction for personal income growth this year. His own most recent prediction, done several months ago, was 3 percent and he said that may well have been on the low side.
The real numbers, not just the predictions, show the economy was on the way back late last year, he said. "Retail sales were going off the chart at the end of last year. I really think we're in a very strong mode right now and it's going to catch up and surprise a lot of people," Brewbaker said.
Another prominent local economist, Michael Sklarz, agrees that the economy is rebounding. Tax revenues are "surprising everyone," he said.
"Last year everyone was still gloomy and couldn't imagine this sort of growth. For whatever reason, the cash kept coming in," said Sklarz, head of research at the real estate firm Prudential Locations Inc. and chairman of the Council on Revenues, the group of economists who advise state lawmakers.
Sklarz also agreed with Brewbaker that economists may have been overly cautious in their recent estimates. "The economy is certainly due for a good rebound," he said. "Clearly, things are much better."
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