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Hawaii economy
poised for growth

Incomes will grow
but so may prices,
Leroy Laney says

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By Russ Lynch
Star-Bulletin

Hawaii's economy is out of the doldrums and into positive growth in jobs, visitor arrivals and real personal income, a leading local economist told First Hawaiian Bank's 31st annual Business Outlook Forum today.

However, Leroy Laney, professor of economics and finance at Hawaii Pacific University, said the return to an active and growing economy comes at a price -- higher consumer prices. Hawaii's inflation rate has been quite low in recent years because of the state's economic stagnation.

"The Hawaii economy has now emerged from a rather dismal decade in the 1990s, gone through a recovery period and is now back on track," said Laney, the bank's former chief economist and now an economic consultant to First Hawaiian. "Signs of that are almost everywhere in the Hawaii economy -- in robust job growth, falling unemployment rates, higher personal income and tax revenue growth and surging real estate sales," he said in remarks prepared for delivery at this morning's meeting at Dole Cannery.

Laney said the growth in the number of jobs is running at 2 percent this year and likely will continue at 2 percent next year and may even be higher.

The state's job survey may even underestimate job creation in Hawaii because it is hard to measure growth in small businesses and among those who work for themselves, he said.

"Construction jobs have been growing particularly fast," he said. "If the current pace continues, construction job growth will finish the year with a pace not seen since 1990 and a good bit of job growth is also seen in hotel jobs and retailing."

Oahu is beginning to catch up with the job growth that has been experienced on the Neighbor Islands in recent years, he said.

Laney estimated that visitor arrivals will rise 4.5 percent this year, compared with 1999, and increase another 4 percent in 2001.

The small slowdown in arrivals' rate of growth next year may be a result of the state's marketing drive to seek people who stay longer, rather than just trying to attract more tourists, he said.

The Hawaii Tourism Authority and its marketing contractor, the Hawaii Visitors & Convention Bureau, are pushing for longer stays and bigger-spending visitors as a way of improving the economy without overcrowding Hawaii's beaches and other infrastructure.

Laney said real personal income, the amount people earn after adjusting for inflation, should be up 3.5 percent this year and another 3 percent next year. The Consumer Price Index, which measures inflation, is expected to be up 2 percent this year and 2.5 percent in 2001, but that is low by longer-term historical standards, he said.