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Recovering economy It had nothing to do with hanging, pregnant or dimpled chads.
the top Hawaii
story of 2000
Good news was found in
virtually all indicators
that economists useBy Rob Perez
Star-BulletinIn Hawaii the big story for 2000 was the big story for most of the 1990s.
But this year's version had a new twist: It was upbeat.
The Hawaii economy, after nearly a decade of sputtering, is ending the year on a high note.
Although the economy has been expanding slightly since 1997, it wasn't until this year that the signs of growth were so widespread. Good news was found in virtually all the indicators economists use to measure the health of a market.
Job growth, one of the most important measures, was up. Unemployment was at the lowest level since the early 1990s. Home resales were poised to end the year at the strongest clip in a decade. Tourism was headed for a record finish. Inflation remained low. Bankruptcies fell for the second straight year. Personal income was growing. State tax revenues jumped. Construction jobs were on the rise for the first time since 1993.
"Almost everything is pointing to very positive growth," said Pearl Imada Iboshi, the state's chief economist.And all the positive signs helped consumers become more upbeat, experts said.
"When people are able to find jobs, they feel much better about the economy as a whole," Iboshi said.
The strengthening labor market in almost all industries and in all four counties distinguished 2000 from the past few years, helping people realize that the economy finally was on the upswing, economists said.
Going into the final two months of the year, job growth statewide was nearly 2 percent -- a level not seen locally since 1991. Last year it was 0.5 percent. In 1998 it was flat.
Jobs in construction, a key industry, were up 9.6 percent through October, the first year-over-year expansion in seven years. The Big Island led the way with a 27 percent increase, fueled partly by luxury homes being built for West Coast residents flush with stock market and high-tech profits.
With the economy kicking on almost all cylinders, Iboshi expects the state gross product -- the broadest measure of economic health -- to grow by an inflation-adjusted 2.8 percent this year. That compares with less than 2 percent the prior two years.
For next year, however, don't expect an encore. Most economists predict a slowing of Hawaii's economic expansion, partly due to slowing economies in places from which Hawaii gets most of its tourists and trade.
"I'm a little cautious about 2001," said David McClain, dean of the University of Hawaii's College of Business Administration.
The state's forecast is for only a tiny let-up next year. It is projecting a 2.7 percent growth rate. Leroy Laney, a Hawaii Pacific University economics professor, predicts 3 percent growth, compared with 3.5 percent this year.
Matching numbers just fine
For Harvey Shapiro, research chief for the Honolulu Board of Realtors, matching this year's numbers in the real estate market would be just fine.
More than 7,000 existing homes were sold on Oahu, a 16 percent increase over 1999 and the highest level in a decade, according to board data.
On the price front, the median for a single-family home increased for the first time since 1994. Through November, the median was up 1.7 percent to $295,000."My personal feeling is if in 2001 we hit the numbers from 2000, it'll be another very good year," Shapiro said.
Loren Shim, assistant vice president of sales for Aston Hotels & Resorts, also wouldn't mind seeing a repeat of 2000 numbers.
Through November, Aston posted a 10 percent increase in revenues, excluding the five properties it acquired in 2000, Shim said.
"I've been here 11 years, and this has been the best year by far," he said. Aston's previous best, Shim added, was 6 percent.
The same good-news story was heard throughout the hotel industry as Hawaii welcomed a record number of tourists. By year's end, the count was expected to reach nearly 7 million. The state is forecasting a 3.7 percent increase for 2001.
More important from an economic perspective, visitor spending was expected to surge 9 percent this year, to more than $11 billion, after several years of declines.
The growing tourism market also translated into a rise in hotel jobs for the first time in several years, according to the state Department of Business, Economic Development & Tourism.
As the overall job market and economy improved, Hawaii's bankruptcy picture brightened as well. Just a few days before the end of the year, the number of bankruptcies filed at U.S. Bankruptcy Court was 17 percent less than in 1999 and more than 20 percent off the record 5,813 recorded in 1998.
Gayle Lau, assistant U.S. trustee, said the growing economy is one reason for the decline.
Other indicators upbeat
Other economic indicators were equally upbeat.
Inflation this year was projected to be a modest 2.1 percent, while personal income was expected to grow 5 percent, according to state forecasts. Experts expect little change next year.
Building permits statewide also were up this year, indicating more good times for the construction industry in the months ahead.
Through the first half of 2000, permits for private projects statewide increased 13 percent, according to the state. Though the pace is well off the 25 percent increase for all of 1999, industry officials say enough new projects are in the works to keep most contractors busy next year."It takes a while for construction projects to be put on line," said Gary Wiseman, executive director of the Associated Builders and Contractors' Hawaii chapter.
One indication of the better times: the number of employer requests for apprentices is exceeding the number of apprentices looking for work, Wiseman said. That hasn't happened in a long time, he said.
In fact, a shortage of skilled labor has hit some segments of the construction industry, and some experts expect shortages to surface in other sectors in 2001.
Despite the improving economy, thousands of people still were unable to find jobs this year. But even that picture improved.
By November, the state's unemployment rate dropped to 3.7 percent, the lowest level since January 1992 and the first time since March 1995 that it fell below the national rate.
A year earlier, Hawaii's rate was 5.1 percent.
McClain of the UH business school said a jobless-rate reduction of 1.4 percentage points in a year's time "is an indication of remarkable growth in an economy."
Based on such a steep drop, McClain said, he wouldn't be surprised if Hawaii's economy actually was growing at a clip of more than 4 percent.
And he doesn't expect it to slow until the second or third quarter of next year, perhaps to around 2.5 percent or a little less.
But like other economists, McClain said the wild cards for the state's economy in 2001 will be what happens with the Japanese and U.S. economies.
"That makes the outlook cloudier for Hawaii," he said.
