More hard times Honolulu will be among the U.S. cities to lose the highest percentage of jobs this year as effects from the Sept. 11 attacks linger, according to a study released today.
coming Hawaii’s way
A Milken Institute report
Maui may have escaped recession
says Honolulu will lose
2.57% of jobs this yearStar-Bulletin staff and wire
The city will lose an estimated 2.57 percent of jobs during 2002, says a report by the Milken Institute, an economic think tank.
The continued effects will obliterate an estimated 1.6 million jobs in major cities this year, the report says. The losses will spread across industries, from tourism and dining to aerospace and financial services.
"With the economic injury focused predominately on a handful of sectors -- travel, tourism, lodging, dining and recreation -- the consequences for individuals and unique localities have been profound," the report says. "Bellhops as far away as Las Vegas and Honolulu, baggage handlers at airports such as O'Hare and LAX and housekeepers at hotels throughout the nation, are now jobless."
Honolulu ranks ninth in the percentage of jobs losses projected for this year, but 42nd in the total amount of jobs projected to be lost, with about 10,700. Wage income in the city is expected to decline by about $360 million this year, the report says.
New York City will lose nearly 150,000 jobs, more than any other city. Los Angeles will rank second with 69,000 positions lost.
"That is one big number," said Jack Kyser, chief economist at the Los Angeles Economic Development Corp.
Even though the attacks had a huge initial impact on travel, tourism and related industries, Kyser is convinced the city will prove resilient and rebound by the end of the year as tourism and trade pick up.
Las Vegas will prove the single most vulnerable metropolitan area, likely to see nearly 5 percent fewer jobs this year because of the attacks.
"We do feel the impact, and it hurts," said Erika Brandvik, a spokeswoman for the Las Vegas Convention and Visitors Authority. "But nobody ever gets a long-term feeling of doom and gloom about the Las Vegas economy. We have a record of recovery."
Las Vegas hotels have managed to maintain high occupancy rates by offering discounts. In mid-week, more than 80 percent of its 125,000 hotel rooms remain booked, and on weekends that figure tops 90 percent, she said.
But great deals will not be enough to stem further job losses in travel-related industries this year, the Milken study says.
"The consequences of Sept. 11 for individuals and unique localities have been profound," the report concludes.
Most cities are expected to begin to recover in 2003, with the exception of New York, which should start its rebound a year later, the study says.
"The good news is that many of those jobs should come back," said Ross DeVol, director of regional studies at the Milken Institute and principal author of the report.
However, he expects the economic damage to linger into 2004.
The study examined 315 cities, using economic models to extrapolate employment losses based on each area's economic trends prior to Sept. 11.
Nationally, the largest falloff in jobs will occur in the air transportation sector, which will account for about 20 percent of the 1.6 million lost positions. The amusement, recreational services and hotel sectors will be next hardest hit.
Spending on airline travel dropped 38 percent in September, a decline of $12.5 billion, and improved only modestly in October. The airline industry responded in October and November by cutting 81,000 jobs, or 6.2 percent of its total work force, and more deep cuts are on the way, the study says.
The impact of Sept. 11 will extend well beyond travel-related industries. The entertainment and advertising sectors will lose 150,000 jobs as a result of the attacks, primarily because companies are slashing advertising budgets.
Across the country, the financial services industry will likely lose 96,000 positions through the year. Part of the losses relate to compensation payments made to victims' families that have hit the profits of insurance companies.
As the scene of the World Trade Center attack, New York lost billions of dollars worth of assets and thousands of jobs directly related to the shutdown of the financial district for a week. In addition, the city's economy has yet to benefit from any reconstruction.
KAHULUI >> First Hawaiian Bank economic consultant Leroy Laney said Maui's economy has not been hit as hard as Honolulu, primarily because the Valley Isle isn't as dependent on Japanese tourism as Oahu. Maui’s economy may
have escaped falling
into recessionStar-Bulletin staff
"Depending on how you measure it, there is even some question as to whether Maui is actually in a recession now to match the state's downturn," Laney said during the bank's Maui Business Outlook Forum yesterday at the Maui Beach Hotel.
Laney said all three Neighbor Island counties had domestic visitor arrivals that matched or exceeded numbers from a year ago.
He said construction on Maui last year was the strongest since a decade earlier -- with more than $400 million in building permit value -- real estate was holding up well, and the vacancy rate at the Maui Research and Technology Center has been less than 10 percent.
According to First Hawaiian Bank, domestic visitor arrivals statewide rose to within 1 percent of the prior year for Christmas week and international arrivals, including Japan, were down 34 percent. Both categories have seen much worse weeks than that since the Sept. 11th terrorists attacks on the East Coast.
Laney predicts visitor arrivals statewide in 2002 will rise 2.5 percent over the 2001, inflation will remain at about 1.3 percent, the number of jobs will decrease by .5 percent, and the real gross state product will be up .5 percent.
Nationwide, he said most economists see a 12-month recession with at least a reasonably strong recovery.
