Experts: economy
to hit pre-Sept. 11
projections in ’03

Lawmakers were briefed
in advance of the 2002 session

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By Pat Omandam
pomandam@starbulletin.com

On the night of Sept. 10, University of Hawaii economist Carl Bonham finished a forecast for the state that he planned to present a few days later.

Bonham was prepared to say Hawaii's economy was in pretty good shape and he was "cautiously optimistic" about its growth. But by the next morning, he knew his careful projections were forced off track.

"I know exactly what I was thinking before everything changed," Bonham said.

"Really, the economy looked reasonably good prior to Sept. 11," said Bonham, a member of the state Council on Revenues.

State lawmakers heard from Bonham and experts on Hawaii's economic future yesterday at a joint committee briefing at the state Capitol. The Legislature begins its regular 2002 session tomorrow.

The experts predict the economy will return to pre-Sept. 11 projections sometime in 2003.

Bonham said the attacks quickly pushed the U.S. economy into recession while consumer confidence took a hit.

In Hawaii, businesses that were considering a downsize not only let go of workers they wanted to lay off, but others as well. Bonham said the slowed economy "broke the back" of local retail and hotel businesses, which quickly eliminated local jobs.

The result was 11,383 people filing unemployment claims between Sept. 22 and Oct. 16.

Bonham predicts tourism job losses will persist until the first quarter of 2003. He said the unemployment rate will probably rise, while inflation will slow.

State economist Pearl Imada Iboshi said leading state economic indicators have not signaled any increase in growth in Hawaii's economy in the next five to 10 months. Expectations for 2002 are mixed, she said.

Iboshi said the forecast is for a gradual rebound from the declines of the past three months. There are signs of recovery in both the domestic and international visitor markets.

Iboshi said construction is one area where government can have an impact. But she cautioned legislators to choose wisely in their support of Gov. Ben Cayetano's proposed $900 million construction budget.

Only construction projects that can get going within six months will have an impact on the current slump. But those projects should also have a real benefit to the future of the state, she said. For example, building a road to nowhere may help the economy in the immediate future, but it doesn't benefit anyone in the long-term.

"It's not worth building anything that we don't need or want," Iboshi said.