During boom year, During 2000, a year in which Hawaii broke records in tourist arrivals, the state still lagged the rest of the country in economic growth.
isle economy lagged
As Hawaii drew record tourists
during 2000, its economic growth
stayed below most statesBy Lyn Danninger
ldanninger@starbulletin.comA Commerce Department report released yesterday showed Hawaii, with 1.9 percent growth in gross state product, was among the weakest U.S. states in terms of economic growth. Gross state product is the total market value of all goods and services produced in a state.
Hawaii ranked 42nd, behind Oklahoma and ahead of Arkansas. Alaska trailed the country while Rhode Island led.
While the Commerce Department report showed most sectors of Hawaii's economy contributed to growth, there were slight decreases in two areas: the sectors of finance, insurance and real estate and the government sector.
Economics professor Byron Gangnes, part of the University of Hawaii Economic Research Organization, said his group tends to look more at growth in personal income as a measure.
"As long as GSP is used there is a lag. That's why we use real personal income as a measure," he said.
Moreover, the two tend to track one another closely, he said. Whichever measure is used, the modest growth in 2000 was an improvement over previous years, he said.
"It's probably the case that 2000 was not as good a year in terms of overall income growth than most of us believed, but it's still a pretty good year," he said. "It was not until 2000 where any significant growth was seen. In 1999, there was a 0.6 percent growth in GSP.
"It's the first year in the better part of a decade where we had moderate growth," he said.
Hawaii's Department of Business, Economic Development and Tourism had earlier forecast that Hawaii would enjoy 3.7 percent growth in GSP during 2000.
The disparity in estimates can be explained in part by different information used in the calculations and the time lag between when the state forecast was issued versus the recent federal estimates.
The federal government also has access to some data that makes its estimate of growth more accurate, said John Mapes, an economist with the department.
"We did our 2000 estimate in mid-2001 based on earlier trends," Mapes said. "Ours was a projection, whereas they are basing it on things they saw for the year 2000."
Nationally, at the end of America's longest economic boom, Rhode Island and Idaho led all states in economic growth while Alaska and Louisiana, where the recession started, were dead last, the government reported.
The Commerce Department report on gross state product showed the 10-year economic boom was showering prosperity from coast to coast in 2000 but there were pockets of weakness, reflecting hard times in the oil and gas industry and manufacturing.
Residents of Rhode Island enjoyed the fastest growth pace, a gain of 10.7 percent in gross state product in 2000 compared to 1999. Idaho was not far behind with an increase of 8.3 percent, followed by an 8.1 percent rise in economic output in neighboring Oregon.
At the other end of the spectrum, Alaska, Louisiana and Mississippi were all hurt by weakness in the oil and gas industry and manufacturing. Economic output in Alaska fell by 2.9 percent in 2000 and was down 2.7 percent in Louisiana, the only two states where the economy shrank that year. Mississippi, third from the bottom, eked out a tiny 0.8 percent increase.
The performance in the various states compared to a nationwide increase of gross state product of 4.5 percent in 2000. That performance compared with an increase in the gross domestic product, the benchmark for the entire economy, of 4.1 percent for 2000.
The GDP and GSP figures are not directly comparable because the government subtracts some components from the state-by-state figures that are included in the overall GDP numbers. For instance, the gross state product excludes compensation paid for federal employees and members of the military stationed overseas.
The National Bureau of Economic Research has ruled that the country's longest period of economic growth ended in March 2001, exactly 10 years after the economic expansion began. The NBER has not determined when the recession ended, but many private economists believe the recovery began in January or February.
The Commerce report on the states showed that after Rhode Island, Idaho and Oregon, the states with the best growth performance in 2000 were New Hampshire, up 7.8 percent; California, 7.3 percent; Colorado, 7.3 percent; Massachusetts, 7.1 percent; New Jersey, 6.6 percent; Arizona, 6.5 percent; and New York, 6.1 percent.
All together the top 10 growth states accounted for more than half of U.S. economic growth in 2000.
The top-performing states in the West -- Idaho, Oregon, California and Arizona -- all enjoyed robust gains in high-tech manufacturing industries while Colorado had strong growth in business services and communications.
The top-performing Northeastern states -- Rhode Island, New Hampshire, Massachusetts, New Jersey and New York -- enjoyed strong growth in financial services, insurance and real estate.
After Alaska, Louisiana and Mississippi, the states with the weakest economic performance in 2000 were Delaware, up 0.9 percent; Wyoming, 1.2 percent; Alabama, 1.2 percent; West Virginia, 1.3 percent; Arkansas, 1.7 percent; Hawaii, 1.9 percent; and Oklahoma, 2.0 percent.
Economic weakness was widespread in many sectors in the slow-growing states with trouble in the mining sector, which includes oil and gas drilling, and manufacturing and construction.
The gross state product estimates are adjusted to remove the impact of inflation.
Before those adjustments, the current dollar output as measured by the gross state product measured $9.9 trillion for the nation as a whole in 2000.
The Associated Press contributed to this report
