UH report indicates
economic upswingThe researchers see a recovery
in Hawaii from events of 2001
A strong performance in industries outside tourism has prompted the University of Hawaii Economic Research Organization to release an optimistic report on the state's economy which says the islands have recovered from the bad events of 2001.
"Outside of tourism, Hawaii's economy is continuing to perform well. Income growth rebounded in the post-9/11 period, buoyed by strength in government, construction and financial services sectors," said authors Carl Bonham and Byron Gangnes.
They predict real personal income growth of 3.6 percent this year and 3.4 percent growth next year. Payroll jobs are expected to grow 2.3 percent this year and 2 percent next year.
Still, the report has caveats. "A U.S. economy that was clearly on the mend a year ago faltered this spring, and its direction remains unclear. Continued expansion depends on a revival of corporate optimism that is not yet evident. Japan's woes are familiar, deep and provide little room for optimism," it said.
The report cites a litany of statistics.
The total dollar volume of Oahu real estate resales this year has reached $1.87 billion, an increase of $486 million, or 3 percent, from year-ago levels, according to the Honolulu Board of Realtors. The UH report says the torrid pace is not likely to slow soon, despite recent increases in mortgage rates.
Total nonfarm jobs edged up 1.1 percent to 570,050 in June from 563,650 last year, according to the state Department of Labor & Industrial Relations. Hawaii's June unemployment rate stood at 4.4 percent, a decrease from 4.5 percent last year and well below the national rate of 6.4 percent. The UH report predicts unemployment will remain low next year.
Some have noted that Hawaii's low unemployment rate has not been caused by job creation, but by slow growth in the civilian labor force. Hawaii led the nation in per capita loss of people during the last half of the 1990s, with 76,133 more people moving out of the state than moving in, according to recently released census data.
Still, real personal income rose 3.9 percent last year and continued to grow 4 percent in the first quarter, the UH report said. Private building permit values were up 60 percent in the first five months of the year compared with last year.
"If you look at the numbers, it is pretty bright," said Leroy Laney, economics professor at Hawaii Pacific University. "We're getting very, very strong numbers in personal income."
Laney noted that some people will always slip through the cracks of positive economic data, "but you've got to deal with the broader numbers."
All the activity has helped to weather sluggish times in Hawaii's No. 1 industry, tourism, which had a 9.1 percent drop in visitor arrivals in 2001 after a record year in 2000. Last year's arrivals were relatively flat, and the UH report expects the same for this year. Growth in Hawaii's largest market for tourists, the U.S. mainland, is projected to balance out substantial losses in the No. 2 market, Japan.
The official state forecast says Hawaii will have 1.32 million Japanese visits this year, down 10.7 percent from 1.48 million in 2002, and down 38.6 percent from a record 2.15 million Japanese arrivals in 1997.
The brunt of that impact is being felt in Waikiki, which relies heavily on Japanese arrivals.
The UH report is even more bearish on Japan, with the expectation that Japanese arrivals will drop 18.6 percent this year, then bounce back in 2004. Japan Airlines and Northwest Airlines Corp. plan to drop Japan-Honolulu flights later this year, citing weak demand.
