Hawaii economy expected
to stay strong, experts sayLaney forecasts real personal
income to grow 2.7% in 2004 and
remain among the best in the U.S.
When restaurant lines start snaking around Coconuts Island Style Grill & Bar on Kauai, it's a sign to investor Sheila Harty that Hawaii's economy is doing pretty well.
Business from increased tourism and more prosperous locals has grown so much that the island-style dinner spot recently completed a 55-seat expansion, Harty said.
"Overall business has been firm and it's remained constant," she said. "I'd say the economy is doing well."
So Harty would agree with the economists who have said Hawaii's economy is among the nation's healthiest, as do business owners and experts islandwide.
First Hawaiian Bank Chief Economist Leroy Laney, speaking at the bank's annual business outlook forum yesterday morning at Dole Cannery, said economic indicators in Hawaii were much stronger than the nation as a whole and forecasted growth will stay strong into next year.
While economists such as Ken Courtis of Goldman Sachs Asia, who also spoke at the forum, say they are optimistic about the United States' economy as a whole, they say growth is not going to be anything to "get giddy" about.
However, in the islands, the picture is different, Laney said.
A construction boom is changing the face of Hawaii as lower interest rates have made building more affordable. Businesses are creating jobs and people are getting hired. They're spending money, and they're buying homes and cars. They're also filing fewer bankruptcies and whipping out their credit cards again.
"Hawaii has one of the healthiest economies in the nation," Laney said. "There is no reason at this point to expect that Hawaii's good health shouldn't continue into 2004, although some marginal slowdown might occur just because 2003 turns out to be a very good year and growth rates are hard to top."
Although higher long-term interest rates could start to cool construction and real estate, Laney forecasts a 2.7 percent growth rate in 2004, which would still place Hawaii high among states in economic growth.
Laney forecasts that gross state product -- one of the widest measures of the isles' economic activity -- will remain strong into next year with a 2.5 percent increase. While the state's inflation rate will remain muted in 2004, he said, forecasting a 2.1 percent rate.
A recovery in tourism and the continued effects of low interest rates has created jobs, said Laney, who is also a professor of economics and finance at Hawaii Pacific University.
And Hawaii's construction industry will continue to see a large boost from recently announced military housing construction and renovations, he said.
After gaining two government contracts, Actus Lend Lease, a company that focuses on community development for the military, is expanding its Bishop Street digs by 12,000 square feet, nearly a full floor, said Jamie Brown, President of Hawaii Commercial Real Estate LLC, the firm handling leasing at the building.
Hawaii also will see increasing tourism for 2004, Laney said, predicting visitor arrivals will increase by 3 percent, driven by time-share and cruise ships.
In 2004, several new time-share projects will see occupancy, and Norwegian Cruise Line will add more vessels to the interisland route, he said.
The addition of four direct flights to Maui from Spokane, Wash.; Anchorage and Fairbanks, Alaska; and Boise, Idaho are also expected to spur visitor arrivals to Maui, said Lynn Araki-Regan, economic development coordinator for the county of Maui.
"The flights were added in November and we're already in the process of seeing an impact," Araki-Regan said.
Tourism experts throughout the islands say they expect expansion by Norwegian to significantly boost the economy.
"By 2005, we should have a cruise ship coming in daily," said Sue Kanoho, executive director of the Kauai Visitors Bureau.
Growth in tourism and construction should increase the number of available jobs in Hawaii by 2 percent next year, with more jobs being created if the Japanese tourist market improves, Laney said.
"The divergence is striking -- loss of jobs nationwide, gains here in Hawaii. That's the main reason Hawaii's economy is doing so much better than the nation at this point," he said.
Business leaders throughout the state also are hoping the state's push to turn Hawaii into a technology and service training center for homeland security will create more jobs, said Emy Yamauchi-Wong, a manager at Altres Staffing Inc., one of Hawaii's largest temp agencies.
"We're waiting with baited breath to see if that happens," Yamauchi-Wong said. "But regardless, we've definitely seen an increase in the number of clients who are hiring or requesting temporary workers."
In Maui, high-tech is going strong. The Maui Research & Technology Center has more prospective clients than they have space, Araki-Regan said.
The park plans another 35,000-square-foot building, scheduled for completion in 2005. The park has ripple effects, providing higher-income employment for local graduates in technical disciplines who do not want to leave the island or want to return from the mainland. The park also helps tourism, accounting for 10,000 room nights per year and $10 million in visitor spending, she said.
High-tech jobs are also growing on Kauai, led by the Pacific Missile Range Facility and its subcontractors, said Beth Tokioka, director of the Office of Economic Development for Kauai County.
Astronomy is driving high-tech in Hawaii County and on Maui, said Ted Liu, director of the Department of Business, Economic Development and Tourism.
An observatory at Haleakala has attracted businesses and created higher-paying jobs, as have facilities atop Mauna Kea, he said.
However, agriculture still accounts for a large share of the Big Island's economy, said Paula Helfrich, president of Hawaii Island Economic Development board.
Flowers, nursery products, banana, macadamia, fruits, forestry, dairy products and cattle are important to the East Hawaii economy.
And if federal funding for the U.S. Pacific Basin Agricultural Research Center comes through the pipeline, it should continue to foster Big Island farming efforts.
