Hawaii economy sizzles
The state's expected economic growth
is attributed to an active housing
market, military construction plans
and a recovering tourist industry
A hot domestic housing market, plans for expanded military housing, a recovering tourist industry, and growth in the national and global economies promise continued strong growth in Hawaii's economy, according to two University of Hawaii experts.
"Growth is now increasingly broad-based, touching nearly every sector of the Hawaii economy," they said. "The construction sector will continue to grow strongly for the next several years, with moderate expansion in tourism-related areas and other service categories."
The only negative in a report released yesterday by professors Carl Bonham and Byron Gangnes of the University of Hawaii Economic Research Organization is temporary inflation fueled by growing housing and fuel prices.
"The external economy, which was generally negative for Hawaii in 2003, has since improved markedly," the report said. "The U.S. recovery has strengthened and Japan is performing better than in past years" with good prospects for moderately strong global growth over the next two years.
There are signs Hawaii's economy is doing even better than UHERO's first quarter report, which pointed to a nearly 2 percent job growth in 2003 and forecast "job growth this year and next to match that, before cooling slightly in 2006."
The state Department of Labor and Industrial Relations reported last month that Hawaii in April posted the highest percentage job growth in the nation, up 4,500 jobs, and an unemployment rate two percentage points lower than the national average, giving the islands a record work force.
The UHERO report said the big story for the next several years will a sharp increase in the impact from the military sector.
"Deployment of Oahu troops will exert a negative influence this year, but new basings will provide stimulus further out," it said. "There will be substantial stimulus to construction associated with military housing renovation projects."
Bonham and Gangnes forecast that inflation-adjusted personal income in Hawaii, their broadest measure of economic activity, will hit 2.8 percent this year (compared to 2.5 percent in 2003) and will reach 3.6 percent in 2005 "as military construction, public sector raises and Japanese visitor recovery work their way through the economy."
As for inflation, they said it probably will exceed 3 percent this year, "dropping back only slowly thereafter."
"Both surging home prices and high energy costs will contribute to a more inflationary environment for the next several years," their report said.
University of Hawaii Economic Research Organization:
www.uhero.hawaii.edu