Hawaii’s income growth
falls behind mainland

Hawaii had one of the slowest personal income growth rates in the nation during the first quarter of 2005, according to a new federal report.

The U.S. Commerce Department said yesterday that Hawaii's personal income -- a broad measure of the economy that measures the income received by all people from all sources -- for the first quarter was $42.2 billion.

While Hawaii's personal income grew 6.9 from a year earlier, it rose 0.2 percent from the last quarter of 2004. Dividends, interests and rents fell 3.9 percent during the same time period.

Only Minnesota, North Dakota, and Washington posted lower growth rates for the first quarter.

"The fact that we grew 6.9 percent as compared to the first quarter (of 2004) shows strong growth," said state economist Pearl Imada Iboshi, adding that anything more than 2 percent adjusted growth is considered very good.

Historically Hawaii doesn't post strong personal income growth from the fourth quarter to the first quarter because the strength of the fourth quarter skews the results, Imada-Iboshi said.

Personal income grew 3.2 percent in the fourth quarter, the strongest of 2004.

That's in keeping with national results. Personal income growth for the nation, and for all states except Rhode Island, slowed in the first quarter of 2005 from the fourth quarter, according to the U.S. Bureau of Economic Analysis.

National growth slowed to 0.7 percent in the first quarter from 3.3 percent in the fourth quarter and did not keep pace with the 0.8 percent inflation rate as measured by the consumer price index.

The slowdown reflects the pattern of recent corporate dividend and compensation payments, the bureau said. In addition, bonuses and other lump sum wage payments contributed to make fourth-quarter earnings growth the strongest in more than four years.

Imada Iboshi said that she anticipates Hawaii's economy will remain strong, with job increases in nearly every sector.

"Tourism continues to be strong and we see continued planned increases for air seats, which should sustain the momentum," she said. "Construction activity will also show continued strength, especially as federal construction gears up over the next few years."

Hula Mae's interest rate drop is good news for first-time Hawaii buyers, who are struggling to get into homes, said Lehua Rosa Malott, a counselor at the Hawaii HomeOwnership Center.

"Buying a home is a stretch for most of my clients," Rosa Malott said.

The drop in interest rates will save prospective buyers who are trying to purchase a $300,000 home around $300 a month, she said.

"It's also going to help more people qualify," Rosa Malott said.