Hawai'i economic slump may last into summer

By John Duchemin
Advertiser Staff Writer

Hawai'i is sliding into a recession that could last into next summer, a local economist said yesterday in a gloomy prediction that is becoming the consensus among state forecasters.

Leroy Laney, an economic consultant for First Hawaiian Bank, is predicting declines in jobs, tourism and income for the next few quarters for the state as a result of the Sept. 11 attacks and the ensuing shock to Hawai'i's tourism industry.

By the middle of next year, the state's economy could be growing again, but the number of visitors, jobs and growth in income may not return to pre-Sept. 11 levels until the end of next year, Laney said in a forecast released yesterday at First Hawaiian Bank's annual Business Outlook Forum.

"Obviously, 2001 went suddenly from 'pretty good' to 'catastrophe,'" Laney said in the report. "And 2002, we hope, will make a transition from 'bad' to 'recovery.'"

Laney, a professor of finance at Hawai'i Pacific University, predicted overall job growth of 0.5 percent this year, followed by a decline of 0.5 percent in 2002. Dozens of companies have laid off or reduced hours for thousands of workers in the wake of the attacks.

He also forecast:

• A drop in visitors of 8 percent this year, followed by a slight rebound of 2.5 percent next year.

• Real personal income growth of 2 percent this year and 0.7 percent next year.

• Inflation at a relatively low 1.5 percent this year and 1.3 percent next year.

• Gross state product growth of 1.8 percent this year and 0.5 percent in 2002.

Laney's forecast is in line with those of other economists in the state.

Reach John Duchemin by e-mail at jduchemin@honoluluadvertiser.com or at 525-8062.