Posted on: Sunday, September 8, 2002

ONE YEAR, ONE NATION
The economy is better, but the signals are still mixed

Did the Sept. 11 attacks leave permanent scars on the Hawai'i economy, or were the declines in visitors, job losses and other problems merely transitory?

The Hawai'i economy, by some accounts, is back on track, with key indicators showing recovery or growth as the summer progresses.

But as Sept. 11, 2002, approaches, other signs show that Hawai'i's economic prospects have changed in some substantial and important ways. As Bank of Hawai'i economist Paul Brewbaker says, "we're long in some areas, well short in others."

The post-9/11 shock served to exacerbate some on-going trends — for example, it accelerated the decline in importance of international travel to Hawai'i. It also led to profound changes in the state government's fiscal outlook, with forecasts of revenue growth evaporating in the face of slumping tax collections.

And the shock threw tourism into a slump from which it has yet to recover. Encouraging arrival numbers masks hotels' struggles to make money, while an improved unemployment rate doesn't necessarily mean everyone has found a job. Tourism jobs are still down by several thousand, and the labor force has shrunk sharply, possibly due to jobless workers' despair at finding new employment, economists say.

"What's striking about this recovery," Brewbaker says, "is its lack of uniformity. There are clearly areas where work still needs to be done."