Economic growth expected to continue next year

By Andrew Gomes
Advertiser Staff Writer

A report released by University of Hawai'i economists says, "growth in Hawai'i continues unabated." The only slight weakness predicted was for relatively flat visitor arrivals this year. That is expected to increase next year. Advertiser library photo

The report cited increases in personal income, employment, home buying and construction combined with tame inflation, low interest rates and relatively flat visitor arrivals as much of the basis for predicting the local economy should build on its 2-year-old expansion.

"There's just no stopping this economy," wrote report authors Carl Bonham and Byron Gangnes of the UH Economic Research Organization. "Little more than six months after the outbreak of the War in Iraq, economic growth in Hawai'i continues unabated."

The only slight weakness predicted was for visitor arrivals, which the economists expect will decline by 0.3 percent this year, softening their forecast made in August that predicted arrivals would grow 0.2 percent.

However, visitor arrivals next year are anticipated to increase 8.7 percent, up a fraction from the 8.4 percent projection made in August.

The economists were most upbeat about employment. They predict the number of people who have at least one job or are self-employed will increase 4 percent this year, a revision from a 3.2 percent growth expectation made in August.

The anticipated rise in employment, combined with an expected jump in the number of jobs, which accounts for people with multiple jobs, should push the unemployment rate down from a projected 3.8 percent this year to 3.7 percent next year, the report said.

Growth in personal income adjusted for inflation is forecast to be 3.4 percent this year, slipping to 3.2 percent next year because of an anticipated increase in the inflation rate from a 1.7 percent projection this year to 2.5 percent next year.

Still, the economists said a 2.5 percent inflation rate would be tame by historical standards.

Among the more notable factors earlier this year supporting the forecast are a 3.5 percent rise in inflation-adjusted personal income during the first half of the year, and private building permits running 73 percent ahead of last year through July.

Reach Andrew Gomes at agomes@honoluluadvertiser.com or 525-8065.