Posted on: Thursday, June 23, 2005

Island workers earning more

By Sean Hao
Advertiser Staff Writer

Personal incomes statewide rose sharply in the first quarter, although a rise in the cost of living sliced real income gains to less than 3 percent.

That's in line with the expectations of local economists and demonstrates that Hawai'i's economic growth remained robust through early 2005. During the first three months of the year incomes rose 6.9 percent, according to figures released yesterday by the U.S. Bureau of Economic Analysis.

After adjusting for inflation, which is forecast to rise about 4 percent this year, personal incomes grew 2.9 percent compared with the first three months of 2004. For all of 2004 real personal incomes statewide rose 3.4 percent.

"The best part for us is we seem to be on track," said Carl Bonham, an economist at the University of Hawai'i-Manoa.

Driving the current economic boom, which is the strongest since the early 1990s, are strong construction, real estate and tourism sectors. However the pace of growth is expected to begin slowing next year.

Also contributing to income growth was a 2.9 percent jump in jobs during the first quarter, Bonham said. However, income attributed to new jobs means that many Hawai'i residents didn't actually experience an estimated 2.9 percent increase in purchasing power.

In fact, the figures appear to show that many residents are just keeping pace with inflation caused by rising energy and housing costs.

"Most of the real income growth looks like it's coming from job growth," Bonham said.

However, in certain sectors incomes are outpacing job growth by a wide margin, Bonham added.

"The real standouts are (jobs) in finance, insurance and real estate, management of companies and construction," he said.

Reach Sean Hao at shao@honoluluadvertiser.com or 525-8093.