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The Honolulu Advertiser
Posted on: Wednesday, February 22, 2006

UH report sees more growth for economy

By Sean Hao
Advertiser Staff Writer

Hawai'i's hot economy should continue to grow this year and next, but at a more moderate pace, according to a forecast released yesterday.

The state's economy is benefitting from booming construction and real estate markets and an increase in visitors.

That expansion will continue despite barriers to growth such as a tight labor market and high hotel occupancy rates, said the University of Hawai'i Economic Research Organization.

"Hawai'i is coming off an exceptional year one that will be tough to match," the UH economists said.

The biggest near-term risk to Hawai'i will likely come from outside the state.

Those include high oil prices and interest rate increases.

"While economic conditions in the U.S. look sound, an end to home price appreciation could undermine spending by consumers, who already are over-extended," the report said.

Here's how key economic indicators are expected to change:

  • During 2006 visitor arrivals are forecast to rise 3.4 percent, followed by 1.5 percent growth in 2007. Visitor arrivals rose 6.8 percent last year.

  • Personal income is expected to rise 3.2 percent this year, after adjusting for inflation. Incomes are expected to rise 2.4 percent in 2007.

  • Hawai'i's jobless rate, which is the lowest in the nation, is expected to fall to 2.6 percent this year, followed by a further decline to 2.5 percent in 2007.

  • The cost of living is expected to increase 3.8 percent this year, up from an estimated 3.7 percent last year.

    The inflation rate is forecast to fall to 3.3 percent in 2007.

    Reach Sean Hao at shao@honoluluadvertiser.com.