Slower economy in forecast
By Sean Hao
Advertiser Staff Writer
By Sean Hao
Hawai'i's economy continues to chug along at a solid pace, but there are signs growth is slowing, according to a forecast released yesterday by the University of Hawai'i Economic Research Organization.
The findings are in line with previous predictions by UH economists, who say the slowdown isn't cause for concern. The group yesterday lowered an estimate for Japanese visitor arrivals to a half-percent growth this year, which was revised downward from a February forecast of 2.4 percent growth.
The move follows a "miserable" first quarter for Japanese visitor arrivals, said Carl Bonham, an economist at UH-Manoa.
A 7.5 percent drop in visitors from Japan during the first quarter from the same period a year earlier was partly a result of limited airline capacity and high hotel room occupancy, which led to higher room rates, Bonham said. Rainy weather and a major sewage spill in Honolulu also probably contributed to the decline.
"There are a lot of different factors that are causing it. I don't know that you can point to one thing," Bonham said.
Weaker-than-expected personal income growth in the fourth quarter of last year was another clear signal that growth rates are slowing. Local economists have been expecting growth to slow on the heels of several years of above-trend economic growth.
"The slowing that we've been anticipating is already happening," Bonham said.
Still, Hawai'i's economy is expected to continue to expand with real income growth forecast to rise a respectable 3 percent this year and 2.2 percent next year. Additionally, stronger-than-expected job growth during the first three months of this year caused UHERO to boost its estimate of job growth to 2.5 percent in 2006. In February UHERO predicted 2.1 percent job growth this year.
Hawai'i's jobless rate, which has been the nation's lowest, is expected to fall to 2.5 percent this year from 2.8 percent last year.
Hawai'i's slower growth won't be noticeable to most residents, Bonham said. However, people can't miss the increase in the cost of living, which now is rising at nearly 4 percent annually.
"That's what people will be noticing — that they're having to pay more for housing, rent, gasoline and insurance," Bonham said. "There's not much out there that doesn't have a price that's rising."
Reach Sean Hao at email@example.com.