In her first speech of the year, San Francisco Federal Reserve Bank President Janet Yellen said the U.S. economy is likely to turn in a sluggish performance this year but that Hawai'i should weather a downturn in spending by U.S. consumers.

Yellen spoke Thursday night to the Chartered Financial Analysts of Hawaii in a speech at Waialae Country Club, saying current indicators point to continued anemic growth for at least the first half of this year. In her prepared remarks, she said there was significant downside risk to that expectation.

Part of the weakness stems from the housing market, with parts of Arizona, Nevada and California hit with falling prices and unsold homes for extended periods.

But "Hawai'i has been at the opposite end of the spectrum," said Yellen.

"Indeed, the sales pace for existing homes actually increased during the first nine months of the year compared with the same period in 2006, reflecting healthy economic conditions in the state, and a lower exposure to the subprime mortgage market."

Yellen said Hawai'i's economy isn't immune to what's happening on the Mainland, though it remains in a good position.

"Slower growth in consumer spending has already started to affect the Hawaiian economy," Yellen said.

"Up to last year, Hawai'i enjoyed an extended run of robust growth in the tourism industry, spurred primarily by visitors from the U.S. Mainland. This helped Hawai'i achieve the lowest unemployment rate in the nation during 2004 through 2006.

"Last year, tourist visits actually dropped a bit, largely because fewer Mainlanders came over. Employment growth in the state has slowed accordingly, and the unemployment rate is up by more than a percentage point from its remarkable low of 2 percent at the end of 2006.

"Nevertheless, economic conditions remain sound by historical standards, and the state appears well-positioned to weather any further spending reductions by U.S. consumers," Yellen said.