Forecasts suggest downturn will continue
|||Bleak economy has many in Hawaii facing 2009 with uncertainty|
By Greg Wiles
Advertiser Staff Writer
By Greg Wiles
It's a new year and a time of new beginnings.
Unfortunately the newness doesn't extend to Hawai'i's economy, which many expect will remain mired in a downturn through much of 2009.
"Everybody is saying to me they maybe think it's going to get worse," said Stephen Wilson, a Honolulu certified public accountant. "They're saying it's going to get worse before it gets better."
The economy has been the subject of talk around dinner tables and in coffee shops for months. That will continue, given forecasts that key economic benchmarks — such as visitor arrivals, unemployment and real personal income — will fall farther this year.
Recovery may come late this year or next year, experts say.
"I don't see anybody that thinks it's going to bottom out by the middle of the year," said state Sen. Sam Slom, head of Small Business Hawaii, a business advocacy group whose annual January conference is themed "Small Business 2009: Overcoming Hawaii's Economic Challenges."
"It's difficult to talk about expansion or even keeping things the way they are. There's talk about cutting back more on people's hours."
Many people associate the start of Hawai'i's economic downturn last year with the shutdowns of airlines and pineapple operations, and layoffs at well-known companies. That sent unemployment rising faster than the national average, with November statewide unemployment reaching a nine-year high of 4.9 percent.
In 2009, the jobless rate is expected to continue rising. Economist Leroy Laney's forecast for First Hawaiian Bank projects unemployment will rise to 5.5 percent.
Even then, the rate doesn't take into account workers whose hours were trimmed but who remain employed.
Among the people at a job fair this week for The Counter, a 92-seat restaurant opening this month at Kahala Mall, were a noticeable number with experience in the industry.
"They've been working at places that have been cutting back their hours," said Ed Robles, general manager of the eatery specializing in made-to-order gourmet hamburgers.
The Counter is one of the few restaurants to be opening at a time when other eateries have been shuttered. Wilson said people are cautious about spending, and that there could be more restaurants and stores closing.
"There's more people with debt who haven't been flushed out yet."
At an upcoming meeting of the Big Island's Kona-Kohala Chamber of Commerce, members will discuss how best to navigate the economic doldrums. Vivian Landrum, executive director of the group, said among suggestions she's received are companies sharing workers and partnering in other areas.
She said businesses are putting off big expenditures and encouraging residents to shop locally. "Most people are anticipating 2009 is going to be a tough year,"she said. "We know we'll pull out of this. We just don't know when."
In November, the University of Hawai'i Economic Research Association issued a report, "No Quick Recovery from Hawai'i Recession," saying prospects for two drivers of the local economy — tourism and construction — weren't good and that it expected more job and income losses.
It cited economic problems in the state's two biggest tourist feeder markets, the U.S. Mainland and Japan, and said that construction jobs will recede in 2009.
The forecast was made before talk of President-elect Barack Obama's $775 billion stimulus plan. Gov. Linda Lingle and counties have set in motion an accelerated public works program for $1.86 billion in road, harbor, airport, school and other new construction and upgrade projects. But typically, it takes months for such projects to start and for money to start flowing through the economy.
Therefore, it's difficult to predict when a national stimulus program will dent national unemployment, which was at 6.7 percent in November.
But it's a positive that government is taking action to stem the economic downturn, said David Goya, executive vice president at Roberts Hawaii, the state's largest privately owned tour and transportation company. Goya said he doesn't see a tourism turnaround happening in 2009.
Forecasts range from the Bank of Hawai'i's estimate of a 0.2 percent decline in visitor arrivals this year to the UH Economic Research Organization's 5.7 percent drop. Those projections translate into at least 6.4 million visitors next year.
"There will still be a large number of people coming in," said Goya, whose company is hiring workers selectively. "People will still be coming to Hawai'i."
Others say it's easy to get lost in the negative news, and point to pockets of optimism.
"I've got clients who are in construction, and they're still busy," Wilson said. "There are still people wanting to tear out kitchens and remodel."
Moreover, gasoline prices most likely won't spike dramatically if oil price forecasts hold, and electricity prices should continue to decline in the short term. Inflation should also come down as housing prices drop.
Slom said he's talked with people who do solar energy installations, shred documents and conduct environmental studies, and they are busy.
While he is aware of businesses that are struggling, Slom said, "I also talk with people who have never had it so good."
Reach Greg Wiles at email@example.com.