Hawaii Pacific University economist Leroy Laney delivered his annual economic outlook for Hawaii island Thursday, and once again had to dig deep to find positive things to say.
"The good news is that the Hawaii island economy is making progress. The bad news? Improvement will be slow. That’s been our main message for three years now, and it will likely continue for awhile," he said.
Laney delivered his remarks to business leaders at forums sponsored by First Hawaiian Bank in Hilo and in Kona.
Most of the economic indicators cited by Laney in his presentations portrayed a Hawaii island economy lagging behind the rest of the state. About the only sector where it has a chance of being in the forefront this year is in growth of visitor arrivals. And that’s mainly because of the low base from a tourism slump in 2011, he said.
The sluggish economy claimed another victim this week with the owners of the Keauhou Beach Hotel announcing they would close the hotel and lay off 112 workers.
In terms of overall jobs, the county is still 10 percent below its peak in 2007, and its jobless rate remains the highest in the state at 9.3 percent. The level of construction jobs is still about 50 percent below the 2007 peak, and a weakness in housing prices has resulted in lower property valuations that are beginning to affect county finances, Laney said.
"There has been a significant fallout of contractors since the slump began, with more likely to come," Laney said in his prepared address. A "slight uptick" in construction jobs since the beginning of the year is probably the result of high-end residential building in Kohala or government projects, he added.
Several large-scale projects, including the $17.2 million first phase of the West Hawaii Community College Palamanui campus in the Kealakehe area of Kailua-Kona, will help underpin the sluggish construction sector. Also in the pipeline is a new student housing complex at the University of Hawaii-Hilo campus, a Kaiser Permanente health center planned for Honokohau and a new pier at Hilo Harbor.
However, the issuance of building permits has been erratic, which will prevent construction in the near term from establishing a clear upward trend, Laney said. "Any revival is likely to be at least a year or two down the road."
Like the rest of the state, Hawaii island’s best short-term growth prospect is tourism, he said.
The island’s tourism industry underperformed the rest of the state last year, weighed down by a drop in Japanese visitors that began with the discontinuation of a direct Japan Airlines flight from Tokyo to Kona in 2010 and continued with fallout from the earthquake and tsunami in 2011.
"But that strengthens 2012 growth," Laney said. "In fact, Hawaii island could lead all counties in visitor numbers this year due to this snapback."
