Economy Improving, But Progress is Slow
While US economic growth will be slightly higher in 2013 than most other global economies, the rate of growth will remain slow.
The same can also be said of Hawaii County.
That was the consensus from both Jack Suyderhoud, professor of business economics at the University of Hawaii at Manoa and Leroy Laney, professor of economics and finance at Hawaii Pacific University.
They shared their findings today at the 38th Annual First Hawaiian Bank Hawaii Island Business Economic Forum, co-hosted with the Kona-Kohala Chamber of Commerce at the Waikoloa Marriott to help local businesses prepare for the year ahead.
Laney provided state and local forecasts, while Suyderhoud discussed factors affecting US and global markets.
US growth during 2012 has disappointed economists, coming in at less than 2% for the year to date. Consumer confidence remains extremely low, an important indicator because 75% of the US economy depends on consumer spending.
National housing prices continue to “bump along the bottom,” but housing starts are showing signs of life.
Locally, real estate sales are leveling off after recovering some in past few years. These figures “have to be taken with a grain of salt,” according to Laney as there is tremendous disparity between East Hawaii and West Hawaii and any trends are fairly fragile.
“Until foreclosures work their way through the system, the added inventory hangs like a cloud over the real estate market,” he said.
While construction is lagging both on island and statewide — on Hawaii Island construction is still 50% below peak levels — there is some good news.
Several public sector and commercial projects are on the horizon, including the West Hawaii Community Health Center, a 30-bed Kaiser Permanente health center at Honokohau, a new West Hawaii judiciary complex, phase one of the Palamanui Campus in West Hawaii, and dredging has been completed for Pier 4 at Hilo Harbor, which will significantly expand capacity.
The need for an upgraded visitor plan for Hilo was emphasized again by Laney, citing the condition of East Hawaii facilities and the fact that the Hawaii Island visitor experience is very different compared to other islands.
In other areas, Laney explained Mauna Kea may soon be losing two telescopes due to cutbacks in spending from the United Kingdom. The United Kingdom Infrared Telescope and the James-Clerk Maxwell Telescope will likely close and be dismantled.
Agriculture is a more upbeat area. Better weather has increased macadamia nut production by about 15%. Coffee production is also expected to increase by 10%, despite North Kona yields being a little bit lower. Ka`u coffee is winning awards in competitions. Still, it’s unclear what the overall economic impact of the coffee borer beetle will be, and that has the coffee industry worried.
Another highlight for the Big Island is the good prices ranchers are getting for their beef. Prices for Hawaiian beef will remain strong while supplies are low on the mainland due to drought.
Demand for Hawaiian grass-fed beef is also strong, but ranchers are doing better when they sell 400-pound wean-offs, so they will be more likely to ship their cattle to the mainland in coming months.
Overall, the economic picture for Hawaii Island is very similar to last year. The economy is improving, but progress is frustratingly slow.
“People might be getting tired of hearing that after three years, but it’s the truth,” Laney said. “We can only hope this fragile recovery won’t be derailed.”
The full economic forecast is available online at www.fhb.com/hm_econ.htm
Laura Kinoshita, a Big Island business consultant, contributed to this article.