Thursday, July 31, 2014

By COLIN M. STEWART

Tribune-Herald staff writer

The Big Island -- as well as the rest of the nation and much of the world -- will continue to struggle economically in 2012, economists say.

Even so, things could be a lot worse, said Hawaii Pacific University Economics Professor Leroy Laney.

"There were some signs, in the later summer and early fall on the mainland, of a 'double-dip recession.' But things have improved some since then, so that doesn't look likely," he said Tuesday afternoon.

Instead, Laney said, Hawaii is in for a long, protracted recovery that will continue to decelerate moving forward.

In a statewide economic forecast he provided for First Hawaiian Bank in mid-November, Laney predicted job growth of 1.2 percent for the new year, with most of that occurring "in the private sector, with the public sector remaining a drag."

Meanwhile, the state's unemployment rate would make a "marginal improvement" from 6 percent to about 5.5 percent, he predicted.

Perhaps most tellingly, Laney said, the state will see a small increase in visitor arrivals of 2.6 percent.

"Tourism will likely remain Hawaii's main economic driver in the near future," he said in November. "But we are reminded once again that we do sell a luxury good to the rest of the world; a trip to Hawaii can be cut back in tougher times. Growth in visitor arrivals has been running over 3 percent so far in 2011, but that could mean slightly slower growth next year."

Hawaii Island, as well as the other neighbor islands, he added, will continue to lag in new construction projects, an area hard hit by the recession.

According to Julie Hugo, the 2011 president of the Hawaii Island Realtors Association, residential sales figures are an important economic indicator, and numbers this year show that the Big Isle's drop in sales has finally hit bottom, and it is now beginning the long climb back.

"We've shown a slow recovery since 2009," she said last week. "Median prices are holding, and I'm not seeing hugely falling values, and that's great."

Before the economic downturn began, Hawaii Island saw its best year ever in 2006, with 2,084 residential units sold. But then sales began to plummet. There were only 1,685 in 2007 and 1,148 the following year. There was a slight rebound in 2009, with 1,246 units sold, followed by more growth in 2010 with 1,509 residential sales. In 2011, there were 1,612 residential sales, she said.

During that time, the islandwide median home price fell from $414,900 in 2006 to a low of $243,750 in 2011. But, she added, median prices appear to be leveling off, and 2012 looks to be a year for modest growth.

"I don't see any kind of a blossoming," she said. "But, we'll continue to build strength for the third year in a row, and moving on into the fourth year of recovery."

Meanwhile, auto dealers are expecting a 10 percent increase in new statewide vehicle sales next year, said Dave Rolf, executive director of the Hawaii Automobile Dealers Association.

Such a jump in sales would be more than welcome by Hawaii dealers after the severe slump brought on by the global economic crisis, he said.

"The market (in Hawaii) tumbled from (selling) 70,000 units in 2005, a record year, all the way down to 33,639 in 2009," he said. "It tumbled by half, and has remained down there, bumping along with low levels of sales ever since."

Additionally, he said, last year's earthquake and tsunami in Japan and the flooding in Thailand served to impede the production of parts for automakers worldwide, causing a shortage of vehicles in stock.

The year 2010 saw a very slight increase in sales of about .01 percent, with 34,019 vehicles sold. While final numbers were not yet available for 2011, Rolf said expectations were for the year to end with a slip in sales of about 4 percent, totaling around 33,500 units. On the Big Island, 2,447 vehicles were sold in the first three quarters of 2011.

HADA did not have estimates for Big Isle sales in 2012, but Rolf said there are definite differences between Hawaii Island's car-buying habits and the rest of the state, including more interest in larger, less fuel-efficient trucks.

Email Colin M. Stewart at cstewart@hawaiitribune-herald.com.

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