University of Hawaii economists have updated their forecasts, and while they find that the Hawaii economy is in some respects healthier than the national economy, expansion has paused.
"Our forecast is for gains as we move into 2012, but not at a pace that will lead to rapid improvement in economic conditions," the University of Hawaii Economic Research Organization reported today.
An annual forecast by UHERO, supported by funding from local businesses, is updated around this time each year. The late 2011 forecast is decidedly less optimistic than the one issued a year ago.
The island economy is closely tied to national and foreign events, and while a year ago UHERO was hopeful, anticipated improvements did not happen. "Consumer confidence and spending remain anemic and manufacturing activity continues to hover just barely above contraction," the forecast says.
On the international scene, the European debt crisis creates uncertainty, and at home "domestic political impediments have caused governments to dither, rather than adopting decisive actions to stave off a major crisis."
Upbeat news to add to the mix is sparse. Oil prices are down for the year but still higher than they were in the previous forecast update.
High oil prices tend to depress airline ticket sales, and they also deter airlines from expanding services, although the report notes that international carriers continue to expand their Hawaii offerings.
The visitor industry, and employment, got a bump from the opening of Disney's big Aulani resort at Ko Olina on Oahu.
Otherwise, most harbingers have been negative. "Most worrisome this year has been the steady decline in visitors from the U.S. Mainland," the economists said in their report.
Through August, Mainland traffic was down 10 percent. There was a bump up in September, which was hard to interpret since that is one of the slowest months for tourism.
But UHERO calls the bump in arrivals from everywhere but America and Japan "stunning."
The biggest sectors of the state economy are tourism, construction, military spending and other government spending.
Construction work is stabilizing on Oahu (thanks to military contracts, primarily), but "this is all about Honolulu County."
UHERO has been looking forward to government contracts to restore construction, and it notes there are big things on the horizon: Also, Oahu-centric, they include rail and an urgently needed replacement of that island's aging sewers.
But not much is happening now. "The $63 million of public contracts in the second quarter was the lowest level of government contracting since the first quarter of 1984!" the report points out.
Sales of new and existing real property is a big item. In Maui County, it results in multibillion-dollar turnover, although unless it is new development, not a big job creator.
"On Maui and to a lesser extent the Big Island there is still clear downward trend with no sign of price stabilization," the report says.
The unemployment rate has moved up slightly, and the total of payroll jobs is 5 percent off the peak achieved in December 2007.
That is a reminder that even before the financial collapse in October 2008, there were signs that Hawaii's boom was running out of gas.
UHERO expects nonfarm payroll jobs to expand by 1.7 percent in 2012, unevenly distributed across various sectors. This will come on top of 1.2 percent overall growth this year.
That will leave many long-term unemployed, and local families will be strongly impacted by whether Congress again extends the limit of long-term unemployment compensation.
The economists sum up the past year by saying, "Hawaii's showing this year has been disappointing, but not particularly surprising."
* Harry Eagar can be reached at heagar@mauinews.com.
