Economist: Tourism pushing recovery
The return of tourists is driving economic improvements across Hawaii Island, an economist told West Hawaii business owners and leaders Thursday afternoon.
“The years of bouncing along the bottom seem to be over,” Jack Suyderhoud said during the 39th annual First Hawaiian Bank economic outlook forum at the Hapuna Beach Prince Hotel.
Suyderhoud, a business economics professor and the bank’s economic adviser, said statewide tourism arrivals are boosting government coffers, as well as helping businesses, which is allowing the state to take on new infrastructure projects, such as the University of Hawaii campus at Palamanui and mixed commercial and residential development at University of Hawaii at Hilo.
West Hawaii relies more heavily on tourism than East Hawaii, Suyderhoud noted, and the Hilo visitor industry’s largest problem is uncertainty on Banyan Drive. The Naniloa Volcanoes Resort and the Hilo Hawaiian Hotel both have a significant number of rooms closed, in the Hilo Hawaiian’s case for renovations. And tourism industry officials there are also worried about a lack of airlift capacity to Hilo.
Kona is seeing new hotel capacity, with the construction of a Holiday Inn Express, as well as renewed capacity, with renovations ongoing at the Kona Village Resort, Suyderhoud said.
Kenneth Miller, the bank’s chief investment strategist, noted the ongoing impact Asian economies can have on Hawaii’s visitor arrivals.
“A weakening yen is not helpful,” he said, but added if Japan can emerge from its recent “zero growth” economy, that would be a positive result of that country’s economic situation.
Suyderhoud said he recently noticed announcements in Korean at Honolulu International Airport, an indicator arrivals from that country are up, the result of the federal government’s visa waiver program for South Korean tourists.
But the tourist boost — 13,000 more visitors this June than last June — hasn’t completely erased the impacts of the economic downturn, Suyderhoud said. Hawaii Island lost an estimated 8,000 jobs between 2008 and 2011, with only about 3,000 of those jobs having returned as the economy improved.
Hawaii Island still has an unemployment rate of 7.5 percent, above the statewide average of just less than 5 percent. Job growth has been uneven, Suyderhoud said.
“My estimate is that when we get together next year, we’ll still be down a little from the 8,000,” he said, adding that by 2015, job numbers should have fully recovered.
Even with some growth in construction, hiring there remains tentative, he said prior to his presentation.
They’re bringing people on, but it’s a little bit slow,” he said. “They’re being careful.”
Job growth usually does lag behind other indicators of economic improvement, he said. Business owners won’t do much significant hiring until they are certain the economic improvements are going to last.
The economic downturn, which Miller called the Great Recession, saw the economy shrink at a rate of 5 percent, he said. Growth, in the last few years, has remained at about 2 percent a year.
“There’s no reason we can’t get back to 3 percent growth,” Miller said, showing a chart of country’s gross domestic product growth since 1812, which featured steady growth over the last two centuries. “The economy is going to keep growing. I don’t see a double dip.”
Citing additional construction and infrastructure projects, increasing home sales and sale prices and economic drivers that aren’t directly related to, but may still be influenced by, tourism, including UH-Hilo and the Natural Energy Laboratory of Hawaii Authority, Suyderhoud said the unpleasant years Hawaii Island residents recently experienced are gone.
“As economic activity increases, there will be more self-sustaining growth and more opportunities for all of Hawaii Island’s businesses and residents,” he said.
Suyderhoud and Miller gave the same presentation earlier Thursday in Hilo. The audience there was particularly interested in macroeconomic issues, Suyderhoud said, asking questions about interest rates and Federal Reserve policies, as well as touching on how long it would take for Hawaii Island to return to prerecession job levels.
Suyderhoud and Miller discussed one more project that has the potential to increase business opportunities islandwide, the ongoing improvements to Saddle Road.
“People from the east side might find it easier and safer to travel to this side for restaurants or ball games,” he said.
That could open up the market for businesses on either side to do more marketing to the whole island, he added.