Suyderhoud, professor of economics at the Shidler College of Business at the University of Hawai‘i, provided an overview of national and global economic conditions.
“Last year when we stood before you, we forecasted better times,” he said. “And, it is indeed the case that the economy is doing better; however, we also know that times are far from good. In fact, as we enter the second half of 2010, the term ‘double dip’ recession is often heard… While most economists, including myself, are not predicting the second dip, the mere fact that a double dip is on most peoples’ minds is by itself a sign that our economic recovery is very fragile.”
With a handful of mayoral candidates and other political hopefuls seated in the audience, Suyderhoud acknowledged the critical role of policymakers in resuscitating the economy.
“Recovery rests on the shoulders of policymakers,” he said.
In addition, Suyderhoud said, “At the heart of this unease is a concern about how the U.S. and some other major economies will reconcile the conflicting needs of short-term stimulus with long-term rebalancing… the short-term requires stimulus to offset a lack of consumer and business spending. However, the resulting government deficits and monetary expansion run counter to the long-term needs of reducing excessive government debts.”
After Suyderhoud exited the stage, Laney took the microphone, noting he was about to deliver his 21st economic forecast to Maui’s business community. Laney, who is the First Hawaiian Bank economic adviser and professor of economics and finance at Hawai‘i Pacific University, narrowed the focus closer to home.
“I wasn’t able to give you much good news last year,” he said. “But in 2010, the bottom has emerged.” There are signs of hope, but we aren’t free and clear yet, he said.
“Maui County—and all of the neighbor islands for that matter—has been feeling the recession more acutely than O‘ahu.” However, Laney said, Maui is distinguished by “an impressive rebound in tourism,” but “sustained recovery will emerge with improvements in tourism and construction.”
“Barring any unforeseen misfortunes, an economic recovery is now underway or at least imminent for the Maui economy, but don’t expect a rapid return to normal,” he said. “Led by its economic mainstay of tourism, Maui can look forward to better times in the future. Much greater uncertainty would have been attached to a statement like that a year ago.”
As audience members breathed an audible sigh of relief, Laney explained, “Maui’s tourism recovery in 2010 easily leads the state… growth in both visitor arrivals and spending is well ahead of other islands. Both March and May of this year have shown particularly impressive gains. Added flights—from Hawaiian and Alaska Airlines, as well as Canadian carriers WestJet and Air Canada—are helping.”
After spending the summer interviewing a number of individuals in Maui’s business community, Laney said he discovered they felt “travelers are still a little cautious despite gains in the numbers, but if potential travelers do a little research on packages, they can get good deals. Visitors are still searching for value. Regarding trends in visitors, honeymoons are up even if weddings on island are falling, and family business has been strong. Two important components of the Hawai‘i economy—tourism and construction— have to return to health before a sustained recovery emerges.”
As he concluded his presentation, Laney emphasized the importance of rousing Maui’s lackluster construction industry.
“Maui does lag in this sector,” he said. However, there is some construction activity “worth mentioning,” he said, such as the Maui Lani development, the planned Kahului Town Center and Phase II of the Maui Business Park.
Laney said the job picture on Maui mirrors the statewide trend, which “started to fall off the cliff in the second quarter of 2008 when the exit of Aloha Airlines, ATA and two NCL cruise ships began to be felt. The ensuing collapse of financial markets in the fall of 2008 led to “a very grim year for almost all of 2009,” Laney said.
“But as 2010 has progressed, a bottom has emerged,” Laney said. “A few job categories are already growing, and without further negative developments, it won’t be long before overall job gains become consistent.”
He said Maui, like the state as a whole, is “still losing overall jobs, but at a slower rate.” Laney said, “Maui has further to go in returning to positive job growth than the overall state, a reflection of the reality that all of the Neighbor Islands have felt the recession more acutely than O‘ahu’s relatively diversified economy.”
He said unemployment rates for both Maui and the State of Hawai‘i as a whole will “come down slowly.” Maui County’s unemployment rate often runs higher than the state average, he said, but “more evidence of how a tourism-dependent neighbor island economy is more vulnerable in the kind of recession we’ve just been through. Look for slow future declines here also.”
Regardless if his forecast was interpreted as either “sunny” or “gloomy,” Laney assured audience members, “Maui can look forward to better times in the future.”
To view the entire 2010 Economic Forecast, visit the First Hawaiian Bank Website at www.fhb.com.
