It could take two years to regain jobs lost in the recession, a top economist says
POSTED: 01:30 a.m. HST, Oct 31, 2012
The strength in Hawaii's visitor industry is spreading to other sectors of the economy, but it could take another two years to regain all the jobs lost during the recent economic downturn, one of the state's top economists said Tuesday.
Gross domestic product, the broadest measure of state economic activity, is expected to grow by 1.5 percent this year and 2.3 percent in 2013 after adjusting for inflation, according to a forecast by Leroy Laney, professor of economics and finance at Hawaii Pacific University and economic adviser to First Hawaiian Bank.
"There are some bright spots besides tourism. Those bright spots — in a housing market that shows signs of turning, in retailing, in auto sales and in some other areas — are cause for cautious optimism as we head into 2013," Laney told business leaders gathered for First Hawaiian Bank's annual Business Outlook Forum.
"Our gradual recovery following the 2008-2009 Great Recession has been very slow, like everywhere else, but on a more optimistic note, it has been fairly steady," Laney said.
Three years into the economic recovery, Hawaii's overall job count is still about 5 percent below its pre-recession peak, he said.
"It could quite possibly be 2014 before we are back at the same level of jobs," Laney said. "I think it all depends on how quickly the strength in the visitor industry is disseminated to other sectors of the economy. We are seeing signs of that, but we'd like to see it accelerate."
The fastest job growth over the past year has been in leisure and hospitality, which added about 6,500 positions. Retail, transportation and utilities gained about 2,500 jobs, and financial services positions increased by roughly 1,000. The number of construction and government jobs, by contrast, both contracted over the past year.
"Suffice it to say that job growth has continued to be spread unevenly across sectors," he said.
The recovery in Oahu's housing market, if it can be sustained, will have positive impact across the broader state economy, Laney said. The median sales price is up about 9 percent this year, he noted. "By next year it's quite possible the old record high for median prices will be broken."
Laney was asked during the question-and-answer period if it would it make any difference to the local economy whether the rail project is built.
"I think there are two parts to that question. One, is it a good idea to build rail? And that I am not going to address," Laney said. "As far as its impact on the Hawaii economy, I don't think there is any doubt — and I've said this before — that the lagging sector of the economy is construction, and that (rail) would be a big shot in the arm for construction."