A new report shows Hawaii consumers are gaining confidence in the health of the local economy amid strong growth in tourism and rising home prices.
The Hawaii Resident Confidence Index has risen by 30 points since the end of last year, the biggest six-month change since the 2008 financial meltdown.
Local research firm OmniTrak Group, which publishes the index, also reported that the number of consumers who cited the economy as their top concern dropped to 35 percent of those surveyed from 50 percent six months ago.
The results of the research were included in the summer edition of The People’s Pulse, a semiannual update on the state’s economy sponsored by the Hawaii Business Roundtable and Pacific Resource Partnership.
"We were surprised at how strongly consumer confidence has recovered," said Gary Kai, executive director of the roundtable, an organization that includes chief executives of Hawaii’s largest businesses, which employ more than 80,000 people.
"Our members are relatively positive. Unemployment levels are declining, although slowly. The visitor market is up, and all indications are that the economy is reacting positively," he said.
To calculate the index, OmniTrak conducts a random telephone poll of Hawaii residents and asks them a series of questions about the economy. For the latest poll OmniTrak surveyed 701 adults on Oahu, Hawaii, Maui and Kauai between May 3 and 21. The margin of error was plus or minus 3.7 percentage points.
The latest index reading was 109, up from 79 from the previous survey. The index peaked at 151 during in the summer of 2005 during the last economic boom. It bottomed out at 61 in late 2009 after the recession.
The upward trend in the index "bodes well for the economic outlook over the rest of 2012," according to the update.
While consumer confidence among island residents is rising, it is heading the opposite direction nationally. The Thomson Reuters/University of Michigan index of consumer sentiment fell from 73.2 in June to 72 in July, its lowest level this year.
Economists attributed the decline to weak job market data and stock market volatility tied to Europe’s debt crisis. A separate report issued by the Conference Board last month showed that consumer confidence fell in June for the fourth straight month.
However, Hawaii is benefiting from several factors that aren’t occurring across the broader U.S. economy. Tourism, the main engine of economic growth, is on pace to set records for both tourist arrivals and spending this year.
Hawaii residents are also likely feeling optimistic about rising home values. The Honolulu Board of Realtors reported last week that the median price of a single-family home on Oahu rose to $620,000 in June, a 10.2 percent increase from the same month a year earlier.
The University of Hawaii Research Organization is forecasting the median price for an existing single-family home on Oahu to reach $630,000 in 2012, slightly below the record high of $643,500 set in 2007.
The national median price for an existing single-family home was $182,600 in May, compared with the record high of $220,000 set in 2006.
