Analyst says Hawaiin economy to slow

Hawaii's economy will see an 11th straight year of growth in 2008, but at a slower pace than this year, an economist says.

Leroy Laney, consultant for First Hawaiian Bank and professor at Hawaii Pacific University, said in the bank's annual look-ahead on the state's economy that cooling real estate markets and a slowdown in tourism growth are affecting overall growth.

Overall, he sees a state affected by national trends and hovering on the edge of recession.

The forecast said visitor numbers are expected to grow slightly, but increased travel from the U.S. mainland will not be enough to offset low numbers from Japan.

Unemployment, still close to the lowest in the nation, is expected to increase and job growth to slow somewhat because of a continued slack-off in construction, Laney said.

The slower growth trend is expected to continue for several years, with no new economic boom in sight, he said.

Median home prices across the islands continue to go up in most neighborhoods, although some sellers have been hit with long waits with fewer homes selling.

"The speculators expecting to flip a property in a year or so are gone, and those just wanting to buy a place to live in are shopping for price more carefully," Laney told the First Hawaiian Bank business Outlook Forum on Wednesday.

For 2008, Laney predicted continued high construction costs despite less residential construction. Planned military housing, however, will keep government contractors busy, he said.

Inflation will remain high, he said, with job growth dropping from 2 percent this year to 1 percent next year. That, in turn, will hold back personal income growth, and inflation should drop to 4 percent, he said.

The impact will also be felt on state tax revenue, he said, with the state already seeing a return to single-digit growth after the boom years of 2004 and 2005.

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