Business is booming and consumer confidence is growing — including on Kauai.
Island residents are purchasing second vehicles, buying new clothes and going out to dinner, while the increasing number of visitors is steadily impacting the economy.
“The economy is fine,” said Jeff Adams, executive director of Ha Coffee Bar on Tuesday as tourists and locals sat, drank coffee and talked story in the Rice Street shop.
North Shore boutique, BLISS (Beach Life Is So Sweet), is seeing an uptick in sales for beachwear, blankets and home decor, especially around the holidays and summertime.
“Local support is huge,” said BLISS owner, Julia Donner, on Tuesday. “All these small business are all trying to help each other out, and we’re all trying to connect with one another on island.”
Many residents and tourists are also spending money to eat out.
“It’s been busier than last year for sure,” said Anna Tellez, manager for Mariachi’s Authentic Mexican Restaurant at Harbor Mall. “We’ve been busy everyday from morning to night.”
Their sales have increased by double, so the Lihue restaurant has even had to hire more staff.
New Fed Chair Jerome Powell delivered a semi-annual monetary report to the House Financial Committee Tuesday that said the US economy is doing well, maybe even better than he thought late last year. Powell emphasized in his first Congressional testimony that the Central Bank plans to raise interest rates gradually.
“My personal outlook for the economy has strengthened since December,” Powell said. He noted a number of ways that the economic outlook has improved since December, including stronger data on growth and inflation, the passage of a $1.5 trillion tax cut in late December, and an increase in government spending in a January budget deal.
The Conference Board says its consumer confidence index rose to 130.8 in February, highest since November 2000 and up from 124.3 in January.
The business research group’s index measures consumers’ assessment of current conditions and their outlook for the next six months. They feel better about today’s economy than they have since March 2001. Their outlook also improved.
Tax cuts passed into law last year are starting to show up in workers’ paychecks. “As people slowly absorb the details of the tax reform package, opinion polls suggest that it is becoming significantly more popular,” Stephen Stanley, chief economist at Amherst Pierpont Securities, wrote in a research note.
A strong job market is also boosting confidence. The unemployment rate has stayed at a 17-year low 4.1 percent.
Kauai’s economy continues to be buoyed by the strong visitor sector, said Mark Perriello, president and CEO at Kauai Chamber of Commerce.
“Our island’s economic expansion will continue into the near future as visitor arrivals and spending should remain on par with recent trends,” he said. “However, some indicators point to structural weaknesses in our economy, which could impact us in the long-term if they are not addressed.”
He feels that as Kauai approaches its carrying capacity, it must look at creating and attracting new industries in order to secure long-term prospects for economic growth.
“We must support a stronger manufacturing base, along with other industries, in order to make our economy more resilient to inevitable future fluctuations in tourism,” Perriello said. “Economic diversification could support higher wage jobs and help to keep more of our families together.”
Tourism is strong.
For the sixth consecutive year, Hawaii’s tourism industry in 2017 achieved new annual record totals in five key categories, visitor spending, generated tax revenue, visitor arrivals, trans-Pacific air seats serving Hawaii and jobs supported statewide, according to the Hawaii Tourism Authority.
Visitors to the Hawaiian Islands spent $16.8 billion in 2017, an increase of 6.2 percent from the previous record in 2016. Spending by visitors generated a record $1.9 billion in state tax revenue in 2017. And a record 204,000 jobs statewide were supported by Hawaii’s tourism industry in 2017.
A total of 9.4 million visitors came to Hawaii last year.
Auto sales have been up, said Harbor Motors’ owner Arlen Miner-Ho.
“With taxes coming in, everyone looks for a second, sometimes third car,” he said.
Tax cuts passed into law last year are starting to show up in paychecks, while a strong job market is also boosting confidence with Kauai’s unemployment rate hovering around 2 percent since last fall.
Hawaii Auto Outlook reported that new retail light vehicle registrations exceeded 59,000 units statewide in 2017, with the light truck market share increasing to nearly 65 percent. State registrations of hybrid and electric cars and trucks increased 26 percent for 2017.
“Sales have been slowly climbing, especially with the amount of work we’re doing on Kauai,” Miner-Ho said. “Everybody is employed right now, so that’s usually a big indication of how the car market does. As the economy thrives, so does the car market and so does pretty much everybody else.”
The Associated Press contributed to this report.