A report released last week by the University of Hawai‘i’s Economic Research Organization predicts slowing to moderate growth for Kaua‘i County’s economy. Taking into consideration growth in visitor arrivals, the national economy, jobs, construction, real income and inflation, the forecast
A report released last week by the University of Hawai‘i’s Economic Research Organization predicts slowing to moderate growth for Kaua‘i County’s economy.
Taking into consideration growth in visitor arrivals, the national economy, jobs, construction, real income and inflation, the forecast for the next two years looks a little bit better than the last two.
According to the report, strong growth in 2004 and 2005 was followed by a period of “gradual deceleration,” which is likely to slow a bit through 2008.
“Conditions both locally and in the U.S. economy will support a continuation of growth but at a more measured pace than that of recent years,” states the report.
The Office of Economic Development, which released the document Friday, uses the forecast in shaping its own workforce development programs and also distributes it to other county department heads.
“It really helps us to have a snapshot of what we’re looking at in the next few years,” Beth Tokioka, director of the Economic Development Office, said.
Overall, the economy is strong, Tokioka noted, and a little slowing will actually do Kaua‘i some good, as accelerated growth through 2005 put a lot of pressure on the workforce to fill jobs.
“The cooling gives us a little room to breathe and catch up with where we’re at,” she said.
Kaua‘i will again see the strongest visitor arrivals growth of the islands for 2007, though the numbers are expected to drop from 8.4 percent last year to 2.7 percent in 2008.
As the bread and butter of the local economy, Tokioka said that the island-specific data on tourism sets this study apart from others.
“Kaua‘i in terms of economy is very different from the other islands and doesn’t always follow the statewide trends,” Tokioka said.
Construction is also expected to slow as the current cycle of development — including unprecedented growth on the South Shore — reaches its peak. But this trend, too, will fare better than that of the Neighbor Islands.
Looking up, real income, or wages adjusted for inflation, will bounce back a bit, with an increase to 2.3 percent by 2008 from the current 0.5 percent growth. The report identifies real income as “the most comprehensive measure of the Kaua‘i economy.”
In addition, the report predicts that inflation will subside gradually from the 6 percent level of 2006.
Nationally, the report indicated restrained growth, with U.S. real Gross Domestic Product growth down to 1.9 percent this year from 3.3 percent. However, levels were deemed sufficient to sustain healthy tourism on-island.
According to the report, the Garden Isle will see the weakest job growth of the four counties, slowing to 1.7 percent by 2008 from this year’s 2.2 percent.
Tokioka said there is a consistent need on the part of employers in terms of a qualified workforce. But workers can’t take jobs in places where they can’t afford to live. Affordable housing was cited as an “extreme problem,” as the median home price on-island of $678,000 exceeds O‘ahu’s $632,000.
Tokioka noted that the county is considering a bill to require a percentage of affordable housing from new developments. She said she has encouraged the business community to participate in the public process, as it is an issue that is affecting them.
Taking a positive outlook, Tokioka said the slowing is an opportunity to grow industries that pay living wages such as those identified by the office’s economic plan, including health services, renewable energy and agriculture.
She noted that workforce development programs and educational initiatives at the high school and college levels will help meet demand for agricultural and high-tech jobs.
The issue has also been recognized at the state level, with Gov. Linda Lingle signing legislation to increase science, technology, engineering and math education.
As for strong sectors, the report states that transportation and utilities will see robust growth, with accommodation and food service jobs trailing with moderately strong growth.
But the report also identifies infrastructure shortfalls as a key factor in restraining the island’s growth. With resistance in the form of the County Council’s big box ban ordinance as well as worsening traffic and the high cost of living, the report notes that there are constraints to increasing the size of the local economy.
In addition to the annual report, updated statistical data is available on the office’s Web site and can be compared to statewide figures and those of neighboring islands. Tokioka said this is an important resource for businesses year-round.
For more information or to view the report, visit the Office of Economic Development’s page at www.kauai.gov.
