Maui County’s economic doldrums won’t dissipate soon, though the slowdown figures to give way gradually to growth tied to an upturn in tourism. That’s the gist of a forecast by Leroy Laney, First Hawaiian Bank economic adviser and professor of economics and finance at Hawaii Pacific University, who said Maui, like the rest of the state, had a steep slide into the recession but that it will have a slower recovery.
“The question now on everyone’s mind is how long it will be before better times return,” said Laney, in remarks prepared for a talk yesterday on Maui. “As I indicated in my remarks about the state economy, I think the recovery will be gradual.”
Laney said the economic comeback will be led by tourism and that a plausible scenario calls Hawaii to have an “L-shaped” recession with the bottom of the L slowly trending upward. “A lot of the angle to that trend will depend on tourism’s recovery,” he said. “That is still Hawaii’s major export industry, and without external injections, a genuine recovery cannot occur.”
Laney painted a picture in which a number of economic indicators had taken a dive in 2008, as well as earlier this year. Laney’s forecasts for the state included:
• Personal income will fall by an estimated 2.5 percent this year
• Hawaii unemployment will average 7.5 percent
• Tourism arrivals to the isles will be off 6.5 percent in 2009
• Private building permits will fall by 20 percent
Additionally, credit-card spending fell by 10 percent during the first half of this year, according to First Hawaiian Bank data.
Laney said the neighbor islands have seen a greater downturn because they are more reliant on tourism. He projected Maui’s job count will fall 4 percent this year, and that unemployment will average 10 percent in 2009, or more than double what it was in 2008.
When it comes to tourism, Laney said Maui has had to fight against a reputation for being a pricey destination catering to affluent visitors. “That reputation is likely to haunt it in this new world of frugality, in which fewer potential visitors see themselves as recession proof,” Laney said. Moreover, “Visitors attracted to Maui by lower airfares and hotel room rates are not likely to be big spenders when they get here.”
Laney also noted that Maui’s construction industry is in the third year of a downturn, with an estimated 30 percent drop in private building permits this year. He also noted that there have been big declines in home sales, but price declines had not been as great as other neighbor islands.
Concerns remain about Maui’s sugar industry, which will be the state’s lone sugar business after the last crop of commodity sugar is harvested in 2010. Laney said Maui’s Hawaiian Commercial & Sugar Co.’s yield per acre is expected to be in the 9-tons-per-acre range this year when it needs yields of 12 or better to remain viable on a long-term basis.