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Hawaii ranked 4th in growth of personal income for the first quarter, according to a report released Thursday by the U.S. Bureau of Economic Analysis.Hawaii’s personal income grew 1.6 percent from the fourth quarter of 2007 to $52 billion.

It appears that the Fed’s rate cuts may be over for a while.  In fact, it has been rumored that the Fed may raise rates to combat the concern of inflation.  If inflation continues, long term mortgage rates may worsen.

current Fed interest rate policy “well positioned to promote moderate growth and price stability over time.” That language signals the central bank, increasingly worried about inflation, is done cutting rates for now. Bernanke noted that slower U.S. growth, and previous interest rate cuts, have reduced the value of the dollar against other currencies, increasing the potential for inflation.

That equity line of credit you have? You may want to try and lock that rate if you can.  If the Fed raises rates, it will effect the interest rates on shorter term loans, such as credit cards and equity lines.

I will throw a few articles that came up this past week out at you.

For Hawaii, the loss of Aloha Airlines and ATA, means fewer airline seats available for visitors to arrive on. 15% to be exact.  Brewbakermentioned that the other airlines in the industry may make up for their loss, but in the short-term there will be a small effect.  that coupled with the higher than expected inflation recently, leading to minimal economic growth this year, or no growth.

There was an interesting article about the value of the dollar recently than is worthy of reading, especially since Hawaii is a hot-spot for foreign investors.

Treasury Secretary Henry Paulson speaks in the article titled Worst of U.S. Credit Crisis May Be Over.

A good sign of the economy can be tracked back to retail vacancy rates, which is highlighted here.

As mentioned before we are anticipating the easing of tourist visa restrictions in various countries in Asia.  Well…in the Honolulu Advertiser we see:

Hawai’i’s visitor industry is getting ready for an expected surge in tourists from South Korea once visa restrictions are eased, which could come as early as year’s end.

Hotels and other players in the visitor industry are now joining the effort launched by state tourism officials several years ago to market Hawai’i to South Korean visitors.

The power of the global economy has put Hawai’i in a great position to generate meeting and incentive business from Korea, and HVCB is seizing the opportunity,

There really isn’t a lot to cover in this article other than the POTENTIAL.

The positive military spending news just got better.  The controversial Stryker Brigade is set to stay in Hawaii permanently.

The Army in 2001 decided to base a Stryker unit in Hawai’i, and started more than $700 million in construction projects, but in 2006 a federal appeals court ruled that the service had not adequately examined alternative locations, and ordered the Army to do so.

The decision largely halted one of the biggest Army projects in the Isles since World War II.

Bases in Alaska and Colorado were considered before the Army in February said Hawai’i was the “preferred” location; yesterday’s announcement made the decision permanent.

If and when the Stryker projects go forward, previous contracts would be continued, and could run for years, the Army said.

“Obviously, with other recent newsworthy happenings here on the island, an infusion of a lot of construction projects would not be a bad thing,” Shanks said, referring to job losses like those at Aloha Airlines. “And the stability of forces, soldiers and their families living (here) contributing economically to the Islands has got to be a positive influence here.”

I am sure you have asked yourself, “I have seen all of this negative economic news on the mainland and I wonder why hasn’t Oahu’s home prices dropped like that on the mainland? 

This is a very common question that almost everyone has been asking themselves right now.   It is either that question or they ask, how much lower are prices going to go on Oahu. (which means they don’t know what is going on in the market).

I had the chance to see Paul Brewbaker, Chief Economist and Senior Vice-President of Bank of Hawaii, speak at the regional group meeting recently and wanted to give you the information that was presented.

In summary, according to Brewbaker the reason we haven’t had the same problems here in Hawaii as in areas of the mainland, are:

1. Our economy has stayed strong with some of the lowest unemployment in the country
2. We didn’t overbuild during this last boom, consequently it didn’t leave us with an “Overhang” of properties, like what has occurred on the mainland.  The building was more restricted and controlled during the last boom.
In his Hawaii Economic Trends, January 30, 2008 issue:

“In two previous housing cycles, annual production in Hawaii peaked at 11,165 units in the year ending in fourth quarter 1980, at 10,429 units in the year ending in first quarter 1990, and at 9,802 units in the year ending in first quarter 2006, up from a cyclical low of 3, 331 units in the year ending in third quarter 1983. (A cyclical low of 4,630 units was set in the year ending in third quarter 1984. The all-time production high of around 18,000 housing units permitted was set in 1974 before current regulatory restrictions.)

3. When the private building (developers) sector slowed down construction, we were off-set by the large increase in the construction of military housing projects.  These projects didn’t add a lot of new housing, but instead replaced, old out-dated housing, thus this helped balance out the loss of economic activity in the private building sector.
4. We are also still considered affordable in comparison to San Fransisco and Orange County, which helped with the demand side of housing (Buyers).
5. In doing so, we have had the lowest number of delinquencies and defaults on mortgages in the country.

Which all leads us to where we are today.  Any thoughts?

Leroy Laney spoke recently at the Kapolei Chamber of Commerce and helped shed some light on the future potential of Kapolei.  Those of you looking to live in the Kapolei, Ewa, Makakilo areas, can gain some insight from this article.

The region’s population will grow from 85,000 now to about 172,000 in 2025, which Laney said would be more than the current populations of Maui or Hawai’i counties. Jobs are expected to nearly triple over the same time to nearly 70,000, he said.

Laney said economic activity generated by new development in Kapolei will be about $93 billion.

Thanks to activity in Kapolei, we’re likely to see less volatile swings in statewide employment, personal income growth and tax revenues,” Laney said. “As Kapolei transforms into an urban center, it will be a source of jobs for people who live in the area and a provider of a full range of private and public goods and services for local residents, visitors and businesses in Kapolei and beyond.

There are several articles out regarding the recent job figures released for March by the U.S. Labor Department.  You can watch Mike Mandels Video and accompanying article and the NPR’s article titled U.S. Economy Lost 80,000 Jobs In March.

The three consecutive declines in employment make it difficult to deny the economy is in recession, says S&P chief economist David Wyss, and suggest the Federal Reserve will cut its benchmark interest rate by 50 basis points at its Apr. 30 policy meeting, rather than by 25 basis points as S&P had assumed. …..the jobs report could make it more likely that the Federal Reserve will continue to cut interest rates in an effort to stimulate the economy into more growth.

The report prompted Action Economics to revise downward its gross domestic product forecasts for the second and third quarters. But Action points out that the upside surprise in the average workweek and associated hours-worked actually boosts some of its other economic forecasts for March, “leaving further evidence that the economy likely continued to post positive growth through the first quarter.”

Here was an article that shows that Hawaii’s income growth rate ranked 10th in the country.  The bad news is inflation in the islands is about double what the national average is.

I don’t much care that it was up, it is more about why Hotel Occupancy was up, than the fact that it was up.

Hospitality Advisors President Joseph Toy said the increase was fueled by a big increase in visitors from Canada — up 31.6 percent — convention-goers, sports travel and an upswing in independent travelers.

The state Department of Business, Economic Development and Tourism reported last week that visitor arrivals rose 5.9 percent in February to 603,689 visitors, helped in part by an extra calendar day because of leap year. Still, excluding the extra day, those arrivals rose 2.8 percent.

It is also good to see that room-rates are still increasing as well.