ON THE INSIDE
Economic Outlook
Tougher for CNMI,
Saipan
O
7
Guam Economic Confidence Remains High
Thanks to Plans for U.S. Military Buildup
Economic analysis by Dr. Leroy O. Laney, Economics Consultant to First Hawaiian Bank and Professor of Economics & Finance, Hawaii Pacific University
verall, consumer and business
confidence on Guam remains high.
The big item in the island’s
economic outlook continues to be the
expected huge increase in military
presence on the island, which will have
major repercussions for construction,
housing supply (both on and off bases),
housing prices, and retail activity.
Much recent investment in real
estate has been external in source,
encouraged by flat to downward trends in
real estate markets elsewhere. Another
factor contributing to upward pressure on
Guam’s real estate prices is low inventory,
which also encourages new construction.
The downsides of the Guam boom,
and the greater activity to come if the
military buildup materializes in planned
time frames, include:
n Higher inflation.
n More congestion.
n Greater pressure on outdated
infrastructure.
n And potential social problems
of various kinds.
As discussed below, announced time
frames for the buildup are likely to slip.
In fact, they have already slipped since
publication of our previous First Hawaiian
Bank Economic Forecast on Guam in
2006. Even if the military expansion is
pushed further into the future, it will
provide great impetus to the economy.
In fact, given some of the problems
detailed in this report, some slippage
might even be desirable.
Guam Military Buildup:
Looking at the Big Picture
In 2006, the U.S. Pacific Command
announced that Guam had been chosen
as the location of a military buildup that
could literally transform the island
economy. The buildup plans envisioned
relocating the U.S. Marines from Okinawa
to Guam, improving Guam’s Naval Base
to serve as a forward operations and
logistics hub, and development of
Andersen Air Force Base to serve the
new forward-based requirements.
Planning for t