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Congressional belt-tightening leaves growth ‘tenuous’

By Therese Hart HAGATNA, Guam (Marianas Variety, July 6, 2011) –Guam’s overall economic performance remained "relatively flat" throughout Fiscal Year 2010 because construction projects outlined in the draft environmental impact statement to relocate U.S. Marines and ancillary services from Japan to this island have not materialized, according to an assessment of local economic factors found in the Office of the Public Auditor’s report released last week.

However, economic growth is expected to accelerate, but that is dependent on the timeline adjustments agreed to by the United States and Japan to finance the infrastructure requirements of the military buildup. This will happen after 2014.

Otherwise, Guam’s growth outlook is tenuous as American Recovery and Reinvestment Act funding opportunities are expected to "dry up this coming year," according to the report.

Globally, crude oil price change volatility has increased production cost uncertainty, stymied employment opportunities, and dampened consumer spending here and abroad. Guam is not immune to this phenomenon or from sequential local and national debt challenges.

Guam’s civilian and military population in 2010 as projected by U.S. Census is 180,692. Of that, 131,263 were aged 16 years and older. The total number of people employed as of September 2010 was 62,180, an increase of 2,080 or 3.5 percent since September 2009.

Over the same time period, private average hourly earnings were $12.33, an increase of 18 cents; and average weekly earnings were $450.51, an increase of $17.99. Job gains increased the most in the services and construction industries.

With the buildup efforts underway, Guam will see an increase in permanent and transient workers employed from abroad to fill the direct and secondary job shortfalls from local sector industries.

In 2010, overall prices increased by 2.9 percent as compared to 2009. Food prices decreased by 1.2 percent, housing increased by 0.7 percent, apparel and upkeep decreased by 1.4 percent, transportation increased by 4.7 percent, medical care increased by 12.2 percent, recreation decreased by 6.1 percent, education and communication increased by 0.6 percent, and other goods and services increased by 13.0 percent from the fourth quarter 2009 to the fourth quarter 2010.

The good news is that construction permits continue to rise year to year. In 2008, gross construction permit valuations were $210.9 million. And in 2010, valuations increased to $278.2 million. It is anticipated permits will exceed well past $300 million in 2011 and 2012, barring further delays in the buildup phase to the U.S. Marines relocation to Guam, according to the report.

In the tourism sector, arrivals have rebounded to pre-2009 levels, increasing from 1,053,248 in 2009 to 1,170,857 in 2010. But the report said the outlook remains tenuous through 2011, given sustained financial instability in world markets.

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