Generally speaking, Guam's economy is "brighter than in several years," assessed Hawaii economist Leroy Laney, in an analysis for First Hawaiian Bank.

But just like credit-card teasers for low-interest rates or fees, the report requires reading of the fine print.

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The fine print spells out details and issues Guam must address for the bright economy to not lose its luster.

The economic report states this: Even though Guam's share of Japanese visitors has been rising since 2003, "there is evidence in market surveys that Guam has been attracting lower-income tourists."

In 2003, visitors earning less than 3 million yen annually accounted for 14 percent of the total Japanese visitors who came to Guam, the report states. By 2005, that number had risen to 34 percent.

Meanwhile, Guam's share of Japanese visitors making more than 10 million yen annually fell from 14 percent to 4 percent in the two compared years.

"Clearly, these are signs that Guam is becoming even more of a budget destination," according to Laney's analysis. Laney is an economics consultant to First Hawaiian Bank and professor of economics and finance at Hawaii Pacific University.

But the first half of this year seems to show a reversal, with the number of Guam's share of Japanese visitors earning less than 3 million yen a year shifting from 34 to 27 percent. The number of Japanese visitors who visited Guam and whose income range was above 10 million yen rose to 20 percent from 4 percent in the same period.

Guam is often perceived as the budget destination, and Hawaii is more upscale, the report states.

"Part of this simply reflects the fact that Guam is closer to Japan, and the flight time and cost of air fare is less expensive," according to the report.

"Yet even if Guam tourism were to improve dramatically in the coming years, that is not where Guam's next big economic thrust is likely to reside," according to the report.

Military buildup

The military buildup, inclusive of the Marines' relocation from Okinawa to Guam, is expected to cost $15 billion over 10 years.

"And it promises to boost Guam economic growth beyond anything it has experienced in modern times, potentially well exceeding the tourism investment boom," the report states.

During the tourism investment boom, Japanese real estate and hotel investors were the big players in the local economy. But their confidence diminished when the Japanese economy slowed about a decade ago.

The local real estate industry was already on recovery mode before the announcements of unprecedented military investments on Guam.

And so when the massive military expansion plans were confirmed, those became the catalyst to further boom, said Arnold Jose, the new president of the Guam Association of Realtors.

Several years ago, it would have taken years to sell a real estate property on Guam, Jose said.

These days, properties that are in good condition and are priced right can sell in as quickly as 45 to 60 days, he said.

"The problem people are having now is finding property for sale," Jose said.

The local real estate's resurgence has also led to a surge in interest in real estate careers.

The number of licensed real estate agents on Guam has exceeded 300 this year, a contrast to several years ago when the association's membership had less than 100 realtors, Jose said.

Jose said he believes the boom in the local real estate market is fueled by optimism about increased military spending on Guam.

And when the military projects start becoming reality, the local real estate growth, will be sustained, Jose added.

The renewed interest in real estate jobs, Jose said, will also have a beneficial effect to the local charities.

Jose said under his new leadership he's encouraging realtors to give back to the local community by providing various forms of support.

The economic report states that major opportunities exist for local construction firms, environmental services, facilities maintenance, food services and administrative jobs, among other things.

But there are also unknowns on the military aspect of Guam's economy.

Perhaps the biggest problem in analyzing and quantifying the impact is the uncertainty concerning funding and timing, the report states.

"Anything of this magnitude often changes in committed dollar amounts and time line. ... Some military decisions are still pending," according to Laney.

Possible growth

Guam's economy, measured in terms of Gross Territorial Product, was locally calculated at $3.4 billion in 2002, or about 8 percent of Hawaii's economic size at the time, the report states.

Few economies ever experience that kind of growth without major pains -- inflation, failure of infrastructure to keep up, congestion in various forms, and labor shortages among them, according to the report.

"So it is not all good news," according to the report.

Other not-so-good news stems from the years-long failure of the local government to come up with solid economic data that offer a more accurate, big-picture look at the local economy.

The lack of economic data began when Gov. Carl Gutierrez's administration was ending, and continues to be a problem now, under more than three years of Gov. Felix Camacho's administration.

Earlier this year, however, the federal government, led by the U.S. Census Bureau, and the Department of the Interior, helped toward filling the gap "by training people to gather the data and generate the appropriate statistics according to acceptable U.S. standards," according to the economic report.

"Any quantitative forecasting of the future obviously is harder if one cannot measure the present," the report states.

"Economists are certainly not the only ones who need this data; off-island investors, local businesses and consumers, and the local government require it also to make intelligent decisions," according to the report.

There's another caveat to the bright assessment of Guam's economic future: a major portion of the military construction spending might go to off-island contractors, the report stated.

But even under modest assumptions, the "trickle-down" effect to the local economy will be considerable, the report states.

"On the positive side, there will be plenty of work to go around, Guam homeowners will bee seeing major appreciation of their homes, and on balance, the standard of living on the island should rise," according to the report.

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Originally published November 7, 2006

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