After painting a picture of economic turmoil and problems in most parts of the world, including Japan which faces a continuing battle with deflation, Bradley said Guam’s economic outlook is rosy.
Despite a rise in consumer prices of nearly 26 percent in the last five years — information which he said is unreliable — the economist said in a “construction-led” economy, any indication of increasing construction activity is good. Flatbeds of rebar are going north and, he said, “I think we’re likely to see a lot more in the near future.”
Trigger
“I’m not in a position to say whether the Programmatic Agreement is a good thing, but it is a trigger,” said Bradley. The agreement was signed on Wednesday by Lynda Aguon, Guam State Historic Preservation officer, whose signature was needed in order for the agreement to be legally binding. Gov. Eddie Calvo and other Guam officials have also signed the agreement.
The economist pointed out that deposits in Guam banks, including the Bank of Guam, have been steadily rising, up 28.1 percent over the past five years. Local banks now have $2.1 billion on deposit. Loans by Guam banks have been rising, too. They are up 29.6 percent, to $2.8 billion. As for his bank, Bradley said loans by Bank of Guam are up 41.1 percent over the past five years, to $637 million.
“All of these figures,” said Bradley, “reflect a healthy, adaptive, growing economy.” And he said internal BOG documents tell even more. Demand deposits have grown more rapidly than time deposits, for more readily spendable funds. Delinquencies are down and foreclosures are rare.
Bradley said rising consumer debt is a good thing, indicating greater confidence in the economy, and, he added, “Higher credit card usage also show that people are spending more freely. Among our merchant customers, card use in the three months ending in January of this year was up 15 percent from a year earlier,” Bradley told his audience.
Consumer spending in general was also up 15 percent during the same period, spending on consumer services was up nearly 18 percent, and spending on transportation was up almost 19 percent.
Longer
As to the future, Bradley says the pending military buildup is “taking longer than expected to start in earnest.” But it’s probably a good thing that the military expansion is being spread out over more years, to 2020.
He said there are some obstacles to the buildup including Okinawa politics and Japanese funding issues, Guam’s infrastructure limitations, and funding cutbacks in Washington. And, he said, Guam politics is “obviously” an obstacle, as some don’t want the Marines to come here at all, and “some elected leaders don’t seem to know what they want (economic v. social v. cultural v. political issues.)”
Bradley also contrasted what’s happening on Guam with our neighbors to the north in the CNMI. The Northern Marianas economy has been in distress for more than a decade, and he said jobs are disappearing, remittances are down and businesses are suffering. Many have simply closed.
Comparing financial industry data with Guam, he said deposits in CNMI banks have been falling, down 13.4 percent over the last five years, to $455 million. Loans by CNMI banks have fallen substantially, down 39.6 percent over the same period, to $117 million.
“In contrast to Guam,” said Bradley, “these figures reflect a dismal economy that is still unraveling.”
