Hawai'i Pacific University economist Leroy Laney expects the state economy to expand for a 10th consecutive year in 2006, but said his biggest concern is housing prices.

Laney unveiled his economic projections yesterday at the First Hawaiian Bank Business Outlook Forum at which he projected slightly slower growth in major economic areas next year, keeping the state economy in great shape.

Laney projected job growth at 2 percent next year, compared with 2.7 percent this year; real personal income growth at 3.1 percent vs. 3.6 percent this year; and visitor arrival growth at 3 percent vs. 6.2 percent this year. (2005 figures are estimates.)

The economist also projected that 2006 will see unemployment fall to 2.5 percent next year, compared with 2.7 percent this year, and the rate of inflation rise to 4 percent vs. 3.5 percent.

Home sales and construction have helped the economy grow, but median prices, which are expected to be about $590,000 for a single-family home on O'ahu this year, are deterring working-class people from moving to Hawai'i, and that could hinder economic expansion, Laney said.

Laney did not predict how high housing prices might go or whether the market was in for a soft landing with a leveling off of prices or a harder fall.

Reach Andrew Gomes at agomes@honoluluadvertiser.com.