Hawai'i's economy continues to motor along on a pace that by year's end will mark 10 consecutive years of economic growth — the longest continuous expansion since 1974.

The last decade of general good times could not have been more welcome by an Island business climate that suffered through the preceding, so-called "Lost Decade" of the first Gulf War, military downsizing and a downturn in Japan's economy that ended the era of free-spending Japanese visitors and helped trigger economic stagnation in Hawai'i.

But Hawai'i's economy emerged from the Lost Decade stronger and better able to weather a U.S. recession, the terrorist attacks of Sept. 11, 2001, and other geopolitical events like an up-and-down Japanese economy.

For the near future, economists are forecasting a few more years of good times but say that Hawai'i's current economic growth has reached a peak and future expansion will plod along at a much slower pace.

"This particular cycle seems to be slowing in an orderly fashion," said University of Hawai'i economist Carl Bonham. "The slowdown we've seen in real estate is sort of a good sign. If prices would have continued to increase at a 30 percent annual rate, things would start to implode. This cycle has not been so extreme that it would self-destruct."

Eddie Flores Jr., owner and founder of the L&L Drive-Inn chain, agrees the economy has reached a plateau and seems to be slowing.

"Our company has been doing phenomenally," Flores said. "But we peaked two or three years ago in terms of growth."

With a statewide population of nearly 1.3 million and 52 L&Ls stretched across every island, "we can't grow anymore in Hawai'i," Flores said. "That's why we're expanding on the Mainland."

Within a 1-mile radius of the UH-Manoa campus sit four L&Ls that "are already so darn close to each other," Flores said. "Other than a lease expiring, we've never closed a store and we never will. But there's no place to go."

Like other business people, Flores said it's impossible to predict what will happen even three years from now. So he keeps a close eye on economic indicators like construction, troop deployments and tourism arrivals — and developments like the possible home-porting of an aircraft carrier.

For others, the last 10 years were hardly celebrated as prosperous times.

DFS Group continues to rely on Japanese tourists, whose spending habits and arrival patterns have been linked to the value of the yen; fears of overseas travel; and other variables far beyond anyone's control in Hawai'i.

"These have not been our best 10 years," said Sharon Weiner, DFS Group vice president. "It's been more of a feast and famine scenario for us because we're dependent on one segment of the market."

DFS' peak sales year occurred in 1995, Weiner said. Over the years since, sales have looked more like the mid-1980s, Weiner said.

While it's difficult to predict when and why Hawai'i's economy will downshift, economists forecast a gradual slowing, as opposed to a sudden bust.

The more likely scenario is that the current economic cycle will become a victim of its own success as high inflation and oil costs and tight labor markets constrict further growth, said UH economist Bonham.

"It can take some time but the effect is businesses stop hiring and consumers stop spending," he said. "That's how a growing economy can change and things slowdown."

Signs of a pending slowdown include a cooling real estate market, a consistent monthly increase in the state's unemployment rate, high inflation and slower income and job growth.

So businesses such as Times Super Market are left to wonder what lies ahead.

"They keep building homes and things seem to be progressing quite nicely," Times president Roger Godfrey said. "We think times will continue reasonably well. But our optimism is guarded."

Reach Dan Nakaso at dnakaso@honoluluadvertiser.com and Sean Hao at shao@honoluluadvertiser.com.