Robert H. ‘Robbie’ Dein and Kenneth M. ‘Ken’ Hayo Review Hawaii’s Economic Outlook for the 2015 First Quarter

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Based on the most recent developments of national and global economies, performance of Hawaii’s tourism industry, labor market conditions, and growth of personal income and tax revenues, Hawaii’s economy is expected to expand for the remainder of 2015 and progressing into 2016. The current DBEDT forecast seems more optimistic than the previous forecast.

Hawaii’s economy depends significantly on the U.S. economy as well as key international economies–especially Japan. According to the February 2015 Blue Chip Economic Consensus Forecasts, U.S. real GDP is expected to increase by 3.2 percent aggregat–0.2 percentage point higher than the 3.0 percent growth rate projected in the November 2014 forecast. At this time, the 2016 consensus forecast expects an overall 2.9 percent growth in U.S. real GDP.

Meanwhile, the February 2015 Blue Chip Economic Consensus Forecasts real GDP growth for Japan is now expected to increase 1.0 percent aggregate–0.3 percentage point lower than the 1.3 percent growth rate projected in the November 2014 forecast. The 2016 consensus forecast expects an overall 1.4 percent growth in Japanese real GDP.

For the local economy, DBEDT expects most of the economic indicators to have a similar growth rate projected in the previous forecasts.

Overall, measuring by real GDP, Hawaii’s 2015 economy is estimated to increase by 3.1 percent and a 0.3 percentage point above the growth rate forecasted last quarter. In 2016, Real GDP growth is expected a climb to 3.0 percent—0.5 of a percentage point above the growth rate forecasted last quarter.

In 2015, Hawaii’s unemployment rate is projected to be 3.9 percent–0.2 of a percentage point lower than the previous forecast and, in 2016–3.8 percent, the same as the previous forecast.

Visitor arrivals are expected to increase 2.1 percent in 2015–0.2 percentage point higher than the previous forecast. The forecast for visitor days in 2015 increased 0.1 of a percentage point to 2.3 percent. The forecast for visitor expenditure in 2015 decreased to 3.4 percent from the 3.6 percent growth projected in the previous forecast. For 2016, the growth rates of visitor arrivals, visitor days, and visitor expenditures are now expected to be 1.7 percent, 1.7 percent, and 4.3 percent, respectively.

Similar to the previous forecast, the projection for non-agricultural wage and salary job growth rate in 2015 is 1.5 percent. Furthermore, in 2016, jobs are predicted to increase by 1.4 percent, the same as the previous forecast.

The Honolulu Consumer Price Index (CPI) is now expected to increase 1.8 percent in 2015–0.4 percentage point below the previous forecast. In 2016, the CPI is projected to increase 2.2 percent–the same as the previous forecast.

Also in 2015, personal income in current dollars is now expected to increase 4.5 percent–the same as the previous forecast. Real personal income is currently projected to grow 2.8 percent in 2015, 0.3 percentage point above the previous forecast. In 2016, current-dollar personal income and real personal income are expected to increase 4.8 percent and 2.8 percent, respectively.

Beyond 2016, the economy will continually expand, with job growth expected to increase 1.3 percent in 2017 and 1.2 percent in 2018. Visitor arrivals are expected to increase 1.7 percent in 2017 and 2018. Visitor expenditures are expected to increase 3.9 percent in 2017 and 2018. Real personal income is projected to increase 2.7 percent in 2017 and 2.3 percent in 2018. Hawaii’s real GDP growth is expected to increase 2.9 percent in 2017 and 2.5 percent in 2018. The unemployment rate is expected to decrease to 3.6 percent in 2017 and 3.3 percent in 2018.

ACTUAL AND FORECAST OF KEY ECONOMIC INDICATORS FOR HAWAII: 2013 TO 2018

Economic Indicators201320142015201620172018
ActualForecast
Total population (thousands)1,4091,4201,4341,4481,4631,477
Visitor arrivals (thousands) ¹8,1748,2838,4538,5988,7418,885
Visitor days (thousands) ¹74,94275,49877,20678,51779,80681,114
Visitor expenditures (million dollars) ¹14,52114,85715,35816,01416,64217,293
Honolulu CPI-U (1982-84=100)253.9257.6262.2268.0274.7282.1
Personal income (million dollars) ²63,46866,00768,97772,28875,90379,698
Real personal income (millions of 2008$) ³50,79452,16553,62655,12756,61657,918
Non-agricultural wage & salary jobs (thousands)617.6625.2634.5643.4651.8659.6
Civilian unemployment rate4.84.33.93.63.43.3
Gross domestic product (million dollars) 475,23578,51882,32886,19790,02894,031
Real gross domestic product (millions of 2009$) 470,11072,00374,23576,46278,68080,647
Gross domestic product deflator (2009=100) 4107.3109.0110.9112.7114.4116.6
Annual Percentage Change
Total population1.20.81.01.01.01.0
Visitor arrivals ¹1.81.32.11.71.71.7
Visitor days ¹0.60.72.31.71.61.6
Visitor expenditures ¹1.12.33.44.33.93.9
Honolulu CPI-U1.81.41.82.22.52.7
Personal income ²2.44.04.54.85.05.0
Real personal income ³1.12.72.82.82.72.3
Non-agricultural wage & salary jobs1.91.21.51.41.31.2
Civilian unemployment rate 5-0.9-0.5-0.4-0.3-0.2-0.1
Gross domestic product3.84.44.94.74.44.4
Real gross domestic product 41.92.73.13.02.92.5
Gross domestic product deflator (2009=100) 41.91.61.71.71.51.9

1/ Visitors who came to Hawaii by air or by cruise ship–includes supplementary expenditures estimated by HTA for 2013 and DBEDT thereafter
2/ The 2014 values are estimated based on actual values in the first three quarters of 2014
3/ Using personal income deflator developed by the U.S. Bureau of Economic Analysis
4/ 2014 and later years are estimated by DBEDT, data for earlier years from U.S. Bureau of Economic Analysis
5/ Absolute change from previous year

First Published By The State of Hawaii’s Department of Business, Economic Development & Tourism, May 2015, www.hawaii.gov.

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