By University of Hawai’i Economic Research Organization – This executive summary is presented as a public service of the UHERO Forecast Project. The complete report provides comprehensive analysis of recent economic developments and prospects, including industrially detailed multi-year forecasts. The UHERO Forecast Project is a research program of the University of Hawai’i at Manoa and depends on financial support from report subscribers and program sponsors. For more information, visit our Forecast Project information page.
For previous forecast reports, visit UHERO Forecast Reports Archive.
EXECUTIVE SUMMARY
Recovery will take hold across Hawai’i’s four counties during 2010. Visitor numbers have stabilized and will gradually improve as growth strengthens in major tourism markets. After record-setting job losses, limited net hiring will begin this year, building as we move into 2011 and 2012. Private construction is bottoming out, and the sector will begin to see more benefit from Federal and State spending programs. While growth is resuming, the pace of recovery will be slow, and it will take a number of years to return to relative economic health. The challenge is greatest on the Neighbor Islands, which have suffered a much deeper downturn than O’ahu over the past two years.
- The most extensive visitor industry losses have been on the Neighbor Islands, which were hit hard by departing cruise ships and a dependence on visitors from the Western U.S., ground zero for the financial crisis and recession. Arrivals have now stabilized, led this year by surprisingly consistent monthly growth on Maui. All counties will see net growth for the year as a whole, ranging from 4.7% to 7.4% on the Neighbor Islands to 1.5% on O’ahu, with further strengthening in 2011.
- The return of visitors will be a gradual process. By 2012, the number of visitor days on O’ahu will have risen to within a few percentage points of the 2007 level, but Neighbor Island visitor days will remain roughly 7-8% below their previous peak values. This attenuated pace of recovery will continue to pose challenges for hotels and other visitor-oriented businesses. Hotel occupancy this year will range from a low of 55% on the Big Island to about 73% on O’ahu. Occupancy will regain some ground over the next several years, but it will remain substantially below levels seen prior to the industry downturn.
- The construction downturn has been more severe than we anticipated a year ago. All four counties absorbed double digit construction job losses last year, exceeding 20% in every county except Honolulu. While job losses continue on the Neighbor Islands, the rate of decrease has tapered off considerably since the period of rapid decline in late 2008 and the first half of 2009. On an annual basis, statewide private building permits will turn positive in 2011, although activity in coming years will fall far short of the brisk levels experienced during much of the past decade. A boost to construction this year will come from public sector contracting, as we (finally) feel the effects of Federal and State stimulus plans.
- Since the recession began, jobs losses have been extensive and have touched nearly every sector in each county. Again, this has been most extreme on the Neighbor Islands, where cumulative job losses of roughly 10-11% have occurred since late 2007, compared with a drop a bit more than 5% on O’ahu. The economic stabilization of the past half year sets the stage for a resumption of modest job growth in 2010. Because of the steep drop in jobs during 2009, 2010 job numbers are starting off in a very deep hole; as a result, annual figures for this year will still show a small decline in many industries, even though some hiring will occur as the year progresses. By next year, the payroll job base will be expanding by 0.8-1.4% across counties, with additional firming, particularly on the Neighbor Islands, in 2012. Because of the limited pace of job growth, unemployment will only gradually subside from the current high levels.
- Real personal income measures the income accruing to state residents from all sources, adjusted for inflation. Real income growth will be negative this year in all counties, with strong government transfer payments partly offsetting lingering weakness in labor income. There will be a particularly large drop in labor income for the State & Local Government sector, associated with additional job losses and worker furloughs. Roughly 1-2% real income growth will occur in 2011, strengthening further in 2012.
Major Economic Indicators, Year-Over-Year % Change
| 2007 | 2008 | 2009 | 2010 | 2011 | |||
Honolulu |
|||||||
| Visitor Arrivals | 1.5 | -10.7 | -3.9 | 1.5 | 3.2 | ||
| Payroll Jobs | 0.8 | -0.6 | -3.3 | -0.7 | 0.8 | ||
| Real Personal Income | 1.1 | -0.3 | 0.3 | -0.3 | 0.9 | ||
Maui |
|||||||
| Visitor Arrivals | 1.8 | -15.6 | -9.2 | 7.4 | 4.0 | ||
| Payroll Jobs | 2.6 | -1.8 | -8.0 | -0.7 | 1.4 | ||
| Real Personal Income | 1.5 | -1.9 | -1.6 | -1.0 | 1.9 | ||
Hawai’i |
|||||||
| Visitor Arrivals | 1.6 | -18.6 | -7.4 | 4.7 | 4.8 | ||
| Payroll Jobs | 2.6 | -1.8 | -6.8 | -0.7 | 1.2 | ||
| Real Personal Income | 2.7 | -0.8 | -0.6 | -0.4 | 1.8 | ||
Kaua’i |
|||||||
| Visitor Arrivals | 8.0 | -20.7 | -9.6 | 6.4 | 5.8 | ||
| Payroll Jobs | 2.4 | -1.7 | -8.1 | -0.6 | 1.1 | ||
| Real Personal Income | 3.8 | -1.3 | -2.5 | -0.8 | 1.5 | ||
*Source is UHERO. Figures for 2010-2011 are forecasts. Figures for 2009 county income are UHERO estimates. Full macro and industry detail are available to subscribers and sponsors.
Copyright © 2010 UHERO. All Rights Reserved.
UHERO Forecast Report Schedule
UHERO Forecast Report Schedule
1st Quarter: Hawai’i State Forecast Report
2nd Quarter: County Forecast Report, including 2nd-quarter State forecast update
3rd Quarter: Hawai’i Construction Forecast Report, including 3rd-quarter State forecast update
4th Quarter: Global Forecast Report, including 4th-quarter State forecast update
Along with the thematic coverage, reports for the 2nd through 4th quarters will include our update for the overall state outlook. In addition, we will now be including in each quarterly report our detailed numerical forecasts for the construction sector; in the past construction forecasts were reported just twice each year.