SUBMITTED BY DEPARTMENT OF BUSINESS, ECONOMIC DEVELOPMENT AND TOURISM – HONOLULU, HAWAII—In its second quarter 2011 economic report, the Department of Business, Economic Development & Tourism (DBEDT) remains optimistic regarding the state’s economic performance for rest of 2011 and expects to see a stronger growth in 2012.
Despite the negative impact of the March 2011 Tohoku Earthquake and tsunami on Japanese travel to Hawaii, DBEDT projects that overall visitor arrivals will increase by 3.8 percent for 2011, a rate similar to its previous forecast conducted before the Japan earthquake.
“We note that visitor arrivals from rest of the world are still growing, especially visitors from Canada and that cruise visitor counts are growing at double digits during the first three months this year,” said DBEDT Director Richard C. Lim. “We are also pleased to see jobs are growing again in the areas outside of tourism such as information, professional and business services, and educational services.”
Lim also noted that in the tourism sector, the depreciation of the U.S. dollar resulted in Japanese visitors spending more on a daily basis so that the net loss in spending by Japanese visitors was much smaller than the loss in arrivals for this March.
Due to the rising oil price, recent forecasts by more than 50 America’s top business economists (published in Blue Chip Economic Indicators) for the U.S. economy have been adjusted for a higher inflation rate.
The consensus forecast for the U.S. projects a 2.7 percent increase in Real Gross Domestic Product (GDP) for 2011. That is down from a 3.2 percent projection last quarter. At the same time, the U.S. consumer inflation rate for 2011 was revised up from 1.9 percent in February to 3.0 percent in the projection completed in early May. Forecasts of key international economies have remained roughly the same between the February and May forecast, except for Japan where GDP growth revised down for 2011 and up for 2012.
For the local economy, DBEDT forecasts for most of the economic indicators remain similar to the previous forecast.
DBEDT expects total visitor arrivals to increase 3.8 percent, slightly lower than the previous forecast. This revision reflects the decline of Japanese arrivals, tempered by an increase in arrivals from the U.S. mainland and other international markets, especially visitors from Canada.
Because U.S. and Canadian visitors tend to stay longer in Hawaii while vacationing, the forecast for visitor days for 2011 is now increased to 5.1 percent from 4.1 percent. The forecast for total visitor expenditures for 2011 has also been revised upward to 10.8 percent from 9.2 percent in the previous forecast. The first quarter visitor statistics indicate that hotel room rates continue rising but are still about $25 lower than the peak level of early 2008.
Due to the increase in oil prices in March and April this year, DBEDT expects the Honolulu Consumer Price Index (CPI), a proxy for inflation, to rise 2.5 percent in 2011- higher than the 2.2 percent projected previously.
The updated forecast for 2011 real gross state domestic product is for a 1.6 percent growth, lower than the 2.0 percent forecast last quarter. This is primarily due to higher inflation. The current forecast of current dollar personal income growth in 2011 was revised upward to 3.6 percent, higher than the 3.2 percent previously forecasted. The real personal income in 2011, however, remains the same as in the previous forecast at 1.0 percent.
Total wage and salary jobs in Hawai‘i are now expected to increase 1.8 percent in 2011, higher than the 1.3 percent increase previously projected. This upward revision is based on the strong performance of tourism and an economic recovery of the services industries. Wage and salary jobs increased 1.5 percent during the first three months of 2011. DBEDT expects the job growth will strengthen further during the rest of 2011.
If the improvement in national and international economic conditions continues as expected, 2011 is the year that the growth of all the economic indicators in Hawaii will become positive. As with the national economy, job growth has lagged other economic indicators in Hawaii. We do not expect to see the payroll job count peaks above the 630,000 level for several years.
The DBEDT Quarterly Statistical and Economic Report contains more than 100 tables of the most recent quarterly data on Hawai‘i’s economy as well as narrative explanations of the trends in these data. The full report is available at:
https://hawaii.gov/dbedt/info/economic/data_reports/qser
