REPORT FROM THE DEPARTMENT OF BUSINESS, ECONOMIC DEVELOPMENT AND TOURISM – In its fourth quarter 2012 economic report, the Department of Business, Economic Development & Tourism (DBEDT) projected higher growth of visitor-related indicators and more optimistic growth of most other economic indicators in 2012. DBEDT expects positive economic growth in Hawaii for the rest of 2012 and expects to see continued positive growth in 2013.
“We remain cautiously optimistic with regard to the state’s immediate economic future,” said DBEDT Director Richard C. Lim. “Despite political uncertainties often inherent in election cycles and recent natural disasters, the visitor industry is projected to remain strong.”
Lim also noted that construction jobs increased 1.4 percent during the third quarter of 2012 after 17 consecutive quarters of decline. State Capital Improvement Project spending increased 32.9 percent during the first nine months of the year, and the private building permit value increased 39.1 percent during the same time period.
“The construction industry has turned a corner and we hope to see greater growth in that sector next year,” Lim said.
Following a higher-than-expected growth in visitor arrivals in the first three quarters of 2012, DBEDT projects that overall visitor arrivals will increase by 9.4 percent for 2012, 0.8 of a percentage point higher than its previous forecast. Total visitor spending is now projected to increase 18.8 percent in 2012, 3.6 percentage points above the previous forecast.
Hawaii’s economy is affected by both the conditions in the U.S. economy and key international economies. According to the Blue Chip Economic Consensus Forecast, the U.S. economy is expected to grow at the 2.0 percent range in 2012 and 2013. Labor market conditions continue to improve with unemployment projected to be 8.1 percent for 2012 and 7.8 percent for 2013. Though the Japanese economy is slightly weaker than expected, the exchange rate is still in favorable to Japanese visitors at about 80 yen per dollar.
For the local economy, DBEDT increased the forecasted growth rates of most of the economic indicators such as real personal income, GDP, and jobs compared with its forecast in August 2012.
The number of non-agricultural wage and salary jobs in Hawaii is expected to increase 1.5 percent in 2012, 0.3 of a percentage point higher than the growth rate of non-agricultural wage and salary jobs in Hawaii projected in the previous forecast. Non-agricultural wage and salary jobs increased 1.3 percent during the first three quarters of 2012. As with the national economy, job growth has lagged other economic indicators in Hawaii.
DBEDT expects total visitor arrivals to increase 9.4 percent in 2012, 0.8 of a percentage point higher than the previous forecast. The forecast for the growth of visitor days in 2012 remain unchanged compared with the previous forecast.
For other major economic indicators, the current forecasts are mostly more optimistic compared with the previous forecasts. DBEDT expects the Honolulu Consumer Price Index (CPI), a proxy for inflation, to rise 2.5 percent in 2012,0.3 of a percentage point below the previous forecast.
The forecast for 2012 real gross domestic product for Hawaii is a 1.6 percent growth, 0.1 of a percentage point above the forecast last quarter. Although the current dollar personal income in the first quarter of 2012 was revised downward by the Bureau of Economic Analysis (BEA), the current forecast of current dollar personal income growth in 2012 was unchanged at 4.3 percent. The real personal income forecast in 2012 was increased from 1.5 percent to 1.8 percent, 0.3 of a percentage point higher in the current forecast.
Forecasts for 2013 are also mostly more optimistic compared with the previous forecasts. Real GDP growth in 2013 is now forecasted to grow 2.4 percent, 0.1 of a percentage point above the previous forecast. Real personal income growth in 2013 is currently forecasted to be 2.3 percent, 0.2 of a percentage point above the previous forecast. Non-agricultural wage and salary job count is currently expected to increase 2.0 percent, 0.2 of a percentage point above the previous forecast. The forecast for 2013 visitor arrivals increased from 3.5 percent in the previous forecast to 3.9 percent and visitor spending is projected to grow at 5.2 percent in the current forecast, 0.4 of a percentage point below the previous forecast.
The DBEDT Quarterly Statistical and Economic Report contains more than 100 tables of the most recent quarterly data on Hawaii’s economy as well as narrative explanations of the trends in these data. The full report is available at:
https://www.hawaii.gov/dbedt/info/economic/data_reports/qser