For Immediate Release: November 17, 2009
DBEDT News Release 09-31

HONOLULU—In its latest quarterly economic report, the Department of Business, Economic Development & Tourism (DBEDT) says it expects the national recession and the sharp decreases in visitor expenditures in Hawaii will continue to affect Hawai‘i's economy.

In the current report, the forecast for the state's 2009 real gross state domestic product growth remained negative 1.1 percent, same as the forecast last quarter.

However, based on downward revisions in both nominal personal income forecast and inflation forecast, the Department revised its forecast of real personal income growth to a negative 0.9 percent from positive 0.4 percent in the previous forecast. In addition, DBEDT revised its forecast for jobs downward and expects a 3.3 percent decline in the average job count for the year.

While the forecast for visitor arrivals improved slightly from the previous forecast, the forecast for visitor expenditures forecast was decreased slightly. In the current forecast, DBEDT expects visitor expenditures to decrease by 12.6 percent in 2009.

Recent forecasts for the U.S. economy show smaller declines in 2009 than previously projected. Forecasts of key international economies are also slightly better.

DBEDT expects total visitor arrivals to decline 4.5 percent in 2009, less than the 5.9 percent decline in the previous (August 2009) forecast; however, visitor expenditures are expected to decrease 12.6 percent, a slightly larger decline than the 11.5 percent decline projected in the previous forecast. Total visitor days is now projected to decrease 4.6 percent in 2009, compared to the 5.8 percent decline projected in the previous forecast.

In light of job declines in the first three quarters of 2009 and the lower forecast for visitor expenditures, the state now expects total wage and salary jobs to decline 3.3 percent in 2009. This is down from a 3.0 percent decline projected in the previous forecast.

The Honolulu Consumer Price Index (CPI), a proxy for inflation, is expected to rise just 0.1 percent in 2009, down from a 0.6 percent increase expected in the previous forecast.

The expectation for personal income growth in current dollars has been reduced to negative 0.8 percent for 2009. After adjusting for inflation, real personal income is now projected to decrease 0.9 percent in 2009.

The state's gross domestic product (GDP) in current dollars is forecast to increase 0.1 percent for 2009. However, in real terms, GDP is expected to decrease 1.1 percent in 2009, same as the decrease projected in the previous forecast.

The state's economy is expected to stabilize in 2010 with a modest, 2.0 percent growth in visitor arrivals and flat (0.0 percent) real personal income growth and small (0.8 percent) real GDP growth. The net job count is likely to decrease slightly in 2010. Inflation will remain low with the Honolulu CPI increasing just 1.5 percent.

Assuming continued improvement in national and international economic conditions, modest growth in the state's economy is forecast to return by 2011. The visitor arrival count is forecast to increase by 4.1 percent in 2011, with visitor expenditures up 8.8 percent. Real personal income and real GDP are expected to increase 1.0 percent and 1.3 percent, respectively, in 2011. The state's job count will likely see a modest 0.8 percent increase for 2011. That gradual pace of recovery should continue in 2012, barring unforeseen events.

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: www.hawaii.gov/dbedt/info/economic/data_reports/qser.

For more information, contact:
Steve Bretschneider
Phone: (808) 586-2407
Email: sbretschneider@dbedt.hawaii.gov