For Immediate Release: November 22, 2004
DBEDT Release News 04-35

Honolulu – Prospects for Hawaii’s economy in 2005 continue to improve, according to the latest economic forecast released by the Department of Business, Economic Development and Tourism. Based on a strong state economy and improving conditions in Hawaii’s major overseas markets, the Department now expects a 2.7 percent increase in real Gross State Product (GSP) for 2005. This projection is up by 0.4 of a percentage point from the last (August) forecast. It also exceeds the 2.6 percent growth expected for 2004 GSP.

Presented in the November issue of the Department’s Quarterly Statistical and Economic Report, the updated forecast also expects generally stronger growth in 2004 than previously forecast. The report is available on the DBEDT website at http://www2.hawaii.gov/dbedt/latest.

"We continue to be pleased with the performance of the state’s economy," said DBEDT Director Theodore E. Liu. "As we complete a very strong 2004, our challenge in 2005 will be sustaining growth and encouraging continued economic diversification."

Based on the report, job growth has been one of the more notable economic highlights of 2004. The latest forecast expects a gain of 12,600 wage and salary jobs in 2004, a 2.2 percent gain over 2003. This total does not include additional jobs created through self-employment, which are difficult to measure. The 2005 forecast anticipates a more moderate, 1.5 percent increase in the job count, but that will still mean the creation of 8,800 new jobs next year.

Hawaii's total Personal Income for 2004 is expected to increase 2.5 percent in real terms (after subtracting out inflation). Real Personal Income (after inflation) is expected to come in a bit higher at 2.6 percent for 2005.

Visitor arrivals for 2004 will likely show an exceptional, 7.6 percent growth, rebounding from three years of poor performance. The 2004 gain in arrivals will be the sharpest annual increase since 1986. For 2005 a more moderate, 3.0 percent growth rate in arrivals is expected. The number of visitor days in 2004 is expected to show a 5.0 increase in 2004, easing to a 2.4 percent growth rate in 2005.

One by-product of more rapid growth has been a faster rate of increase in consumer prices, as measured by the Honolulu Consumer Price Index (CPI). From a rate of just 1.1 percent in 2002, the Honolulu CPI has since risen steadily, reaching a 3.3 percent annual increase in the first half of 2004. As a result the CPI projection for 2004 is now 3.2 percent, up 0.7 of a percentage point from the August forecast. The forecast expects the CPI growth rate to remain somewhat elevated as the economy continues to show strength. A 3.1 percent rate is forecast for 2005 with the rate easing to 2.7 percent by 2007.

The report's analysis of third quarter economic activity in the State showed a strong economy across the board. All major sectors showed job gains from the same quarter of 2003. Agriculture and Information were the strongest sectors in the third quarter, showing job growth of 7.6 percent and 7.5 percent respectively. The state's unemployment rate averaged just 3.2 percent in the third quarter of the year, down from 4.8 percent a year earlier.

State tax collections also showed strength in the third quarter. The General Excise and Use Tax grew by 9.7 percent, with net Individual Income Tax collections up 18.8 percent from a year earlier. Corporate Income Tax collections grew 85.9 percent for the third quarter. Corporate collections were down significantly in 2003. Revenues from the Transient Accommodations Tax (TAT) increased 14.0 percent in the third quarter from a year earlier.

The 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, as well as Excel workbooks containing all of the data tables, is available on the DBEDT website, at http://www.hawaii.gov/dbedt/info/economic/data_reports/qser.

For more information, contact:
Dave Young
Communications
Phone: (808) 587-1212
Email: dyoung@dbedt.hawaii.gov