Continued Strong Economy Predicted in Current State Forecast
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For Immediate Release: May 19, 2005
DBEDT Release News 05-14
Honolulu--Gains in tourism, construction, and federal spending are expected to produce continued growth in jobs and personal income in 2005, according to the latest economic forecast by the Department of Business, Economic Development and Tourism (DBEDT).
Presented in the Second Quarter 2005 issue of the Department's Quarterly Statistical and Economic Report, the forecast expects Hawaii's personal income to grow 3.0 percent in real terms this year. Total wage and salary jobs are expected to increase 1.9 percent, compared with a 1.8 percent projection in the last forecast.
"Hawaii continues to benefit from the combined effects of strong investment spending and export income from visitors and the federal government," said DBEDT Director Theodore E. Liu. "We believe that these conditions offer the proper environment to prepare Hawaii's infrastructure for the future." The DBEDT forecast cites projected economic growth in both the U.S and Japan as a factor in the improved outlook for the state's economy. The U.S. real gross domestic product (GDP) is forecast to grow 3.4 percent in 2005, while Japan's GDP is expected to grow at a moderate 1.1 percent rate.
DBEDT predicts Hawaii's tourism industry will host a record 7.3 million visitors in 2005, up 5.1 percent from a very strong 2004. Visitor spending should reach $11.4 billion in 2005 about 6.1 percent higher than 2004.
As in 2004, the report predicts that inflation will affect economic gains this year. The Honolulu Consumer Price Index (CPI-U) is expected to increase by 3.3 percent in 2005, the same inflation rate experienced in 2004. Thus, while Hawaii personal income is expected to show a 6.5 percent growth in current dollars this year, price increases will hold the gain to 3.0 percent in real terms.
DBEDT economists are expecting continued growth for the economy in 2006 and beyond, though at a slower pace. The report shows the expectations real personal income growth moderating from 2.6 percent in 2006 to about 2.4 percent in 2007 and 2008. Total job growth is expected to stabilize in the 1.2 to 1.3 percent per year range beyond 2005. Total visitor arrivals are projected to grow 2.7 percent in 2006 and 2.3 percent by 2008.
2003 to 2008
| Economic Indicators | 2003 | 2004 | 2005 | 2006 | 2007 | 2008 |
|---|---|---|---|---|---|---|
| (Actual) | (Forecast) | |||||
| Total population (thousands) | 1,249 | 1,263 | 1,278 | 1,292 | 1,306 | 1,319 |
| Visitor arrivals (thousands) | 6,442 | 6,988 1/ | 7,344 | 7,544 | 7,730 | 7,905 |
| Visitor days (thousands) | 59,228 | 63,921 1/ | 66,896 | 68,396 | 70,010 | 71,541 |
| Visitor expenditures (million dollars) | 10,055 | 10,726 1/ | 11,382 | 12,026 | 12,649 | 13,267 |
| Honolulu CPI-U (1982-84=100) | 184.5 | 190.6 | 196.9 | 202.6 | 208.1 | 213.5 |
| Personal income (million dollars) | 38,013 | 40,613 | 43,237 | 45,658 | 48,033 | 50,434 |
| Real personal income ($1996 million) | 35,170 | 36,372 | 37,477 | 38,464 | 39,394 | 40,326 |
| Total wage & salary jobs (thousands) | 574.8 | 590 | 600.9 | 608.7 | 616.6 | 624.0 |
| Gross state product (million dollars) | 46,506 1/ | 49,296 1/ | 52,155 | 54,868 | 57,611 | 60,376 |
| Real gross state product ($1996 million) | 39,719 1/ | 41,075 1/ | 42,356 | 43,514 | 44,619 | 45,754 |
| Gross state product deflator (1996=100) | 117.1 1/ | 120.0 1/ | 123.1 | 126.1 | 129.1 | 132.0 |
| Annual Percentage Change | ||||||
| Total population | 1.2 | 1.1 | 1.2 | 1.1 | 1.1 | 1.1 |
| Visitor arrivals | -0.2 | 8.5 1/ | 5.1 | 2.7 | 2.5 | 2.3 |
| Visitor days | 0.5 | 7.9 1/ | 4.7 | 2.2 | 2.4 | 2.2 |
| Visitor expenditures | 4.6 | 6.7 1/ | 6.1 | 5.7 | 5.2 | 4.9 |
| Honolulu CPI-U | 2.3 | 3.3 | 3.3 | 2.9 | 2.7 | 2.6 |
| Personal income | 4.2 | 6.8 | 6.5 | 5.6 | 5.2 | 5.0 |
| Real personal income | 1.8 | 3.4 | 3.0 | 2.6 | 2.4 | 2.4 |
| Total wage & salary jobs | 1.9 | 2.6 | 1.9 | 1.3 | 1.3 | 1.2 |
| Gross state product | 5.7 1/ | 6.0 1/ | 5.8 | 5.2 | 5.0 | 4.8 |
| Real gross state product | 3.5 1/ | 3.4 1/ | 3.1 | 2.7 | 2.5 | 2.5 |
| Gross state product deflator | 2.1 1/ | 2.5 1/ | 2.6 | 2.4 | 2.4 | 2.2 |
Source: Hawaii State Department of Business, Economic Development & Tourism, May 9, 2005.
In the first quarter of 2005 there were 16,650 more wage and salary jobs than in the first quarter of 2004, an increase of 2.9 percent. Growth was led by an increase of 2,700 jobs in the construction industry. Retail trade jobs increased by 2,500 and the transportation, warehousing and utilities sector produced an increase of 2,350 jobs.
Tourist arrivals rose 12.3 percent in the first quarter of 2005 from the same period of 2004. An 11.8 percent increase in domestic arrivals for the quarter was accompanied by a 13.4 percent increase in international arrivals. State General Fund revenues increased by 20.7 percent in the first calendar quarter of 2005 compared with the same quarter a year earlier. General Excise Tax Revenues were up 14.5 percent for the quarter, with net Individual income taxes up 29.5 percent.
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 is available 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