For Immediate Release: August 24, 2009
DBEDT Release News 09-24

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 Hawai‘i will continue to affect Hawai‘i's economy throughout 2009.

Based on downward revisions in inflation forecast, the department revised its forecast to a 1.1 percent decline in the state's 2009 real gross state domestic product from the 1.6 percent decline forecast last quarter. However, based on downward revisions of visitor expenditures in Hawai‘i, DBEDT revised its forecast for jobs downward and expects a 3.0 percent decline in the average job count for the year.

While the forecast for visitor arrivals was unchanged from the previous forecast, visitor expenditures have dropped. In the current forecast, DBEDT expects visitor expenditures to decrease by 11.5 percent in 2009.

"Our forecast for this period shows a more gradual decline," said DBEDT Director Theodore E. Liu. "We do not believe it is prudent to predict an economic recovery yet, and all indications are that any recovery will be gradual."

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

DBEDT expects total visitor arrivals to decline 5.9 percent in 2009, same as the previous (May 2009) forecast; however, visitor expenditures are expected to decrease 11.5 percent, a significantly larger decline than the 7.9 percent decline projected in the previous forecast; and total visitor days is now projected to decrease 5.8 percent in 2009, compared to the 3.4 percent decline projected in the previous forecast.

In light of job declines in the first two quarters of 2009 and the lower forecast for visitor expenditures and visitor days, the state now expects total wage and salary jobs to decline 3.0 percent in 2009. This is down from a 2.1 percent decline projected in the previous forecast.

The Honolulu Consumer Price Index (CPI), a proxy for inflation, is expected to rise just 0.6 percent in 2009, about half the rate expected in the previous forecast.

The expectation for personal income growth in current dollars has been increased to 1.0 percent for 2009. After adjusting for inflation, real personal income is now projected to increase 0.4 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, compared with the 1.6 percent decrease projected in the previous forecast.

The state's economy is expected to stabilize in 2010 with a modest, 1.2 percent growth in visitor arrivals and flat real personal income (0.0 percent growth) and real GDP (0.4 percent 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 4.3 percent in 2011, with visitor expenditures up 12.0 percent. Real personal income and real GDP are expected to increase 0.6 percent and 1.5 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:
Dave Young, DBEDT Communications
Phone: (808) 587-1212
Email: dyoung@dbedt.hawaii.gov