UHERO State Forecast Update: After Austerity, Road Ahead Will Be Smoother

From UHERO, February 28, 2014

Federal budget woes caused a softening of growth at year-end. With that behind us, we’ll see better performance in 2014.

A summary of this forecast is available as a service to the public. For more detailed analysis, subscribe to UHERO's Forecast Project.

Conclusion of Report:

Our projections for 2014 growth have been marked down somewhat since our last forecast--by about half a percent for both jobs and income. Still, overall economic performance this year will be better than a disappointing 2013. The leading positive factors will be the public sector’s turn from substantial drag to marginal contributor and the ongoing expansion in Oahu construction.

For a number of sectors we are now past the growth peak of the current business cycle expansion. That is not to say that growth is ending, but simply that the period of strongest recovery-related job gains has ended. Further increments to hiring will be more measured. The picture for income is different. While we have seen few gains so far, tighter labor markets and better business profitability should allow workers to begin to share more fully in the benefit of economic growth.

There are always storm clouds somewhere on the horizon. Today, they are a spate of recent economic news that could suggest US economic prospects are softening (although the mainland’s brutal weather may explain all or most of this). The recent selloff in emerging market stocks and currencies also shows how tricky it will be for the Fed to unwind the extraordinary monetary expansion that it has engineered successfully over the past five years. In Asia, China’s slowing growth is a concern, as is the looming consumption tax increases slated for Japan. Still, with Europe on the mend, the global picture remains an overall positive one, and should be sufficiently strong to support continuing growth here in the Islands.

LINK: Public Summary

UHERO:  The Conversation: Carl Bonham on the State Forecast Update