Comparison of Economic Growth Rates: Hawaii and U.S.
|2018 (First 3Qs)
|Annual average growth 2009-2017
DBEDT PROJECTS SLOWER BUT STABLE ECONOMIC GROWTH
News Release from DBEDT, March 6, 2019
HONOLULU—The Department of Business, Economic Development and Tourism (DBEDT) released its first quarter 2019 Statistical and Economic Report today.
In this report, DBEDT kept its projection on Hawaii economic growth unchanged from its fourth quarter 2018 projection. According to the latest data released by the U.S. Bureau of Economic Analysis (BEA), Hawaii’s economic growth, as measured by the percentage change in real gross domestic product (GDP), was 0.7 percent during the first three quarters of 2018, lower than the 2.8 percent for the U.S. average for the same period.
During the current economic expansion, that U.S. started in the 4th quarter of 2009 and Hawaii started in the first quarter of 2010, Hawaii’s economic growth rates were lower than the nation in most of the years. The average annual economic growth between 2009 and 2017 was 1.8 percent for Hawaii versus 2.2 percent for the nation.
DBEDT estimated that the final Hawaii economic growth rate for 2018 should be at 1 percent. The forecasted growth for 2019 is at 1.2 percent, and at about 1.4 percent for 2020 to 2022, unchanged from its previous projection in November 2018. Hawaii’s economic growth rates will be lower than the nation in the next few years.
“We expect our tourism, construction, and healthcare industries continuing to perform well this year. These industries have been the driving force for Hawaii’s economy in the current business cycle.” said DBEDT Director Mike McCartney. “As an indication of tourism supply, the scheduled air seats to Hawaii will increase 2 percent in 2019, without counting the seats from Southwest which will start flying to Hawaii on March 17 this year. Total value of private building permits increased by 4.5 percent and government contracts awarded increased 63.5 percent as of the end of 2018, indicating a busier construction year for 2019.”
Preliminary data from the Hawaii Tourism Authority (HTA) showed that total visitor arrivals reached 9.95 million and spent an estimated amount of $18 billion in Hawaii in 2018. DBEDT projects that visitor arrivals will be over 10 million and visitor spending will be over $18.5 billion in 2019.
January 2019 visitor arrivals increased 3 percent, but expenditures decreased 3.8 percent. The decrease in spending was mainly caused by the daily spending on all the markets except U.S. East. DBEDT projects that visitor spending will increase by 3.3 percent for 2019, lower than the 4.2 percent projected in the previous forecast.
Contracting tax base, an indication of construction completed, totaled $7.1 billion during the first three quarters of 2018, the historical record level for the first three quarter periods, representing a 13.6 percent increase from the same period in 2017. DBEDT expects the construction industry continues to grow in 2019.
There was a total of 2,604 single family units authorized in the state in 2018, the highest number since 2009. 2,201 units of multiple family units were authorized to build in 2018, the second highest number since 2006 with 2015 the highest at 2,868 units.
“State government spending on capital improvement projects (CIP) reached $1.6 billion in 2018, the highest since data are collected in 1990,” said Chief State Economist Dr. Eugene Tian. “The average state CIP spending between 2009 and 2018 was $1.2 billion. State government has been playing an important role in the construction industry.”
Latest data (benchmarked data released on February 28, 2019) from the U.S. Bureau of Labor Statistics showed that Hawaii had the lowest unemployment rate in the nation at 2.4 percent (not seasonally adjusted) in 2018. This is the second consecutive year that Hawaii had the lowest unemployment rate in the nation.
The most recent economic forecasts by more than 50 top economic research organizations (the Blue Chip Economic Indicators, February 9, 2019) indicated that the U.S. and world economies will experience slower growth in 2019 and 2020. The U.S. economy will experience decelerated growth at 2.5 percent in 2019 and 1.8 percent in 2020. Hawaii’s economic growth rate will be lower than that of the nation, as well as lower than the average Hawaii economic growth rate of past 30 years at 1.8 percent.
DBEDT revised the visitor industry forecast with visitor arrivals now growing at 2.0 percent for 2019, 1.9 percent for 2020, 1.7 percent for 2021, and 1.4 percent for 2022. Growth of nominal visitor expenditures will be between 3.2 to 3.7 percent during the next few years.
DBEDT kept its projection on the non-farm payroll job count unchanged from the previous quarter forecast at 0.9 percent for 2019 and 2020, 0.8 percent for 2021 and 2022. The unemployment rate projections were changed slightly upward to 2.7 percent for 2019 and will gradually increase to 3.6 percent by 2022.
DBEDT lowered the projection for consumer inflation, as measured by the Honolulu Consumer Price Index, from the previously projected, now at about 2 percent for the next few years.
DBEDT revised the nominal personal income growth rates slightly downward from the previous quarter forecast to 3.3 percent for 2019, 3.7 percent for 2020, 3.9 percent for 2021, and 4.0 percent for 2022. During the first three quarters of 2018, nominal personal income grew 2.7 percent from the same period a year ago. Growth of real personal income was also revised downward from the previous quarter forecast and is now at about 1.5 percent for the next few years.
The DBEDT Quarterly Statistical and Economic Report contains 136 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: dbedt.hawaii.gov/economic/qser.
PBN: Hawaii's economic growth well below U.S. average over the past 10 years
HPR: Hawaiʻi Economy Projected To Grow At Slower Pace Than U.S. Average