State Forecasts Stronger Tourism Growth, Modest But Continued Growth Anticipated for Other Economic Indicators

News Release from DBEDT August 16, 2012

HONOLULU—In its third quarter 2012 economic report, the state Department of Business, Economic Development and Tourism (DBEDT) expects continued positive economic growth in Hawai‘i for the rest of 2012 and in 2013, particularly among visitor-related indicators. "We are pleased that visitor arrivals reached an historical high during the first half of 2012," said the DBEDT director, Richard C Lim. "While non-tourism sectors have still not fully rebounded, they are showing positive signs of recovery. That's why we are focused on policy tools and state support in areas such as construction, renewable energy and light manufacturing.

"We have already witnessed what can be accomplished through sound policy and government support in the renewable energy sector, where solar and photovoltaic development accounts for roughly 20 percent of all construction expenditures."

Following a higher-than-expected growth in visitor arrivals in the first half of 2012, DBEDT projects that overall visitor arrivals will increase 8.6 percent for 2012, 2.1 percentage points higher than its previous forecast. Similarly, total visitor spending is now projected to increase 15.2 percent in 2012, 6.2 percentage points above the previous forecast.

Nationally, the consensus forecast by the top 50 economic forecasting agencies projects a 2.2 percent economic growth rate for the United States for 2012, slightly lower than the 2.3 percent growth rate projected in May 2012.

At the same time, the U.S. consumer inflation rate for 2012 was revised down from 2.4 percent in May 2012 to 2.0 percent in the projection completed in early August 2012. However, forecasts for Japanese real GDP growth in 2012 were increased to 2.3 percent from 1.8 percent in the April forecast. Translating those indicators to the local economy, DBEDT analysts decreased the forecasted growth rates of most of the economic indicators such as personal income, GDP and job compared with its forecast in May 2012.

The number of non-agricultural wage and salary jobs in Hawai‘i is expected to increase 1.2 percent in 2012, 0.3 of a percentage point lower than the growth rate of total wage and salary jobs in the state projected in the previous forecast. Non-agricultural wage and salary jobs increased 1.0 percent during the first half of 2012. As with the national economy, job growth has lagged other economic indicators in Hawai‘i.

For other major economic indicators, the current forecasts are also reduced from previous forecasts. DBEDT expects the Honolulu Consumer Price Index (CPI), a proxy for inflation, to rise 2.8 percent in 2012 - 0.2 of a percentage point below the previous forecast.

The forecast for 2012 real gross domestic product for Hawai‘i is a 1.5 percent growth, 0.7 of a percentage point below the forecast last quarter. The current forecast of current dollar personal income growth in 2012 was decreased from 4.8 percent to 4.3 percent, 0.5 of a percentage point lower in the current forecast. The real personal income forecast in 2012 was decreased from 1.7 percent to 1.5 percent, 0.2 of a percentage point lower in the current forecast.

The forecast for 2013 remains mostly unchanged for non-visitor related indicators from the previous forecast, with 2.3 percent real GDP growth and 2.1 percent real personal income growth. Job growth is expected to increase to 1.8 percent.

The forecast for 2013 visitor arrivals increased from 2.2 percent in the previous forecast to 3.5 percent, and visitor spending is projected to grow at 5.6 percent in the current forecast - 2.1 percentage points above the previous forecast.

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: hawaii.gov/dbedt/info/economic/data_reports/qser.

Economic Indicators	2010	2011	2012	2013	2014	2015
	Actual		Forecast
Total population (thousands)	1,363	1,375	1,389	1,402	1,416	1,431
Visitor arrivals (thousands) ¹	7,018	7,299	7,929	8,210	8,427	8,637
Visitor days (thousands) ¹	65,465	68,495	74,967	77,380	79,481	81,520
Visitor expenditures (million dollars) ¹	11,066	12,255	14,123	14,919	15,688	16,472
Honolulu CPI-U (1982-84=100)	234.9	243.6	250.4	257.0	263.4	270.0
Personal income (million dollars)	56,647	59,297	61,846	64,815	68,185	71,595
Real personal income (millions of 2000$) ²	42,521	42,911	43,537	44,470	45,642	46,755
Non-agricultural wage & salary jobs (thousands)	586.9	592.1	599.2	610.0	619.1	627.2
Gross domestic product (million dollars)	65,599	66,991	70,036	73,294	76,705	80,274
Real gross domestic product (millions of 2005$)	58,106	57,977	58,847	60,200	61,645	63,124
Gross domestic product deflator (2005=100)	112.9	115.5	119.0	121.8	124.4	127.2
Annual Percentage Change
Total population	1.2	0.8	1.0	1.0	1.0	1.0
Visitor arrivals ¹	7.7	4.0	8.6	3.5	2.6	2.5
Visitor days ¹	7.6	4.6	9.4	3.2	2.7	2.6
Visitor expenditures ¹	10.7	10.7	15.2	5.6	5.2	5.0
Honolulu CPI-U	2.1	3.7	2.8	2.6	2.5	2.5
Personal income	3.7	4.7	4.3	4.8	5.2	5.0
Real personal income ²	1.5	0.9	1.5	2.1	2.6	2.4
Non-agricultural wage & salary jobs	-0.8	0.9	1.2	1.8	1.5	1.3
Gross domestic product	2.1	2.1	4.5	4.7	4.7	4.7
Real gross domestic product	1.4	-0.2	1.5	2.3	2.4	2.4
Gross domestic product deflator	0.7	2.3	3.0	2.3	2.2	2.2

1/ Visitors who came to Hawaii by air or by cruise ship.

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SA: Uneven growth slows down state economy

2/ DBEDT calculated using BEA estimate of nominal personal income deflated by U.S. Bureau of Labor Statistics Honolulu CPI-U.

Source: Hawaii State Department of Business, Economic Development & Tourism, August 10, 2012.