Wednesday, June 19, 2024
Hawai'i Free Press

Current Articles | Archives

Wednesday, December 1, 2021
DBEDT: State Economic Performance Better Than Expected
By News Release @ 11:04 PM :: 2443 Views :: Economy, Hawaii Statistics, COVID-19


News Release from DBEDT, November 30, 2021

HONOLULU—The Department of Business, Economic Development and Tourism (DBEDT) released its fourth quarter 2021 Statistical and Economic Report today. DBEDT revised its economic growth projection for 2021 to 3.9 percent, up from the 2.7 percent projected in August year-to-date this year. The higher projected growth follows recently revised and higher economic growth estimates issued by the U.S. Bureau of Economic Analysis (BEA). In August, BEA estimated that Hawaii’s economic growth for the first quarter of 2021 was at -5.2 percent. In October, BEA revised that rate higher to -1.3 percent and estimated Hawaii’s economic growth rate during the second quarter at 12.6 percent for a combined economic growth rate of 5.3 percent during the first half of 2021.

DBEDT projects that the economic growth rates slowed in the second half of 2021 due to the surge in delta variant cases that slowed recovery in tourism and other local industry sectors. The annual economic growth rate is projected to be 3.9 percent averaging the quarters.

State Tax Revenues Reflect Economic Activities

Reflecting the robust economic growth during the second quarter of 2021, the Hawaii retail tax base (total retail sales before applying the general excise tax) was at $10 billion, the second highest quarterly sales in Hawaii’s history, just shy of the record first quarter of 2020 by $13.5 million. Contracting tax base (majority are for construction activities) also had the second-best quarter in history at $2.64 billion (just $4.2 million short from the record level of $2.65 billion in third quarter of 2020) over the same period.

As a comprehensive indicator of Hawaii economic activities, the state general excise tax (GET) collections were a record high of nearly $1 billion in the third quarter of 2021 (GET tax collections lags sales by one month). Year-to-date through October 2021, total GET collection was 98.8 percent of the collection during the same period in 2019.

Year to date through October 2021, state net individual income tax revenue increased 31.5 percent from the same period in 2020 and 25.5 percent from the same period in 2019. The increase in individual income tax is mainly due to the increase in federal government assistance related to COVID-19, including unemployment insurance and other assistance programs. In 2020, federal government assistance as measured by personal transfer receipts, increased 52.6 percent from 2019, and during the first half of 2021, personal transfer receipts further increased 15.9 percent from the same period in 2020.

Labor Market Conditions

Hawaii’s labor market conditions have continued to improve in 2021 with unemployment rates decreasing to a seasonally adjusted rate of 6.3 percent in October 2021, and 5.8 percent at not seasonally adjusted rate. This compares to the 11 percent unemployment rate over the period last year for both seasonally adjusted and not seasonally adjusted. In October 2021, the total number of people employed either as payroll employees or self-employed was the highest since March 2020 at 605,950 and represents a 92.2 percent recovery compared to the pre-pandemic period of October 2019. The number of people who were on unemployment and still seeking jobs dropped to 40,850 in October 2021, the lowest level since March 2020. Initial unemployment claims during the week ending, November 20th dropped to 1,553, the lowest since March 7, 2020. As a comparison, the average weekly initial unemployment claims were 1,200 in 2019.

Non-agricultural payroll jobs started to recover in the second quarter of 2021 with the second quarter growth rate at 10.4 percent and third quarter at 11.1 percent from the same period in 2020. As of October 2021, total non-agriculture payroll job count recovered 87.5 percent of the October 2019 level.

Leading the job recovery this October was the construction industry with over 100 percent of the October 2019 job count, followed by federal government civilian jobs at 98 percent, county government jobs at 96.3 percent, and wholesale trade at 96.2 percent. Falling behind is the leisure and hospitality sector (consists of art, entertainment and recreation, accommodation, and food services) that only had a 74.4 percent recovery and ranked the lowest recovery rate among all the sectors. Compared with October 2019, there were still 32,300 payroll jobs lost this October.

Although it has improved significantly, Hawaii is still among the states with the highest unemployment rate. The seasonally adjusted rate is the 7th highest, and the October 2021 non-seasonally adjusted rate is the second highest in the nation.

The latest data from the U.S. Bureau of Labor Statistics show that Hawaii had the largest job separation (layoffs, quits, retirement, and discharge) rate in the nation at 10.1 percent and the lowest job opening rate at 4.8 percent in September 2021. This indicates that Hawaii may experience job shortages in the months to come.

Visitor Industry Performance

Hawaii tourism industry recovery accelerated between January and July of this year. In January 2021, total visitor arrivals were 21 percent of the level of the same month in 2019, increasing to 57 percent in April, and 88.4 percent in July 2021. Beginning in August, the spread of the delta variant slowed the pace of tourism recovery through the middle of November. Through October 2021, total visitor arrivals reached 5.4 million and visitor spending totaled $10.2 billion, representing a 62.7 percent recovery in arrivals and a 69.4 percent recovery in visitor expenditures, during the first 10 months of 2021 from the same period in 2019.

During the first 10 months of 2021, U.S. mainland visitors accounted for 96.5 percent of total visitors representing a 91.4 percent recovery from 2019 level. International visitor recovery was only at 6.4 percent. Since April 2021, U.S. visitor count has surpassed the 2019 monthly levels. Between May and October, U.S. visitor count was 110.8 percent of the same period 2019 level. Compared with 2019 and 2020, visitors now spend more on daily basis and stayed longer.

In October 2021, a total of 4,899 flights came to Hawaii, 1.9 percent higher than the same month in 2019. 96.3 percent of the flights came from the U.S. mainland. Flights from the U.S. mainland in October 2021 was 27.4 percent higher than the same month in 2019 at 4,717 flights in October 2021 vs. 3,702 in October 2019. Of the 182 international flights that came to Hawaii in October 2021, 77 were from Canada, 49 from Japan, 14 from Korea, 3 from the Philippines, and the rest were from the Pacific Islands.

Construction and Real Estate

The construction industry performed well during the pandemic. In 2020, total construction put in place as measured by the contracting tax base reached a historic high of $9.8 billion. During the first 7 months of 2021, the total value of construction completed was $5.9 billion, a 4.7 percent increase from the same period in 2020.

During the first 10 months of 2021, the value of private building permits issued by the county building departments increased 29.6 percent of which the value of residential building permits increased 90 percent while the value of commercial and industrial permits, and additions and alterations building permits decreased 5.9 percent and 4.9 percent, respectively. Value of residential permits account for 53.5 percent of the total permit value. The increase in residential permit value was high enough to offset the decrease in the other two categories.

The number of residential home units authorized by the county building departments increased to 4,281 units during the first 3 quarters of 2021 compared to 1,916 units authorized during the same period a year ago-a 123.4 percent increase. Of the total authorized units during the first 9 months this year, 40.9 percent or 1,751 were single family units and 49.1 percent or 2,530 were condominium units.

During the first 3 quarters of 2021, there were 19,240 homes sold statewide, a 49.3 percent increase from the same period in 2020 and 26.7 percent increase from the same period in 2019. Of the homes sold during the first 9 months of 2021, 47.7 percent or 9,181 were single family homes and 52.3 percent or 10,059 of them were condo units.

The average sale price for single family homes during the first 9 months of 2021 was $1,044,537, representing a 30.5 percent increase from the same period in 2019 and 31.1 percent increase from the same period in 2020. During the same period, the average sale price for condo homes was $660,940, an increase of 15.3 percent from same period in 2019 and 13.4 percent from the same period in 2020.

Of the homes sold during the first 9 months of 2021, 14,425 units or 75 percent were sold to local buyers and 25 percent or 4,815 were sold to out-of-state buyers. Between 2008 and 2020, 75 percent of the residential homes were purchased by residents.

Other New Developments

New developments in the U.S. and local economy in the past few months will impact the economic growth nationwide. The first is the unexpected rise in consumer inflation due to supply chain issues. U.S. consumer inflation rate in October 2021 was 6.2 percent, the highest since 1990. Hawaii’s consumer inflation rate in September 2021 was 5 percent, the highest since 2007. Consumer price increases are driven by increasing oil and commodity prices. Crude oil price, as measured by New York Exchange WTI Future Price, increased 72.2 percent during the first 10 months of 2021 as compared with the same period last year. Hawaii’s general commodity price increased by 10 percent between May and September of this year.

On November 15, 2021, President Biden signed into law the $1 trillion infrastructure bill. Hawaii is expected to receive $1.8 billion from the total. This fund will further help the Hawaii construction industry in the next few years in the form of government construction such as airports, highways, and broadband.

After an 8.1 percent decline in bankruptcy filing in 2020, there were a total of 1,014 bankruptcy filings during the first 10 months of 2021 which represents a 20.4 percent decrease from the same period in 2020.

The recent development of Omicron may create some uncertainties in our economic recovery. However, at the time of this news release, there were no cases found in the U.S. and there are very few visitors from the eight countries with travel restrictions to the U.S. The current economic forecast did not take the impact into consideration.

Forecasting Results

In the current report, DBEDT predicts that Hawaii’s economic growth rate, as measured by real domestic product (GDP), will increase 3.9 percent in 2021 over the previous year. The economic expansion path will continue with a 3.0 percent increase in 2022, 2.3 percent in 2023 and 2.0 percent in 2024. These growth rates are higher than the projections made last quarter.

The visitor arrivals forecast is similar to the one projected last quarter at 6.8 million in 2021, or about 66 percent recovery from the 2019 level. Visitor arrivals are projected to increase to 8.9 million in 2022, 9.5 million in 2023, and 10 million in 2024. The current projection also indicates that visitor arrivals will not reach the 2019 level until after 2024. Visitor spending is projected to be $12.7 billion in 2021, which is about a 71 percent recovery from the 2019 level. Visitor spending is projected to grow at 24.6 percent, 8.3 percent, and 5.2 percent, respectively for 2022, 2023, and 2024.

Non-agriculture payroll jobs are forecast to increase by 2.1 percent in 2021, then will increase by 6.1 percent in 2022, 3.3 percent in 2023 and 2.4 percent in 2024. For the current forecasting period (up to 2024), non-agriculture payroll jobs will not recover to the pre-pandemic (2019) level until after 2024.

The state unemployment rate will gradually improve as economic growth returns. The rate (not seasonally adjusted) is projected to be 7.5 percent in 2021, 6.0 percent in 2022, 5.2 percent in 2023, and 4.5 percent in 2024. These rates are similar to the ones projected last quarter. The average unemployment rate for the 20 years between 2000-2019 was 4 percent.

Nominal personal income is expected to increase in 2021 by 2.7 percent, following a 5.1 percent increase in 2020. Normally, GDP and personal income move in tandem. However, in 2020, personal income surged due to unemployment insurance payments and other CARES Act funds which more than offset declines in wages and salaries. Personal income is expected to decrease 1.9 percent in 2022 due to the termination of federal unemployment insurance assistance and other assistance programs. Growth of personal income is projected to be at 3.5 percent in 2023 and 3.2 percent in 2024.

As measured by the Honolulu Consumer Price Index for urban consumers, inflation is expected to increase in 2021 to 4.1 percent, from 1.6 percent in 2020 and will drop to 2.9 percent in 2022 before it falls to the long-term average of 2.0 percent. These inflation projections are higher than those projected last quarter (3Q 2021). During the first half of 2021, Honolulu consumer inflation was 2.6 percent. The U.S. consumer inflation is projected to be 4.4 percent in 2021 and 3.8 percent in 2022. They are all higher than Hawaii inflation rates.

Statement by Director Mike McCartney

Hawaii’s overall economy continues to gain momentum and is on it’s way towards a healthy recovery. Real GDP is expected to grow by 3.9% from $70.6 billion to $73.4 billion year over year which is 92.7% of 2019 levels.

Record levels of home and condo sales, construction projects, infusion of federal funds, domestic visitor arrivals, and consumer spending have accelerated this recovery.

Future economic growth is dependent upon us remaining vigilant in controlling and containing the COVID-19 virus and any of its variants. Strong public health policies, protocols, and procedures are imperative for economic growth and momentum.

The challenges we now face are job recovery and consumer inflation. Though our real GDP has recovered from the pre-pandemic time, our non-agriculture payroll job recovery is falling behind at 86 percent and the hospitality sector recovery was only at 74 percent during the first 10 months of 2021. Job recovery is a slow process among all the economic indicators even with the help of all levels of governments including the infrastructure bill by the federal government and the extra-large amount of state and county government general obligation bond sales. As tourism recovery accelerates in December and into 2022, more workers will be called back in the coming months.

This is a perfect time for us to double down on going beyond net zero emissions for Hawaii’s energy future by leveraging innovation with climate change initiatives. On November 23, 2021, President Biden ordered a record 50 million barrels of oil released from America’s strategic reserve in an aim to reduce the cost of oil and thus ease the consumer inflation. Energy cost is the major driver of Hawaii consumer inflation; therefore, the release of the reserved oil will help to slow down our inflation. We expect the consumer inflation rate will be much better in 2022 than it is now.

The full report is available at:

# # # 

SA: State economy might grow faster than expected this year


TEXT "follow HawaiiFreePress" to 40404

Register to Vote


Aloha Pregnancy Care Center


Antonio Gramsci Reading List

A Place for Women in Waipio

Ballotpedia Hawaii

Broken Trust

Build More Hawaiian Homes Working Group

Christian Homeschoolers of Hawaii

Cliff Slater's Second Opinion

DVids Hawaii


Fix Oahu!

Frontline: The Fixers

Genetic Literacy Project

Grassroot Institute

Hawaii Aquarium Fish Report

Hawaii Aviation Preservation Society

Hawaii Catholic TV

Hawaii Christian Coalition

Hawaii Cigar Association

Hawaii ConCon Info

Hawaii Debt Clock

Hawaii Defense Foundation

Hawaii Family Forum

Hawaii Farmers and Ranchers United

Hawaii Farmer's Daughter

Hawaii Federation of Republican Women

Hawaii History Blog

Hawaii Jihadi Trial

Hawaii Legal News

Hawaii Legal Short-Term Rental Alliance

Hawaii Matters

Hawaii Military History

Hawaii's Partnership for Appropriate & Compassionate Care

Hawaii Public Charter School Network

Hawaii Rifle Association

Hawaii Shippers Council

Hawaii Together


Hiram Fong Papers

Homeschool Legal Defense Hawaii

Honolulu Navy League

Honolulu Traffic

House Minority Blog

Imua TMT

Inouye-Kwock, NYT 1992

Inside the Nature Conservancy

Inverse Condemnation

July 4 in Hawaii

Land and Power in Hawaii

Lessons in Firearm Education

Lingle Years

Managed Care Matters -- Hawaii

Missile Defense Advocacy

MIS Veterans Hawaii

NAMI Hawaii

National Parents Org Hawaii

NFIB Hawaii News

NRA-ILA Hawaii


OHA Lies

Opt Out Today

Patients Rights Council Hawaii

Practical Policy Institute of Hawaii

Pritchett Cartoons

Pro-GMO Hawaii

Rental by Owner Awareness Assn

Research Institute for Hawaii USA

Rick Hamada Show

RJ Rummel

School Choice in Hawaii

Talking Tax

Tax Foundation of Hawaii

The Real Hanabusa

Time Out Honolulu

Trustee Akina KWO Columns

West Maui Taxpayers Association

What Natalie Thinks

Whole Life Hawaii