Wednesday, April 17, 2024
Hawai'i Free Press

Current Articles | Archives

Friday, December 2, 2022
DBEDT Economic Projections Unchanged
By News Release @ 9:17 PM :: 1514 Views :: Economy, Hawaii Statistics

STATE ECONOMIC FORECAST UNCHANGED DESPITE SIGNIFICANT DOWNWARD REVISION FOR THE U.S. ECONOMY

News Release from DBEDT, November 30, 2022

HONOLULU—The Department of Business, Economic Development and Tourism (DBEDT) released its fourth quarter 2022 Statistical and Economic Report today. DBEDT kept economic growth projections for 2022 and 2023 for the State unchanged at 2.6 percent and 1.7 percent, respectively. The same projections were made in the third quarter because economic recovery remaining firm as consumer inflation declines. According to the most recent (November 2022) economic projections by top 50 economic forecasting organizations published in Blue Chip Economic Indicators, U.S. economic growth in 2022 is expected to be at 1.8 percent in 2022 and a mere 0.2 percent in 2023.

Though the U.S. economy is likely to enter into a recession in the early part of 2023, the impact on Hawaii economy is likely to be small due to the following reasons:

Tourism recovery remains strong. During the first 10 months of 2022, Hawaii welcomed a total of 7.6 million visitors, representing an 88.6 percent recovery from the same period in 2019. U.S. visitors were 13.8 percent higher than those who came during the same period in 2019. International visitors recovered 38.1 percent with Canadian visitors leading the recovery at 69.8 percent, Japanese visitors at 10.3 percent, and other international visitors at 59.7 percent.

Visitor arrivals to Maui, Kauai, and Hawaii islands have recovered over 95 percent during the first 10 months of 2022 while Oahu’s recovery was below 80 percent. Historically, about 50 percent of the Oahu visitors are international visitors and international visitor recovery remains low.

Through October 2022, visitor spending in current dollars totaled $15.9 billion, representing an 8.5 percent increase over the spending amount of the same period in 2019. After adjusting for inflation, visitor expenditure recovery during the first 10 months of 2022 was approximately 95 percent of the 2019 level.

In October 2022, the statewide hotel occupancy rate was at 72 percent, 7.5 percentage points lower than October 2019. The statewide hotel room rate in October 2022 was at $338.24 per night, representing 32.4 percent increase from October 2019. Comparing October 2022 with October 2019, average room rates increased more than 50 percent in Maui County (+56.4%) and Hawaii County (+51.6%), with an increase of 43.6 percent in Kauai County. Oahu had the lowest growth rate at 11.5 percent. Reflecting the higher room rate, the state accommodation tax revenue increased 31.1 percent between the two periods.

As currently scheduled, total air seats during the December 2022 to January 2023 period will be fully recovered from the December 2019-January 2020 period. Seats from the U.S. mainland will be 17.5 percent higher and seats from international airports will recover 65.4 percent. Flights from Japan are scheduled to recover 47.4 percent between the two periods.

Labor Market Conditions Continued to Improve. Hawaii’s labor market conditions continued to improve throughout the first 10 months of 2022, with the unemployment rate at 4.0 percent seasonally adjusted and 3.7 percent not seasonally during the first 10 months of 2022. As a comparison, the seasonally adjusted unemployment rate was 6.1 percent and not seasonally adjusted rate was 6.0 percent during the first 10 months of 2021. Hawaii’s seasonally adjusted unemployment rate during the first 10 months of 2021 was the 12th highest in the nation and now dropped to the 16th highest during the first 10 months of 2022.

Total seasonally adjusted employment, including those with payroll jobs and those working as proprietors, continued to improve. In January 2022, total employment was 96.6 percent of the January 2019 level, and in October total employment improved to 97.5 percent of the 2019 level.

The not seasonally adjusted non-agricultural payroll jobs grew 4.6 percent during the first 10 months of 2022 from the same period in 2021, representing a recovery rate of 92.3 compared with the same period 2019 level. In October 2022, non-agriculture payroll jobs (not seasonally adjusted), for all industries combined, recovered 93.9 percent as compared with the same month in 2019. Wholesale trade, transportations and utilities, financial activities, and other services had recovery rates less than 90 percent, and all other industries had more than 90 percent recovery. The low recovery rate in financial activities was mainly caused by the reduction of 1,200 jobs in finance and insurance, and 500 job loss in real estate and rental and leasing industries just for the month of October 2022 as compared with the same month a year ago.

Hawaii’s civilian labor force (seasonally adjusted) participation rate improved to 60.8 percent during the June-October 2022 period and represented the highest since March 2020. The average civilian labor force participation rate in 2019 was 60.9 percent.

Initial unemployment claims, between the week ending March 5, 2022, and the week ending November 19, 2022, have been stable at 1,175 per week; this was similar to the same period in 2019 when the average weekly initial unemployment claims were at 1,172.

During the first nine months of 2022, the average monthly job openings was 46,400 and the average monthly hires was 29,600, leaving 16,800 positions unfilled. Most of the unfilled jobs were in healthcare and tourism related industries. The average number of positions unfilled during the first nine months of 2019 was 7,900.

State Tax Collections Continue to Rise. During the first 10 months of calendar year 2022, state general excise tax (GET) revenue increased 19.3 percent from the same period a year ago; GET is an indicator reflecting Hawaii current business conditions. The increase in GET revenues was partially due to the higher inflation rate and partially due to economic growth. Inflation for commodities in Honolulu during the first nine months of 2022 was 11.1 percent, and inflation for services was 4.7 percent during the same period.

Monthly General Excise Tax Collections
(in millions of 2021 dollars)

Monthly General Excise Tax Collections.  Click on the chart to download a spreadsheet containing monthly GET data

Construction Activity and Home Sales Declining. The construction industry, as measured by the contracting tax base in current dollars increased by 3.4 percent during the first seven months of 2022. However, construction industry price level increase 15.9 percent between the first half of 2021 and first half of 2022. After adjusting for inflation, real contracting tax base decreased by 10.7 percent during the first seven months of 2022.

The value of private building permits declined 13.5 percent during the first 10 months of 2022. Construction payroll jobs also decreased 1.9 percent in the first 10 months of 2022.

Government contracts awarded increased 334.6 percent during the first nine months of 2022 as compared with the same period in 2021. Included in the contracts, the U.S. Navy awarded $945.3 million, and the State Department of Transportation awarded $2.6 billion to Hawaii businesses during the second quarter of 2022. The value of government contracts awarded during the first three quarters of 2022 was the highest since the 1980s for a 3-quarter period.

During the first nine months of 2022, there were 17,237 homes sold statewide, which represents a 10.4 percent decrease from the same period in 2021. The average sales price for single-family homes in the first nine months of 2022 was $1,087,736, representing a 4.1 percent increase from the first nine months of 2021. The average sales price for condominiums was $716,065, an increase of 8.3 percent from the same period in 2021.

Of the homes sold during first nine months of 2022, 12,922 units or 75.0 percent were sold to local buyers and 4,315 units or 25.0 percent were sold to out-of-state buyers. Of the homes sold between 2008 and 2021, 25 percent of them were sold to out-of-state buyers.

Honolulu Consumer Inflation Declining. Inflation in the Honolulu area, as measured by the Consumer Price Index for All Urban Consumers (CPI-U), averaged 6.8 percent during the first nine months of 2022. There was a downward trend from 7.5 percent in March to 7.0 percent in May, 6.8 percent in July, and 6.6 percent in September. The increase in inflation was partly driven by energy prices, which jumped 35.2 percent due to an increase in crude oil prices. Supply chain disruptions also contributed to the higher inflation rate.

The Federal Reserve Bank continues to fight inflation through incremental interest rate hikes. The Federal Funds target rate increased by 50 basis points (0.5%) in May 2022, by 75 basis points (0.75%) in June, July, September, and November. Higher interest rates have negative impacts on investments, especially on home sales.

Forecasting Results

In the current report, DBEDT predicts that Hawaii’s economic growth rate, as measured by the percentage change in real gross domestic product (GDP), will increase 2.6 percent in 2022 over the previous year. In 2023, Hawaii’s economic growth is expected to slow down further, to 1.7 percent, due to the expected global economic downturn. U.S. economic growth is expected to grow at a mere 0.2 percent in 2023, with more than a 50 percent possibility that the U.S. economy will enter a recession according to Blue Chip Economic Indicators. In 2024 and 2025, Hawaii’s economic growth is expected to return to normal growth levels at about 2 percent.

Visitor arrivals are projected to be 9.3 million in 2022, slightly higher than the number projected in the third quarter. Arrivals are projected to increase to 9.8 million in 2023, 10.2 million in 2024, and 10.5 million in 2025, fully recovering to the 2019 level. Visitor spending is projected to be $19.5 billion in 2022, which is slightly higher than previously projected; this is due to the higher than expected average visitor daily spending. During the first 10 months of 2022, daily visitor spending increased 14.6 percent from the same period in 2021. Total visitor spending is projected to grow at 7.5 percent, 4 percent, and 5.1 percent, respectively for 2023, 2024, and 2025.

Non-agriculture payroll jobs are forecast to increase by 4.3 percent in 2022, slightly higher than previously projected. Payroll job counts will increase by 3 percent in 2023, 2.3 percent in 2024, and 1.9 percent in 2025. For the current forecasting period (up to 2025), non-agriculture payroll jobs will recover to the pre-pandemic (2019) level by 2025.

The state unemployment rate will continue to improve as economic recovery continues. The rate (not seasonally adjusted) is projected to be 3.6 percent in 2022, 3.5 percent in 2023, 3.2 percent in 2024 and will finally decrease to 2.9 percent in 2025.

During the pandemic, personal income surged due to government transfers related to unemployment insurance payments and other CARES Act funds. Due to a reduction in government support, personal income is expected to decrease in 2022 by 1 percent, and then grow between 2.6 and 3.0 percent for the following years until 2025.

As measured by the Honolulu Consumer Price Index for urban consumers, inflation is expected to be 6.5 percent in 2022, still lower than the projected U.S. consumer inflation rate of 8.0 percent. Hawaii consumer inflation is expected to fluctuate between 2.1 and 3.1 percent in the following years until 2025. These inflation projections are similar to those projected last quarter (3Q 2022).

Statement by Director Mike McCartney

Since the last DBEDT economic forecast in August of this year, the state’s economy has remained firm, with improvements in major indicators. Our visitor industry performance, labor market conditions, and general excise tax revenue collections are all improving. We’ve seen the construction and real estate industries slowing down in the last few months, but they are likely to improve as we enter into the new year.

Inflation has been trending downward since March and is expected to decrease further in the coming months. Additionally, record levels of government construction projects have been awarded during the past 10 months, and this will help the construction industry in the months to come.

We are optimistic for the future of our economy.

The full report is available at: dbedt.hawaii.gov/economic/qser/.

# # #

SA: Expectations for Hawaii’s economy stay level

MN: Officials ‘optimistic’ for Hawaii’s economy despite US projections

Links

TEXT "follow HawaiiFreePress" to 40404

Register to Vote

2aHawaii

808 Silent Majority

Aloha Pregnancy Care Center

AntiPlanner

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

FIRE

Fix Oahu!

Frontline: The Fixers

Genetic Literacy Project

Grassroot Institute

Habele.org

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 Federalist Society

Hawaii Federation of Republican Women

Hawaii History Blog

Hawaii Homeschool Association

Hawaii Jihadi Trial

Hawaii Legal News

Hawaii Legal Short-Term Rental Alliance

Hawaii Matters

Hawaii's Partnership for Appropriate & Compassionate Care

Hawaii Public Charter School Network

Hawaii Rifle Association

Hawaii Shippers Council

Hawaii Smokers Alliance

Hawaii State Data Lab

Hawaii Together

HIEC.Coop

HiFiCo

Hiram Fong Papers

Homeschool Legal Defense Hawaii

Honolulu Moms for Liberty

Honolulu Navy League

Honolulu Traffic

House Minority Blog

Imua TMT

Inouye-Kwock, NYT 1992

Inside the Nature Conservancy

Inverse Condemnation

Investigative Project on Terrorism

July 4 in Hawaii

Kakaako Cares

Keep Hawaii's Heroes

Land and Power in Hawaii

Legislative Committee Analysis Tool

Lessons in Firearm Education

Lingle Years

Managed Care Matters -- Hawaii

Malama Pregnancy Center of Maui

MentalIllnessPolicy.org

Military Home Educators' Network Oahu

Missile Defense Advocacy

MIS Veterans Hawaii

NAMI Hawaii

Natatorium.org

National Christian Foundation Hawaii

National Parents Org Hawaii

NFIB Hawaii News

No GMO Means No Aloha

Not Dead Yet, Hawaii

NRA-ILA Hawaii

Oahu Alternative Transport

Obookiah

OHA Lies

Opt Out Today

OurFutureHawaii.com

Patients Rights Council Hawaii

PEACE Hawaii

People vs Machine

Practical Policy Institute of Hawaii

Pritchett Cartoons

Pro-GMO Hawaii

P.U.E.O.

RailRipoff.com

Rental by Owner Awareness Assn

ReRoute the Rail

Research Institute for Hawaii USA

Rick Hamada Show

RJ Rummel

Robotics Organizing Committee

School Choice in Hawaii

SenatorFong.com

Sink the Jones Act

Statehood for Guam

Talking Tax

Tax Foundation of Hawaii

The Real Hanabusa

Time Out Honolulu

Trustee Akina KWO Columns

UCC Truths

US Tax Foundation Hawaii Info

VAREP Honolulu

Waagey.org

West Maui Taxpayers Association

What Natalie Thinks

Whole Life Hawaii

Yes2TMT