Outlook for the Economy

4th Quarter 2018 Report

Hawaii’s economy is expected to continue positive growth in 2018 and 2019. This outlook is based on the most recent developments in the national and global economies, the performance of Hawaii’s tourism industry, labor market conditions, and the growth of personal income and tax revenues.

Hawaii’s economy depends significantly on conditions in the U.S. economy and key international economies, especially Japan. According to the November 2018 Blue Chip Economic Consensus Forecasts, U.S. real GDP is expected to increase by 2.9 percent in 2018, same as the growth rate projected in the August 2018 forecast. For 2019 the consensus forecast predicts an overall 2.6 percent growth in U.S. real GDP.

According to the August 2018 Blue Chip Economic Consensus Forecast, real GDP growth for Japan is now expected to increase 1.1 percent in 2018, 0.1 of a percentage point below the growth rate projected in the August 2018 forecast. For 2019, the consensus forecast now projects an overall 1.1 percent growth rate for Japanese real GDP.

For the local economy, DBEDT expects that visitor expenditures will grow at a lower rate than projected in the previous forecast for 2018, and real GDP growth rate will be lower than projected in the previous forecast.

Overall, Hawaii’s economy, as measured by real GDP, is projected to show a 1.0 percent increase in 2018, 0.5 of a percentage point below the growth rate forecast last quarter. The real GDP growth forecast for 2019 is 1.2 percent, 0.4 of a percentage point below the previous forecast.

Hawaii’s unemployment rate is projected to be 2.3 percent in 2018, 0.1 of a percentage point above the previous forecast. The unemployment rate in 2019 is projected to be 2.5 percent, same as the previous forecast.

Visitor arrivals are expected to increase 5.8 percent in 2018, 0.3 of a percentage point below the previous forecast. The forecast for visitor days in 2018 increased 0.2 of a percentage point to 6.0 percent. The 2018 forecast for visitor expenditure growth was revised downward to 8.9 percent, from 9.2 percent growth projected in the previous forecast. For 2019, the growth rate of visitor arrivals, visitor days, and visitor expenditures are now expected to be 1.8 percent, 2.1 percent, and 4.2 percent, respectively.

The projection for the non-agricultural wage and salary job growth rate for 2018 is 1.2 percent, the same as the previous forecast. In 2019, jobs are projected to increase 0.9 percent, also the same as the previous forecast.

The Honolulu Consumer Price Index (CPI) is expected to increase 2.0 percent in 2018, the same as the previous forecast. In 2019, the CPI is projected to increase 2.3 percent, also the same as the previous forecast.

Personal income in current dollars is expected to increase 3.3 percent in 2018, 0.2 of a percentage point below the previous forecast. Real personal income is now projected to grow 1.6 percent in 2018, 0.2 of a percentage point below the previous forecast. In 2019, current-dollar personal income and real personal income are expected to increase 3.5 and 1.7 percent, respectively.

Beyond 2019, the economy is expected to continue its expansion path, with job growth projected to be 0.9 percent in 2020 and 0.8 percent in 2021. Visitor arrivals are expected to increase 1.5 percent in 2020 and 2021. Visitor expenditures are expected to increase 3.6 percent in 2020 and 2021. Real personal income is projected to increase 1.7 percent in 2020 and 1.6 percent in 2021. Hawaii’s real GDP growth is expected to increase 1.4 percent in both 2020 and 2021. The unemployment rate is expected to increase to 3.0 percent in 2020 and 3.4 percent in 2021.

ACTUAL AND FORECAST OF KEY ECONOMIC INDICATORS FOR HAWAII: 2016 TO 2021

Economic Indicators 2016 2017 2018 2019 2020 2021
Actual Forecast
Total population (thousands) 1,429 1,428 1,435 1,443 1,452 1,462
Visitor arrivals (thousands) ¹ 8,931 9,404 9,949 10,128 10,284 10,437
Visitor days (thousands) ¹ 80,195 84,066 89,085 90,980 92,448 93,866
Visitor expenditures (million dollars) ¹ 15,911 16,809 18,312 19,075 19,771 20,476
Honolulu CPI-U (1982-84=100) 265.3 272.0 277.5 283.8 290.9 298.8
Personal income (million dollars) 72,650 75,355 77,842 80,566 83,628 86,972.9
Real personal income (millions of 2009$) ² 59,081 59,908 60,867 61,901 62,954 63,961
Non-agricultural wage & salary jobs (thousands) 646.1 652.7 660.5 666.5 672.5 677.9
Civilian unemployment rate ³ 2.9 2.4 2.3 2.5 3.0 3.4
Gross domestic product (million dollars) 85,648 88,448 91,101 94,290 97,779 101,396
Real gross domestic product (millions of 2012$) 78,556 79,469 80,263 81,227 82,364 83,517
Gross domestic product deflator (2012=100) 109.0 111.3 113.5 116.1 118.7 121.4
Annual Percentage Change
Total population 0.2 -0.1 0.5 0.6 0.6 0.7
Visitor arrivals ¹ 2.9 5.3 5.8 1.8 1.5 1.5
Visitor days ¹ 2.0 4.8 6.0 2.1 1.6 1.5
Visitor expenditures ¹ 5.3 5.6 8.9 4.2 3.6 3.6
Honolulu CPI-U 2.0 2.5 2.0 2.3 2.5 2.7
Personal income 3.3 3.7 3.3 3.5 3.8 4.0
Real personal income ² 2.8 1.4 1.6 1.7 1.7 1.6
Non-agricultural wage & salary jobs 1.3 1.0 1.2 0.9 0.9 0.8
Civilian unemployment rate ³ -0.7 -0.5 -0.1 0.2 0.5 0.4
Gross domestic product 3.5 3.3 3.0 3.5 3.7 3.7
Real gross domestic product 2.0 1.2 1.0 1.2 1.4 1.4
Gross domestic product deflator (2012=100) 1.5 2.1 2.0 2.3 2.3 2.3

1/ Visitors who came to Hawaii by air or by cruise ship. Expenditures includes supplementary expenditures. 2017 supplementary expenditure was estimated by DBEDT.
2/ Using personal income deflator developed by the U.S. Bureau of Economic Analysis and estimated by DBEDT.
3/ Absolute change from previous year.
Source: Hawaii State Department of Business, Economic Development & Tourism, November 16, 2018.