Outlook for the Economy

3rd Quarter 2019 Report

Hawaii’s economy is expected to continue positive growth in 2019 and 2020. 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 August 2019 Blue Chip Economic Consensus Forecasts, U.S. real GDP is expected to increase by 2.4 percent in 2019, 0.2 of a percentage point below the growth rate projected in the May 2019 forecast. For 2020 the consensus forecast predicts an overall 1.9 percent growth in U.S. real GDP.

According to the August 2019 Blue Chip Economic Consensus Forecast, real GDP growth for Japan is now expected to increase 0.7 percent in 2019, the same as the growth rate projected in the May 2019 forecast. For 2020, the consensus forecast now projects an overall 0.3 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 2019, and real GDP growth rate will be slightly lower than projected in the previous forecast.

Overall, Hawaii’s economy, as measured by real GDP, is projected to show a 1.1 percent increase in 2019, 0.1 of a percentage point below the growth rate forecast last quarter. The real GDP growth forecast for 2020 is 1.2 percent, 0.1 of a percentage point below the previous forecast.

Hawaii’s unemployment rate is projected to be 3.0 percent in 2019, the same as the previous forecast. The unemployment rate in 2020 is projected to be 3.2 percent, 0.1 of a percentage point above the previous forecast.

Visitor arrivals are expected to increase 3.5 percent in 2019, 0.9 of a percentage point above the previous forecast. The forecast for visitor days in 2019 increased 0.4 of a percentage point to 1.0 percent. The 2019 forecast for visitor expenditure growth was revised downward to negative 0.2 percent, from 1.1 percent growth projected in the previous forecast. For 2020, the growth rate of visitor arrivals, visitor days, and visitor expenditures are now expected to be 2.0 percent, 1.4 percent, and 2.3 percent, respectively.

The projection for the non-agricultural wage and salary job growth rate for 2019 is 0.4 percent, 0.2 of a percentage point below the previous forecast. In 2020, jobs are projected to increase 0.3 percent, 0.4 of a percentage point below the previous forecast.

The Honolulu Consumer Price Index (CPI) is expected to increase 2.0 percent in 2019, 0.3 of a percentage point above the previous forecast. In 2020, the CPI is projected to increase 2.3 percent, 0.2 of a percentage point above the previous forecast.

Personal income in current dollars is expected to increase 2.9 percent in 2019, 0.3 of a percentage point below the previous forecast. Real personal income is now projected to grow 1.2 percent in 2019, also 0.3 percentage point below the previous forecast. In 2020, current-dollar personal income and real personal income are expected to increase 3.1 and 1.1 percent, respectively.

Beyond 2020, the economy is expected to continue its expansion path, with job growth projected to be 0.4 percent in 2021 and 2022. Visitor arrivals are expected to increase 1.7 percent in 2021 and 1.5 percent in 2022. Visitor expenditures are expected to increase 2.1 percent in 2021 and 1.9 percent in 2022. Real personal income is projected to increase 1.3 percent in 2021 and 1.6 percent in 2022. Hawaii’s real GDP growth is expected to increase 1.3 percent in 2021 and 2022. The unemployment rate is expected to increase to 3.4 percent in 2021 and 3.6 percent in 2022.

ACTUAL AND FORECAST OF KEY ECONOMIC INDICATORS FOR HAWAII: 2017 TO 2022
Economic Indicators 2017 2018 2019 2020 2021 2022
Actual Forecast
Total population (thousands) 1,424 1,420 1,422 1,426 1,431 1,437
Visitor arrivals (thousands) ¹ 9,404 9,955 10,305 10,513 10,690 10,846
Visitor days (thousands) ¹ 84,066 88,560 89,425 90,703 91,743 92,600
Visitor expenditures (million dollars) ¹ 16,809 17,759 17,714 18,126 18,504 18,851
Honolulu CPI-U (1982-84=100) 272.0 277.1 282.6 289.1 296.1 303.5
Personal income (million dollars) 75,355 77,535 79,783 82,257 85,054 88,115
Real personal income (millions of 2012$) ² 60,191 60,976 61,708 62,386 63,197 64,209
Non-agricultural wage & salary jobs (thousands) 653.3 656.6 659.2 661.2 663.8 666.5
Civilian unemployment rate ³ 2.4 2.4 3.0 3.2 3.4 3.6
Gross domestic product (million dollars) 89,044 92,027 95,616 99,154 102,823 106,627
Real gross domestic product (millions of 2012$) 79,998 80,798 81,687 82,667 83,742 84,831
Gross domestic product deflator (2012=100) 111.3 113.9 117.1 119.9 122.8 125.7
Annual Percentage Change
Total population -0.3 -0.3 0.1 0.3 0.3 0.4
Visitor arrivals ¹ 5.3 5.9 3.5 2.0 1.7 1.5
Visitor days ¹ 4.8 5.3 1.0 1.4 1.1 0.9
Visitor expenditures ¹ 5.6 5.6 -0.2 2.3 2.1 1.9
Honolulu CPI-U 2.5 1.9 2.0 2.3 2.4 2.5
Personal income 3.7 2.9 2.9 3.1 3.4 3.6
Real personal income ² 2.0 1.3 1.2 1.1 1.3 1.6
Non-agricultural wage & salary jobs 1.1 0.5 0.4 0.3 0.4 0.4
Civilian unemployment rate ³ -0.5 0.0 0.6 0.2 0.2 0.2
Gross domestic product 3.7 3.4 3.9 3.7 3.7 3.7
Real gross domestic product 1.6 1.0 1.1 1.2 1.3 1.3
Gross domestic product deflator (2012=100) 2.1 2.3 2.8 2.5 2.4 2.4
1/ Visitors who came to Hawaii by air or by cruise ship. Expenditures includes supplementary expenditures. 2018 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, August 22, 2019.