Outlook for the Economy

4th Quarter 2017 Report

Hawaii’s economy is expected to continue positive growth for 2017 and 2018. 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 2017 Blue Chip Economic Consensus Forecasts, U.S. real GDP is expected to increase by 2.2 percent in 2017, same as the growth rate projected in the July 2017 forecast. For 2018 the consensus forecast predicts an overall 2.5 percent growth in U.S. real GDP..

According to the November 2017 Blue Chip Economic Consensus Forecast, real GDP growth for Japan is now expected to increase 1.7 percent in 2017, 0.4 of a percentage point above the growth rate projected in the July 2017 forecast. For 2018, the consensus forecast now projects an overall 1.2 percent growth rate for Japanese real GDP.

For the local economy, DBEDT expects that visitor expenditures and real GDP will both grow at a higher rate than projected in the previous forecast for 2017..

Overall, Hawaii’s economy, as measured by real GDP, is projected to show a 1.7 percent increase in 2017, 0.3 of a percentage point above the growth rate forecast last quarter. The real GDP growth forecast for 2018 is 1.5 percent, same as the previous forecast.

Hawaii’s unemployment rate is projected to be 2.6 percent in 2017, 0.3 of a percentage point below the previous forecast. The unemployment rate in 2018 is projected to be 2.9 percent, 0.2 of a percentage point below the previous forecast..

Visitor arrivals are expected to increase 4.6 percent in 2017, 1.4 percentage point above the previous forecast. The forecast for visitor days in 2017 increased 1.2 percentage points to 4.6 percent. The 2017 forecast for visitor expenditure growth was revised upward to 6.7 percent, from 6.5 percent growth projected in the previous forecast. For 2018, the growth rate of visitor arrivals, visitor days, and visitor expenditures are now expected to be 2.3 percent, 2.4 percent, and 3.9 percent, respectively.

The projection for the non-agricultural wage and salary job growth rate for 2017 is 1.0 percent, the same as the previous forecast. In 2018, 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 2.5 percent in 2017, the same as the previous forecast. In 2018, 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 3.5 percent in 2017, the same as the previous forecast. Real personal income is now projected to grow 1.7 percent in 2017, also same as the previous forecast. In 2018, current-dollar personal income and real personal income are expected to increase 3.4 and 1.5 percent, respectively.

Beyond 2018, the economy is expected to continue its expansion path, with job growth projected to be 1.0 percent in 2019 and 0.8 percent in 2020. Visitor arrivals are expected to increase 1.5 percent in 2019 and 2020. Visitor expenditures are expected to increase 3.6 percent in 2019 and 2020. Real personal income is projected to increase 1.4 percent in both 2019 and 2020. Hawaii’s real GDP growth is expected to increase 1.5 percent in 2019 and 1.4 percent in 2020. The unemployment rate is expected to increase to 3.2 percent in 2019 and 3.4 percent in 2020.

ACTUAL AND FORECAST OF KEY ECONOMIC INDICATORS FOR HAWAII: 2015 TO 2020

Economic Indicators 2015 2016 2017 2018 2019 2020
Actual Forecast
Total population (thousands) 1,425 1,429 1,436 1,447 1,459 1,470
Visitor arrivals (thousands) ¹ 8,680 8,934 9,348 9,562 9,704 9,848
Visitor days (thousands) ¹ 78,620 80,225 83,929 85,960 87,281 88,596
Visitor expenditures (million dollars) ¹ 15,111 15,911 16,979 17,639 18,272 18,921
Honolulu CPI-U (1982-84=100) 260.2 265.3 271.9 278.2 284.6 291.1
Personal income (million dollars) 69,638 71,946 74,464 76,996 79,537 82,162
Real personal income (millions of 2009$) ² 53,634 54,653 55,582 56,416 57,206 58,007
Non-agricultural wage & salary jobs (thousands) 638.6 647.6 654.1 660.0 666.6 671.9
Civilian unemployment rate ³ 3.6 3.0 2.6 2.9 3.2 3.4
Gross domestic product (million dollars) 81,745 84,671 87,348 90,231 93,118 96,098
Real gross domestic product (millions of 2009$) 72,675 74,026 75,285 76,414 77,560 78,646
Gross domestic product deflator (2009=100) 112.4 114.6 116.0 118.1 120.1 122.2
Annual Percentage Change
Total population 0.6 0.2 0.5 0.8 0.8 0.8
Visitor arrivals ¹ 4.3 2.9 4.6 2.3 1.5 1.5
Visitor days ¹ 3.5 2.0 4.6 2.4 1.5 1.5
Visitor expenditures ¹ 0.9 5.3 6.7 3.9 3.6 3.6
Honolulu CPI-U 1.0 2.0 2.5 2.3 2.3 2.3
Personal income 5.3 3.3 3.5 3.4 3.3 3.3
Real personal income ² 4.6 1.9 1.7 1.5 1.4 1.4
Non-agricultural wage & salary jobs 1.8 1.4 1.0 0.9 1.0 0.8
Civilian unemployment rate ³ -0.8 -0.6 -0.4 0.3 0.3 0.2
Gross domestic product 5.9 3.6 3.2 3.3 3.2 3.2
Real gross domestic product 3.2 1.9 1.7 1.5 1.5 1.4
Gross domestic product deflator (2009=100) 2.5 1.9 1.3 1.8 1.7 1.8

1/ Visitors who came to Hawaii by air or by cruise ship. Expenditures includes supplementary expenditures.
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 21, 2017.