Outlook for the Economy

4th 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 November 2019 Blue Chip Economic Consensus Forecasts, U.S. real GDP is expected to increase by 2.3 percent in 2019, 0.1 of a percentage point below the growth rate projected in the August 2019 forecast. For 2020 the consensus forecast predicts an overall 1.8 percent growth in U.S. real GDP.

According to the November 2019 Blue Chip Economic Consensus Forecast, real GDP growth for Japan is now expected to increase 0.9 percent in 2019, 0.2 of a percentage point above the growth rate projected in the August 2019 forecast. For 2020, the consensus forecast now projects an overall 0.3 percent growth rate for Japanese real GDP.

For Hawaii’s economy, DBEDT expects that visitor expenditures will grow at a higher rate than projected in the previous forecast for 2019, and the real GDP growth rate will be slightly higher than projected in the previous forecast.

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

Hawaii’s unemployment rate is projected to be 2.8 percent in 2019, 0.2 of a percentage point below that of the previous forecast. The unemployment rate in 2020 is projected to be 3.2 percent, the same as the previous forecast.

Visitor arrivals are expected to increase 5.7 percent in 2019, 2.2 percentage points above the previous forecast. The forecast for visitor days in 2019 also increased 2.2 percentage points to 3.2 percent. The 2019 forecast for visitor expenditure growth was revised upward to 0.9 percent, from a negative 0.2 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 2.5 percent, 2.0 percent, and 2.5 percent, respectively.

The projection for the non-agricultural wage and salary job growth rate for 2019 is 0.4 percent, the same as the previous forecast. In 2020, jobs are projected to increase 0.3 percent, also the same as the previous forecast.

The Honolulu Consumer Price Index (CPI) is expected to increase 2.0 percent in 2019, the same as the previous forecast. In 2020, the CPI is projected to increase 2.3 percent, also same as the previous forecast.

Personal income in current dollars is expected to increase 3.5 percent in 2019, 0.6 of a percentage point above the previous forecast. Real personal income is now projected to grow 1.7 percent in 2019, 0.5 of a percentage point above the previous forecast. In 2020, current-dollar personal income and real personal income are expected to increase 3.7 and 1.7 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 2.1 percent in 2021 and 1.5 percent in 2022. Visitor expenditures are expected to increase 2.1 percent in 2021 and 1.5 percent in 2022. Real personal income is projected to increase 1.6 percent in 2021 and 1.5 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 9,889 10,456 10,721 10,941 11,110
Visitor days (thousands) ¹ 84,167 88,285 91,118 92,930 94,331 95,273
Visitor expenditures (million dollars) ¹ 16,794 17,642 17,793 18,230 18,606 18,890
Honolulu CPI-U (1982-84=100) 272.0 277.1 282.6 289.1 296.1 303.5
Personal income (million dollars) 75,690 78,721 81,503 84,553 87,714 90,985
Real personal income (millions of 2012$) ² 60,539 61,937 63,001 64,043 65,043 65,994
Non-agricultural wage & salary jobs (thousands) 653.3 656.6 659.2 661.2 663.8 666.5
Civilian unemployment rate ³ 2.4 2.4 2.8 3.2 3.4 3.6
Gross domestic product (million dollars) 89,429 93,798 97,456 101,062 104,801 108,679
Real gross domestic product (millions of 2012$) 80,716 82,652 83,644 84,647 85,748 86,863
Gross domestic product deflator (2012=100) 110.8 113.5 116.5 119.4 122.2 125.1
Annual Percentage Change
Total population -0.3 -0.3 0.1 0.3 0.3 0.4
Visitor arrivals ¹ 5.3 5.2 5.7 2.5 2.1 1.5
Visitor days ¹ 5.0 4.9 3.2 2.0 1.5 1.0
Visitor expenditures ¹ 5.6 5.1 0.9 2.5 2.1 1.5
Honolulu CPI-U 2.5 1.9 2.0 2.3 2.4 2.5
Personal income 3.9 4.0 3.5 3.7 3.7 3.7
Real personal income ² 2.2 2.3 1.7 1.7 1.6 1.5
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 0.4 0.4 0.2 0.2
Gross domestic product 4.2 4.9 3.9 3.7 3.7 3.7
Real gross domestic product 2.3 2.4 1.2 1.2 1.3 1.3
Gross domestic product deflator (2012=100) 1.8 2.4 2.7 2.5 2.4 2.4
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 15, 2019.