Outlook for the Economy

1st 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 February 2019 Blue Chip Economic Consensus Forecasts, U.S. real GDP is expected to increase by 2.5 percent in 2019, 0.1 of a percentage point below the growth rate projected in the November 2018 forecast. For 2020 the consensus forecast predicts an overall 1.8 percent growth in U.S. real GDP.

According to the February 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 below the growth rate projected in the November 2018 forecast. For 2020, the consensus forecast now projects an overall 0.6 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 remain the same as 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, the same as the growth rate forecast last quarter. The real GDP growth forecast for 2020 is 1.4 percent, also the same as the previous forecast.

Hawaii’s unemployment rate is projected to be 2.7 percent in 2019, 0.2 of a percentage point above the previous forecast. The unemployment rate in 2020 is projected to be 3.1 percent, 0.1 of a percentage point above the previous forecast.

Visitor arrivals are expected to increase 2.0 percent in 2019, 0.2 of a percentage point above the previous forecast. The forecast for visitor days in 2019 decreased 0.5 of a percentage point to 1.6 percent. The 2019 forecast for visitor expenditure growth was revised downward to 3.3 percent, from 4.2 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 1.9 percent, 1.7 percent, and 3.7 percent, respectively.

The projection for the non-agricultural wage and salary job growth rate for 2019 is 0.9 percent, the same as the previous forecast. In 2020, 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 1.9 percent in 2019, 0.4 of a percentage point below the previous forecast. In 2020, the CPI is projected to increase 2.1 percent, 0.4 of a percentage point below the previous forecast.

Personal income in current dollars is expected to increase 3.3 percent in 2019, 0.2 of a percentage point below the previous forecast. Real personal income is now projected to grow 1.5 percent in 2019, 0.2 of a percentage point below the previous forecast. In 2020, current-dollar personal income and real personal income are expected to increase 3.7 and 1.6 percent, respectively.

Beyond 2020, the economy is expected to continue its expansion path, with job growth projected to be 0.8 percent in 2021 and 2022. Visitor arrivals are expected to increase 1.7 percent in 2021 and 1.4 percent in 2022. Visitor expenditures are expected to increase 3.5 percent in 2021 and 3.2 percent in 2022. Real personal income is projected to increase 1.5 percent in 2021 and 1.6 percent in 2022. Hawaii’s real GDP growth is expected to increase 1.4 percent in both 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 10,152 10,346 10,517 10,665
Visitor days (thousands) ¹ 84,066 88,560 90,020 91,595 92,952 94,115
Visitor expenditures (million dollars) ¹ 16,809 17,952 18,542 19,235 19,905 20,552
Honolulu CPI-U (1982-84=100) 272.0 277.1 282.3 288.2 293.9 299.8
Personal income (million dollars) ² 75,355 77,616 80,177 83,144 86,386 89,842
Real personal income (millions of 2012$) ³ 59,908 60,690 61,602 62,589 63,529 64,546
Non-agricultural wage & salary jobs (thousands) 652.7 663.5 669.5 675.5 680.9 686.3
Civilian unemployment rate 4 2.4 2.4 2.7 3.1 3.4 3.6
Gross domestic product (million dollars) 5 88,448 91,101 94,290 97,779 101,396 105,148
Real gross domestic product (millions of 2012$) 5 79,469 80,263 81,227 82,364 83,517 84,686
Gross domestic product deflator (2012=100) 5 111.3 113.5 116.1 118.7 121.4 124.2
Annual Percentage Change
Total population -0.3 -0.3 0.1 0.3 0.3 0.4
Visitor arrivals ¹ 5.3 5.9 2.0 1.9 1.7 1.4
Visitor days ¹ 4.8 5.3 1.6 1.7 1.5 1.3
Visitor expenditures ¹ 5.6 6.8 3.3 3.7 3.5 3.2
Honolulu CPI-U 2.5 1.9 1.9 2.1 2.0 2.0
Personal income ² 3.7 3.0 3.3 3.7 3.9 4.0
Real personal income ³ 1.4 1.3 1.5 1.6 1.5 1.6
Non-agricultural wage & salary jobs 1.0 1.7 0.9 0.9 0.8 0.8
Civilian unemployment rate 4 -0.5 0.0 0.3 0.4 0.3 0.2
Gross domestic product 5 3.3 3.0 3.5 3.7 3.7 3.7
Real gross domestic product 5 1.2 1.0 1.2 1.4 1.4 1.4
Gross domestic product deflator (2012=100) 5 2.1 2.0 2.3 2.3 2.3 2.3

1/ Visitors who came to Hawaii by air or by cruise ship. Expenditures includes supplementary expenditures. 2018 supplementary expenditure was estimated by DBEDT.
2/ The 2018 values are estimated based on actual values in the first three quarters of 2018.
3/ Using personal income deflator developed by the U.S. Bureau of Economic Analysis and estimated by DBEDT.
4/ Absolute change from previous year.
5/ 2018 and later years are estimated by DBEDT, data for earlier years from U.S. Bureau of Economic Analysis.
Source: Hawaii State Department of Business, Economic Development & Tourism, February 28, 2019.