Outlook for the Economy

3rd Quarter 2015

Hawaii’s economy is expected to continue positive growth for the rest of 2015 and into 2016. 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 2015 Blue Chip Economic Consensus Forecasts, U.S. real GDP is expected to increase by 2.3 percent in 2015, 0.2 of a percentage point lower than the 2.5 percent growth rate projected in the May 2015 forecast. For 2016 the consensus forecast predicts an overall 2.7 percent growth in U.S. real GDP..

According to the August 2015 Blue Chip Economic Consensus Forecast, real GDP growth for Japan is now expected to increase 0.9 percent in 2015, 0.1 of a percentage point lower than the growth rate projected in the May 2015 forecast. For 2016, the consensus forecast now expects an overall 1.5 percent growth rate for Japanese real GDP..

For the local economy, DBEDT expects visitor related indicators will grow at higher rates than projected in the previous forecast. For GDP growth, however, the current forecast was lower than the previous forecast due to revised historical GDP data from BEA..

Overall, Hawaii’s economy, as measured by real GDP, is projected to show a 1.9 percent increase in 2015, 0.6 of a percentage point below the growth rate forecasted last quarter. The real GDP growth forecast in 2016 is 2.3 percent, 0.1 of a percentage point below the growth rate forecasted last quarter..

Hawaii’s unemployment rate is projected to be 4.0 percent in 2015 and 3.7 percent in 2016, both are 0.1 of a percentage point higher than the previous forecast..

Visitor arrivals are expected to increase 4.3 percent in 2015, 1.8 percentage points higher than the previous forecast. The forecast for visitor days in 2015 increased 1.5 percentage points to 4.2 percent. The forecast for visitor expenditure growth in 2015 was revised upward to 3.8 percent, from 2.0 percent growth projected in the previous forecast. For 2016, the growth rate of visitor arrivals, visitor days, and visitor expenditures are now expected to be 1.6 percent, 1.5 percent, and 3.5 percent, respectively..

The projection for the non-agricultural wage and salary job growth rate in 2015 is 1.1 percent, same as the previous forecast. In 2016, jobs are projected to increase 1.2 percent, the same as the previous forecast..

The Honolulu Consumer Price Index (CPI) is now expected to increase 1.0 percent in 2015, 0.5 of a percentage point below the previous forecast. In 2016, the CPI is projected to increase 2.3 percent, 0.1 of a percentage point above the previous forecast..

Personal income in current dollars is now expected to increase 4.3 percent in 2015, the same as the previous forecast. Real personal income is currently projected to grow 3.5 percent in 2015, 1.0 percentage point higher than the previous forecast. In 2016, current-dollar personal income and real personal income are expected to increase 4.6 percent and 2.9 percent, respectively..

Beyond 2016, the economy will continue its expansion path, with job growth expected to be 1.0 percent in 2017 and 1.1 percent in 2018. Visitor arrivals are expected to increase 1.7 percent in 2017 and 2018. Visitor expenditures are expected to increase 4.3 percent in 2017 and 2018. Real personal income is projected to increase 2.7 percent in 2017 and 2.6 percent in 2018. Hawaii’s real GDP growth is expected to increase 2.4 percent in 2017 and 2018. The unemployment rate is expected to decrease to 3.4 percent in 2017 and 3.3 percent in 2018.

ACTUAL AND FORECAST OF KEY ECONOMIC INDICATORS FOR HAWAII: 2013 TO 2018

Economic Indicators 2013 2014 2015 2016 2017 2018
Actual Forecast
Total population (thousands) 1,409 1,420 1,434 1,448 1,463 1,477
Visitor arrivals (thousands) ¹ 8,174 8,308 8,661 8,796 8,944 9,097
Visitor days (thousands) ¹ 74,942 75,646 78,788 80,004 81,356 82,754
Visitor expenditures (million dollars) ¹ 14,521 14,943 15,518 16,063 16,748 17,476
Honolulu CPI-U (1982-84=100) 253.9 257.6 260.2 266.1 272.8 280.2
Personal income (million dollars) 63,468 65,874 68,707 71,867 75,461 79,234
Real personal income (millions of 2009$) ² 50,920 52,346 54,178 55,749 57,282 58,752
Non-agricultural wage & salary jobs (thousands) 618.6 625.3 632.2 639.8 646.2 653.3
Civilian unemployment rate 4.8 4.4 4.0 3.7 3.4 3.3
Gross domestic product (million dollars) 75,095 77,389 80,045 83,256 86,533 90,294
Real gross domestic product (millions of 2009$) 69,968 70,532 71,874 73,544 75,310 77,117
Gross domestic product deflator (2009=100) 107.3 109.7 111.4 113.2 114.9 117.1
Annual Percentage Change
Total population 1.2 0.8 1.0 1.0 1.0 1.0
Visitor arrivals ¹ 1.8 1.6 4.3 1.6 1.7 1.7
Visitor days ¹ 0.6 0.9 4.2 1.5 1.7 1.7
Visitor expenditures ¹ 1.1 2.9 3.8 3.5 4.3 4.3
Honolulu CPI-U 1.8 1.4 1.0 2.3 2.5 2.7
Personal income 2.4 3.8 4.3 4.6 5.0 5.0
Real personal income ² 2.0 2.8 3.5 2.9 2.7 2.6
Non-agricultural wage & salary jobs 2.0 1.1 1.1 1.2 1.0 1.1
Civilian unemployment rate ³ -1.2 -0.4 -0.4 -0.3 -0.3 -0.1
Gross domestic product 3.4 3.1 3.4 4.0 3.9 4.3
Real gross domestic product 1.4 0.8 1.9 2.3 2.4 2.4
Gross domestic product deflator (2009=100) 1.9 2.2 1.5 1.7 1.5 1.9

1/ Visitors who came to Hawaii by air or by cruise ship. Expenditures includes supplementary expenditures estimated by HTA
for 2014 and DBEDT thereafter.
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 18, 2015.