Outlook for the Economy
2nd Quarter 2021 Report
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Hawaii’s economy has been greatly impacted by the COVID-19 pandemic. During the April 2020-March 2021 period, the average unemployment rate (not seasonally adjusted) was 13.5 percent. Hawaii lost 130,400 non-agriculture payroll jobs during the April 2020-March 2021 period as compared with the same period a year ago. All industry sectors lost jobs except for federal government jobs. The accommodation and food services & drinking places accounted for 42.2 percent of the total job losses, with a decline of 55,000 jobs. Overall, statewide non-agriculture payroll jobs decreased by 19.8 percent during the April 2020-March 2021 period.
Hawaii’s unemployment rate increased from 2.0 percent in the first quarter of 2020 to 19.4 percent in the second quarter of 2020. After this peak, the rate declined to 14.5 percent in the third quarter of 2020, 11.2 percent in the fourth quarter of 2020, and then 9.0 percent in the first quarter of 2021.
Visitor arrivals to the State during the first quarter of 2021 totaled 847,044, a decrease of 59.6 percent from the same quarter in 2020. However, due to the longer average length of stay, the average daily visitor census decreased only 51.6 percent in the first quarter of 2021.
The value of private building permits showed an increase of 2.3 percent or $17.9 million during the first quarter of 2021. The largest increase occurred in the residential category, which was up by $76.7 million or 33.5 percent. The value of commercial & industrial building permits declined by 2.9 percent, and the value for additions & alterations permits declined by 12.7 percent during the same period. In the first quarter of 2021, the state government spending on capital investment projects (CIP) decreased by 18.5 percent or $58.8 million, and government contracts awarded decreased 85.6 percent or $1,148.8 million over the first quarter of 2020.
At the national level, U.S. real GDP growth fell to a negative 9.0 percent in the second quarter of 2020, following a 0.3 percent increase in the first quarter. Growth then began to gradually improve with negative 2.8 percent growth in the third quarter, negative 2.4 percent in the fourth quarter, and positive 0.4 percent growth in the first quarter of 2021, as compared to the same quarter in previous year. The Blue Chip Economic Indicators report from May 10, 2021, which is the consensus of 50 economic forecasting organizations, projected that the U.S. economic growth rate for 2021 will increase by 6.6 percent. The report projected a positive 4.4 percent U.S. economic growth for 2022. The Blue Chip forecasts for foreign countries were all positive for 2021. Based on the above developments, DBEDT projects that Hawaii’s economic growth rate, as measured by the real gross domestic product (GDP), will increase by 3.5 percent in 2021, 3.0 percent in 2022, 2.3 percent in 2023, and 1.8 percent in 2024.
Hawaii will welcome 6.6 million visitors in 2021, an increase of 144.4 percent from the 2020 level. Visitor arrivals will increase to 8.6 million in 2022, 9.5 million in 2023, and 10.1 million in 2024. Visitor spending will increase 117.8 percent in 2021, then will increase 34.0 percent in 2022, 12.9 percent in 2023, and 7.2 percent in 2024.
Non-agriculture payroll jobs will increase 8.0 percent in 2021, then will increase by 3.4 percent in 2022, 1.6 percent in 2023, and 1.4 percent in 2024.
Overall for 2021, the average annual unemployment rate is forecast to be 7.7 percent, then decrease to 6.3 percent in 2022, 5.6 percent in 2023, and 5.0 percent in 2024. These rates are much higher than Hawaii’s average unemployment rate of 2.5 percent from 2017 to 2019.
Nominal personal income is forecast to decrease by 0.9 percent in 2021 and 2.5 percent in 2022, It is then expected to increase 2.8 percent in 2023 and 3.3 percent in 2024.
Hawaii’s consumer inflation rate, as measured by the Honolulu Consumer Price Index for All Urban Consumers, is expected to increase 2.5 percent in 2021, increase 2.3 percent in 2022, and increase 2.0 percent per year in 2023 and 2024.
Hawaii’s population is expected to increase 0.1 percent in 2021, and increase by 0.2 percent in 2022, 2023, and 2024.
| Economic Indicators | 2019 | 2020 ¹ | 2021 | 2022 | 2023 | 2024 |
|---|---|---|---|---|---|---|
| Actual | Forecast | |||||
| Total population (thousands) ² | (NA) | 1,455 | 1,457 | 1,459 | 1,463 | 1,466 |
| Visitor arrivals (thousands) ³ | 10,387 | 2,716 | 6,637 | 8,553 | 9,543 | 10,138 |
| Visitor days (thousands) ³ | 90,361 | 28,702 | 60,386 | 76,473 | 84,499 | 88,857 |
| Visitor expenditures (million dollars) ³ | 17,844 | 5,111 | 11,132 | 14,911 | 16,833 | 18,048 |
| Honolulu CPI-U (1982-84=100) | 281.6 | 286.0 | 293.2 | 299.9 | 305.9 | 312.0 |
| Personal income (million dollars) | 80,727 | 85,446 | 84,706 | 82,599 | 84,875 | 87,666 |
| Real personal income (millions of 2012$) 4 | 61,855 | 65,210 | 63,426 | 60,774 | 61,384 | 62,356 |
| Non-agricultural wage & salary jobs (thousands) | 658.5 | 557.1 | 601.6 | 621.9 | 632.1 | 641.1 |
| Civilian unemployment rate | 2.5 | 11.6 | 7.7 | 6.3 | 5.6 | 5.0 |
| Gross domestic product (million dollars) | 95,744 | 89,856 | 95,045 | 99,901 | 104,019 | 107,780 |
| Real gross domestic product (millions of 2012$) | 82,471 | 75,863 | 78,518 | 80,874 | 82,734 | 84,223 |
| Gross domestic product deflator (2012=100) | 116.1 | 118.4 | 121.0 | 123.5 | 125.7 | 128.0 |
| Annual Percentage Change | ||||||
| Total population | (NA) | (NA) | 0.1 | 0.2 | 0.2 | 0.2 |
| Visitor arrivals | 5.0 | -73.9 | 144.4 | 28.9 | 11.6 | 6.2 |
| Visitor days | 2.4 | -68.2 | 110.4 | 26.6 | 10.5 | 5.2 |
| Visitor expenditures | 1.1 | -71.4 | 117.8 | 34.0 | 12.9 | 7.2 |
| Honolulu CPI-U | 1.6 | 1.6 | 2.5 | 2.3 | 2.0 | 2.0 |
| Personal income | 2.9 | 5.8 | -0.9 | -2.5 | 2.8 | 3.3 |
| Real personal income | 0.7 | 5.4 | -2.7 | -4.2 | 1.0 | 1.6 |
| Non-agricultural wage & salary jobs | 0.0 | -15.4 | 8.0 | 3.4 | 1.6 | 1.4 |
| Civilian unemployment rate 5 | 0.1 | 9.1 | -3.9 | -1.4 | -0.7 | -0.7 |
| Gross domestic product | 2.8 | -6.1 | 5.8 | 5.1 | 4.1 | 3.6 |
| Real gross domestic product | 0.3 | -8.0 | 3.5 | 3.0 | 2.3 | 1.8 |
| Gross domestic product deflator (2012=100) | 2.5 | 2.0 | 2.2 | 2.0 | 1.8 | 1.8 |
3/ Visitors who came to Hawaii by air or by cruise ship. Expenditures includes supplementary expenditures.
4/ Using personal income deflator developed by the U.S. Bureau of Economic Analysis and estimated by DBEDT.
5/ Absolute change from previous year.
Source: Hawaii State Department of Business, Economic Development & Tourism, May 26, 2021.