Outlook for the Economy

1st Quarter 2021 Report

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Hawaii’s economy has been greatly impacted by the COVID-19 pandemic. During the April-December 2020 period, the average unemployment rate (not seasonally adjusted) was 15.1 percent. Hawaii lost 110,600 non-agriculture payroll jobs during the April-December 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 52.6 percent of the total job loss at 58,200. Overall, statewide non-agriculture payroll jobs decreased by 16.9 percent in the April-December 2020 period.

Hawaii’s unemployment rate increased from 2.6 percent in the first quarter of 2020 to 20.3 percent in the second quarter of 2020, decreased to 13.9 percent in the third quarter of 2020, and then decreased further to 11.2 percent in the fourth quarter of 2020.

Visitor arrivals to the State during the fourth quarter of 2020 totaled 496,186, a decrease of 80.2 percent from the same quarter in 2019. However, due to the longer average length of stay, the average daily visitor census decreased only 70.7 percent in the fourth quarter of 2020.

The value of private building permits showed a decrease of 7.7 percent or $65.4 million during the fourth quarter of 2020. The largest decrease occurred in the commercial & industrial category which was down by $55.6 million or 37.1 percent. The value of residential building permits was down by 0.9 percent, and the value for additions & alterations category declined by 1.8 percent during the same period. In the fourth quarter of 2020, the state government spending on capital investment projects (CIP) increased by 100.2 percent or $298.2 million, and government contracts awarded in the fourth quarter of 2020 increased $746.4 million over the fourth quarter of 2019.

At the national level, the U.S. economic growth rate was at 0.3 percent during the first quarter, fell to a negative 9.0 percent in the second quarter, improved to negative 2.8 percent in the third quarter, and improved further to negative 2.5 percent in the fourth quarter as compared to the same quarter in 2019. The Blue Chip Economic Indicators report from February 12, 2020, which is the consensus of 50 economic forecasting organizations, projected that the U.S. economic growth rate for 2021 will increase by 4.9 percent. The report projected a positive 3.8 percent U.S. economic growth for 2022. The Blue Chip forecasts for foreign countries were all positive in 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 2.7 percent in 2021, then will increase by 3.3 percent in 2022, 2.3 percent in 2023, and 1.8 percent in 2024.

Hawaii will welcome 5.5 million visitors in 2021, an increase of 102.9 percent from the 2020 level. Visitor arrivals will increase to 8.3 million in 2022, 9.2 million in 2023, and 9.8 million in 2024. Visitor spending will increase 90.9 percent in 2021, then will increase 48.6 percent in 2022, 12.7 percent in 2023, and 11.1 percent in 2024.

Non-agriculture payroll jobs will increase 6.2 percent in 2021, then will increase by 3.1 percent in 2022, 1.6 percent in 2023, and 1.3 percent in 2024.

Overall for 2021, the average annual unemployment rate is forecast to be 8.2 percent, then decrease to 6.9 percent in 2022, 6.2 percent in 2023, and 5.7 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 expected to decrease by 2.9 percent in 2021, then increase 1.8 percent in 2022, increase 3.1 percent in 2023, and increase 3.3 percent in 2024.

Hawaii’s consumer inflation rate, as measured by the Honolulu Consumer Price Index for All Urban Consumers, will increase at about 2.0 percent per year for the next few years.

Hawaii’s population is expected to decrease 0.1 percent in 2021, and increase by 0.1 percent in 2022, and 0.2 percent in 2023 and 2024.

ACTUAL AND FORECAST OF KEY ECONOMIC INDICATORS FOR HAWAII: 2019 TO 2024
Economic Indicators 2019 2020 ¹ 2021 2022 2023 2024
Actual Forecast
Total population (thousands) 1,416 1,407 1,406 1,408 1,411 1,414
Visitor arrivals (thousands) ² 10,387 2,716 5,510 8,282 9,210 9,837
Visitor days (thousands) ² 90,361 28,702 52,372 72,840 80,772 86,645
Visitor expenditures (million dollars) ² 17,844 5,111 9,757 14,501 16,349 18,163
Honolulu CPI-U (1982-84=100) 281.6 286.0 291.6 297.5 303.8 309.9
Personal income (million dollars) 80,727 86,773 84,270 85,777 88,405 91,330
Real personal income (millions of 2012$) ³ 61,855 66,224 63,399 63,510 64,263 65,172
Non-agricultural wage & salary jobs (thousands) 655.7 572.7 608.5 627.5 637.5 645.7
Civilian unemployment rate 2.7 12.0 8.2 6.9 6.2 5.7
Gross domestic product (million dollars) 95,744 89,850 94,118 99,352 103,521 107,315
Real gross domestic product (millions of 2012$) 82,471 75,967 77,994 80,589 82,442 83,926
Gross domestic product deflator (2012=100) 116.1 118.2 120.7 123.0 125.2 127.3
Annual Percentage Change
Total population -0.3 -0.6 -0.1 0.1 0.2 0.2
Visitor arrivals 5.2 -73.9 102.9 50.3 11.2 6.8
Visitor days 4.9 -68.2 82.5 39.1 10.9 7.3
Visitor expenditures 5.1 -71.4 90.9 48.6 12.7 11.1
Honolulu CPI-U 1.9 1.6 2.0 2.0 2.1 2.0
Personal income 3.6 7.5 -2.9 1.8 3.1 3.3
Real personal income 1.8 7.1 -4.3 0.2 1.2 1.4
Non-agricultural wage & salary jobs 0.5 -12.7 6.2 3.1 1.6 1.3
Civilian unemployment rate 4 0.1 9.3 -3.8 -1.3 -0.7 -0.5
Gross domestic product 2.5 -6.2 4.8 5.6 4.2 3.7
Real gross domestic product 0.3 -7.9 2.7 3.3 2.3 1.8
Gross domestic product deflator (2012=100) 2.3 1.9 2.0 1.9 1.8 1.7
1/ Some of the indicators are preliminary or estimated such as visitor expenditures, personal income, and gross domestic product.
2/ Visitors who came to Hawaii by air or by cruise ship. Expenditures includes supplementary expenditures.
3/ Using personal income deflator developed by the U.S. Bureau of Economic Analysis and estimated by DBEDT.
4/ Absolute change from previous year.
Source: Hawaii State Department of Business, Economic Development & Tourism, February 25, 2021.