Outlook for the Economy

1st Quarter 2020 Report

Hawaii’s economy is expected to continue positive growth in 2020 and 2021. 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 March 2020 Blue Chip Economic Consensus Forecasts, U.S. real GDP is expected to increase by 1.7 percent in 2020, 0.1 of a percentage point below the growth rate projected in the November 2019 forecast. For 2021 the consensus forecast predicts an overall 2.0 percent growth in U.S. real GDP.

According to the March 2020 Blue Chip Economic Consensus Forecast, real GDP growth for Japan is now expected to increase 0.0 percent in 2020, 0.3 of a percentage point below the growth rate projected in the November 2019 forecast. For 2021, the consensus forecast now projects an overall 1.0 percent growth rate for Japanese real GDP.

For Hawaii’s economy, DBEDT expects that visitor expenditures will grow at a lower rate than projected in the previous forecast for 2020, and the real GDP growth rate will also be lower than projected in the previous forecast.

Overall, Hawaii’s economy, as measured by real GDP, is projected to show a 0.5 percent increase in 2020, 0.7 of a percentage point below the growth rate forecast last quarter. The real GDP growth forecast for 2021 is 1.5 percent, 0.2 of a percentage point above the previous forecast.

Hawaii’s unemployment rate is projected to be 3.2 percent in 2020, same as the previous forecast. The unemployment rate in 2021 is projected to be 3.1 percent, 0.3 of a percentage point below the previous forecast.

Visitor arrivals are expected to decrease 3.3 percent in 2020, 5.8 percentage points below the previous forecast. The forecast for visitor days in 2020 decreased 5.7 percentage points to negative 3.7 percent. The 2020 forecast for visitor expenditure growth was decreased 6.3 percentage points to negative 3.8 percent as projected in the previous forecast. For 2021, the growth rate of visitor arrivals, visitor days, and visitor expenditures are now expected to be 4.0 percent, 3.8 percent, and 4.4 percent, respectively.

The projection for the non-agricultural wage and salary job growth rate for 2020 is negative 0.2 percent, 0.5 of a percentage point below the previous forecast. In 2021, jobs are projected to increase 0.5 percent, 0.1 of a percentage point above the previous forecast.

The Honolulu Consumer Price Index (CPI) is expected to increase 1.7 percent in 2020, 0.6 of a percentage point below the previous forecast. In 2021, the CPI is projected to increase 1.8 percent, 0.6 of a percentage point below the previous forecast.

Personal income in current dollars is expected to increase 2.8 percent in 2020, 0.9 of a percentage point below the previous forecast. Real personal income is now projected to grow 1.9 percent in 2020, 0.2 of a percentage point above the previous forecast. In 2021, current-dollar personal income and real personal income are expected to increase 4.0 and 2.0 percent, respectively.

Beyond 2021, the economy is expected to continue its expansion path, with job growth projected to be 0.4 percent in 2022 and 2023. Visitor arrivals are expected to increase 1.8 percent in 2022 and 1.6 percent in 2023. Visitor expenditures are expected to increase 2.1 percent in 2022 and 1.9 percent in 2023. Real personal income is projected to increase 1.9 percent in 2022 and 2023. Hawaii’s real GDP growth is expected to increase 1.3 percent in 2022 and 2023. The unemployment rate is expected to increase to 3.3 percent in 2022 and 3.4 percent in 2023.

ACTUAL AND FORECAST OF KEY ECONOMIC INDICATORS FOR HAWAII: 2018 TO 2023
Economic Indicators 2018 2019 2020 2021 2022 2023
Actual Forecast
Total population (thousands) 1,421 1,416 1,419 1,422 1,426 1,430
Visitor arrivals (thousands) 1/ 9,889 10,425 10,081 10,484 10,673 10,844
Visitor days (thousands) 1/ 88,285 90,892 87,562 90,898 92,321 93,581
Visitor expenditures (million dollars) 1/ 17,643 17,890 17,211 17,972 18,344 18,689
Honolulu CPI-U (1982-84=100) 277.1 281.6 286.4 291.6 297.2 303.0
Personal income (million dollars) 2/ 78,721 81,513 83,796 87,148 90,372 93,716
Real personal income (millions of 2012$) 3/ 61,937 63,218 64,427 65,714 66,972 68,241
Non-agricultural wage & salary jobs (thousands) 656.6 660.1 658.8 662.1 664.7 667.4
Civilian unemployment rate 4/ 2.4 2.7 3.2 3.1 3.3 3.4
Gross domestic product (million dollars) 5/ 93,798 97,456 101,062 104,801 108,679 112,700
Real gross domestic product (millions of 2012$) 5/ 82,652 83,644 84,062 85,323 86,432 87,556
Gross domestic product deflator (2012=100) 5/ 113.5 116.5 120.2 122.8 125.7 128.7
Annual Percentage Change
Total population -0.3 -0.3 0.2 0.2 0.3 0.3
Visitor arrivals 1/ 5.2 5.4 -3.3 4.0 1.8 1.6
Visitor days 1/ 4.9 3.0 -3.7 3.8 1.6 1.4
Visitor expenditures 1/ 5.1 1.4 -3.8 4.4 2.1 1.9
Honolulu CPI-U 1.9 1.6 1.7 1.8 1.9 1.9
Personal income 2/ 4.0 3.5 2.8 4.0 3.7 3.7
Real personal income 3/ 2.3 2.1 1.9 2.0 1.9 1.9
Non-agricultural wage & salary jobs 0.5 0.5 -0.2 0.5 0.4 0.4
Civilian unemployment rate 4/ 0.0 0.3 0.5 -0.1 0.2 0.1
Gross domestic product 5/ 4.9 3.9 3.7 3.7 3.7 3.7
Real gross domestic product 5/ 2.4 1.2 0.5 1.5 1.3 1.3
Gross domestic product deflator (2012=100) 5/ 2.4 2.7 3.2 2.2 2.4 2.4
1/ Visitors who came to Hawaii by air or by cruise ship. Expenditures includes supplementary expenditures.
2019 supplementary expenditure was estimated by DBEDT.
2/ The 2019 values are estimated based on actual values in the first three quarters of 2019.
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/ 2019 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, March 11, 2020.