Outlook for the Economy
3rd Quarter 2023 Report
Download Data Table (spreadsheet)
On August 8, 2023, the wildfire tragedy in Lahaina took the lives of at least 115 people and destroyed over 2,000 residential homes. The disaster area had more than 800 business establishments with about 7,000 employees. A total of 88 transpacific flights were cancelled in August, representing 23,083 air seats. The passenger count to Kahului Airport decreased by over 70 percent after the tragedy from 7,000 a day to 2,000 a day. Initial unemployment claims jumped from an average of 130 cases per week before the wildfire to 865 cases in the first week after the fire, to 4,449 in the second week, and to 2,705 cases in the third week.
Prior to the Maui wildfire, Hawaii’s economy continued its recovery from the COVID-19 pandemic. Year-to-date through July 2023, visitor arrivals recovered to 95.6 percent of the 2019 level while total visitor expenditures were 21.6 percent higher than the same seven months in 2019.
The total value of building permits issued during the first seven months of 2023 increased by 17.1 percent from the same period a year ago. The permit value for additions and alterations increased by 55.1 percent, the value of residential permits increased by 0.6 percent during the same period, while the value for commercial and industrial permits decreased by 21.2 percent during the same period.
State general excise tax collections increased by 8.0 percent during the first seven months of calendar year 2023 compared to the same period a year ago.
Hawaii’s real gross domestic product (GDP) recovered to 97.0 percent in the first quarter of 2023 compared to the same period in 2019. Hawaii’s labor force (not seasonally adjusted data) for the first seven months of 2023 recovered to 98.8 percent of the comparable 2019 level. The unemployment rate (not seasonally adjusted) averaged 2.9 percent during the first seven months of 2023, just 0.2 percentage points higher than the same period in 2019.
Hawaii’s consumer inflation, measured by the Honolulu Consumer Price Index for All Urban Consumers, averaged 3.1 percent during the first seven months of 2023, higher than the 1.8 percent experienced during the same period in 2019, but much lower than the nation at 4.6 percent.
At the national level, the most recent (August 2023) Blue Chip Economic Indicators report, which is the consensus of 50 economic forecasting organizations, projected the U.S. economy to grow at 2.0 percent in 2023 and 0.8 percent in 2024. For Hawaii, DBEDT estimates that the state’s real GDP will increase by 1.1 percent in 2023 and 1.5 percent in 2024, revised downward from its second quarter forecast due to the impact of the wildfire tragedy. In 2025 and 2026, economic growth for Hawaii is expected to be over 2.0 percent due to the expectation that reconstruction activities on Maui will begin.
Visitor arrivals are projected to be 9.8 million in 2023, lower than previously projected. Visitor growth from both the domestic market and international markets will be seen on Oahu. Neighbor islands, especially Maui, will see fewer visitors. Visitor arrivals are expected to increase to over 10 million from 2024. By 2026, visitor arrivals will be fully recovered to the pre-pandemic level. Visitor spending is projected to be $21.2 billion in 2023 and is expected to increase to $23.6 billion by 2026.
Non-agriculture payroll jobs are forecast to increase by 1.8 percent in 2023, lower than the 3.4 percent projected in the previous quarter. The payroll job counts will increase by 1.9 percent in 2024, 1.7 percent in 2025, and 1.5 percent in 2026.
The state unemployment rate is expected to be at 3.0 percent in 2023, and will improve to 2.7 percent in 2024, 2.5 percent in 2025, and 2.3 percent in 2026.
Personal income is expected to grow by 2.7 percent in 2023, lower than the projection made in the previous quarter. Personal income will grow by 2.8 percent in 2024, 3.5 percent in 2025, and 3.8 percent in 2026.
As measured by the Honolulu Consumer Price Index for Urban Consumers, inflation is expected to be 2.8 percent in 2023, still lower than the projected U.S. consumer inflation rate of 4.0 percent for the same year. Hawaii consumer inflation is expected to decrease to 2.3 percent by 2026.
Hawaii’s population is expected to decrease by 0.1 percent in 2023 and 2024, remain stable in 2025, and increase by 0.1 percent in 2026.
| Economic Indicators | 2021 | 2022 | 2023 | 2024 | 2025 | 2026 |
|---|---|---|---|---|---|---|
| Actual | Forecast | |||||
| Total population (thousands) 1 | 1,447 | 1,440 | 1,439 | 1,438 | 1,438 | 1,439 |
| Visitor arrivals (thousands) 2 | 6,778 | 9,234 | 9,757 | 10,098 | 10,280 | 10,434 |
| Visitor days (thousands) 2 | 65,312 | 85,240 | 88,203 | 89,465 | 89,709 | 89,689 |
| Visitor expenditures (million dollars) 2 | 13,154 | 19,800 | 21,222 | 22,171 | 22,898 | 23,580 |
| Honolulu CPI-U (1982-84=100) | 296.8 | 316.1 | 324.9 | 333.8 | 341.7 | 349.5 |
| Personal income (million dollars) | 87,858 | 88,104 | 90,482 | 93,016 | 92,271 | 99,930 |
| Real personal income (millions of 2012$) | 67,312 | 64,408 | 64,590 | 65,306 | 66,451 | 67,789 |
| Personal income deflator (2012=100) | 130.5 | 136.8 | 140.1 | 142.4 | 144.9 | 147.4 |
| Non-agricultural wage & salary jobs (thousands) | 586.9 | 618.1 | 629.2 | 641.2 | 652.1 | 661.9 |
| Civilian unemployment rate | 6.0 | 3.5 | 3.0 | 2.7 | 2.5 | 2.3 |
| Gross domestic product (million dollars) | 91,096 | 98,219 | 102,085 | 105,871 | 110,434 | 114,683 |
| Real gross domestic product (millions of 2012$) | 74,547 | 75,418 | 76,248 | 77,392 | 79,017 | 80,755 |
| Gross domestic product deflator (2012=100) | 122.2 | 130.2 | 133.9 | 136.8 | 139.8 | 142.0 |
| Annual Percentage Change | ||||||
| Total population | -0.3 | -0.5 | -0.1 | -0.1 | 0.0 | 0.1 |
| Visitor arrivals | 150.3 | 36.2 | 5.7 | 3.5 | 1.8 | 1.5 |
| Visitor days | 127.9 | 30.5 | 3.5 | 1.4 | 0.3 | 0.0 |
| Visitor expenditures | 154.8 | 50.5 | 7.2 | 4.5 | 3.3 | 3.0 |
| Honolulu CPI-U | 3.8 | 6.5 | 2.8 | 2.7 | 2.4 | 2.3 |
| Personal income | 5.7 | 0.3 | 2.7 | 2.8 | 3.5 | 3.8 |
| Real personal income | 1.1 | -4.3 | 0.3 | 1.1 | 1.8 | 2.0 |
| Personal income deflator (2012=100) | 4.5 | 4.8 | 2.4 | 1.7 | 1.7 | 1.8 |
| Non-agricultural wage & salary jobs | 4.8 | 5.3 | 1.8 | 1.9 | 1.7 | 1.5 |
| Civilian unemployment rate 3 | -5.7 | -2.5 | -0.5 | -0.3 | -0.2 | -0.2 |
| Gross domestic product | 10.4 | 7.8 | 3.9 | 3.7 | 4.3 | 3.8 |
| Real gross domestic product | 6.3 | 1.2 | 1.1 | 1.5 | 2.1 | 2.2 |
| Gross domestic product deflator (2012=100) | 3.8 | 6.6 | 2.8 | 2.2 | 2.2 | 1.6 |
2/ Visitors who came to Hawaii by air and by cruise ship. Expenditures includes supplementary business expenditures.
3/ Absolute change from previous year.
Source: Hawaii State Department of Business, Economic Development & Tourism, September 6, 2023.