State of the Economy

1st Quarter 2021 Report

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Hawaii’s major economic indicators were mainly negative in the fourth quarter of 2020. Visitor arrivals, wage and salary jobs, State general fund tax revenues, and private building authorizations all decreased in the quarter compared to the fourth quarter of 2019. Only government contracts awarded increased in the quarter.

In the fourth quarter of 2020, the total number of visitors arriving by air to Hawaii decreased 2,013,165 or 80.2 percent. Due to longer lengths of stay, the daily visitor census decreased 70.7 percent in the quarter.

In the fourth quarter of 2020, jobs in the construction sector decreased 1.9 percent or 700 jobs compared with the same quarter of 2019. The government contracts awarded increased $746.4 million from $143.2 million in the fourth quarter of 2019 to $889.5 million in the fourth quarter of 2020. In the fourth quarter of 2020, the permit value for private construction decreased $65.4 million or 7.7 percent compared with the same quarter of 2019. According to the most recent excise tax base data available, current construction put-in-place increased $202.7 million or 8.3 percent in the third quarter of 2020, compared with the same quarter of the previous year.

In the fourth quarter of 2020, State general fund tax revenues were down $196.2 million or 11.7 percent over the same period of 2019. The net individual income tax revenues decreased $19.1 million or 3.1 percent, the state general excise tax revenue decreased $170.3 million or 19.7 percent, and the transient accommodations tax (TAT) decreased $119.0 million or 83.5 percent. In 2020, State general fund tax revenues decreased $877.0 million or 12.0 percent, and state general excise tax revenue decreased $593.4 million or 15.6 percent, compared to the previous year.

Labor market conditions were all negative. In the fourth quarter of 2020, Hawaii’s non-agricultural wage and salary jobs averaged 561,500 jobs, a decrease of 101,400 jobs or 15.3 percent from the same quarter of 2019.

In this quarter, the private sector lost about 92,400 non-agricultural jobs compared to the fourth quarter of 2019. All private sector industries lost jobs in the quarter. Jobs decreased the most in Accommodation, which lost 26,300 jobs or 61.9 percent; followed by Food Services and Drinking Places, which lost 23,900 jobs or 33.9 percent, Transportation, Warehousing & Utilities, which lost 8,800 jobs or 25.3 percent, Professional & Business Services, lost 8,500 jobs or 11.3 percent, Arts, Entertainment & Recreation, lost 3,700 jobs or 27.4 percent, Retail Trade, lost 3,200 jobs or 4.5 percent, and Other Services, lost 3,200 jobs or 11.3 percent in the quarter. The Government sector lost 9,000 jobs or 7.0 percent in the fourth quarter of 2020 compared to the same quarter of 2019. The Federal Government lost 600 jobs or 1.7 percent, the State Government lost 8,600 jobs or 11.4 percent, and the Local Government added 100 jobs or 0.5 percent, compared to the fourth quarter of 2019.

In the third quarter of 2020, total annualized nominal GDP decreased $6,160 million or 6.4 percent, from the third quarter of 2019. In the first three quarters of 2020, total annualized nominal GDP decreased $5,772 million or 6.1 percent from the same period of the previous year. In the third quarter of 2020, total annualized real GDP (in chained 2012 dollars) decreased $6,784 million or 8.2 percent from the third quarter of 2019. In the first three quarters of 2020, total annualized real GDP decreased $6,500 million or 7.9 percent from the same period of the previous year.

In the third quarter of 2020, total non-farm private sector annualized earnings decreased $3,879.7 million or 9.5 percent from the third quarter of 2019. In dollar terms, the largest decrease occurred in accommodation and food services; followed by other services, arts, entertainment, and recreation, transportation and warehousing, and retail trade. During the third quarter of 2020, total government earnings increased $162.7 million or 1.0 percent from the same quarter of 2019. Earnings from the federal government increased $187.0 million or 2.0 percent. Earnings from the state and local governments decreased $24.3 million or 0.3 percent in the quarter.

In the second half of 2020, Honolulu’s Consumer Price Index for Urban Consumers (CPI-U) increased 1.6 percent from the same period in 2019. This is 0.4 of a percentage point above the U.S. average CPI-U and is higher than the second half of 2019 Honolulu CPI-U increase of 1.3 percent from the same period of the previous year. In the second half of 2020, the Honolulu CPI-U increased the most in Food and Beverages (6.9 percent), followed by Recreation (4.5 percent), Education and Communication (4.2 percent), and Housing (1.4 percent). The price of Apparel decreased 7.1 percent; the price of Transportation decreased 5.2 percent, and the price of Other Goods and Services decreased 0.8 percent compared to the second half of 2019.