State of the Economy

3rd Quarter 2020 Report

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

In the second quarter of 2020, the total number of visitors arriving by air to Hawaii decreased 2,576,293 or 98.8 percent. Due to longer lengths of stay, the daily visitor census decreased 96.2 percent in the quarter.

In the second quarter of 2020, jobs in the construction sector increased 0.8 percent or 300 jobs compared with the same quarter of 2019. The government contracts awarded increased from $129.1 million in the second quarter of 2019 to $582.4 million in the second quarter of 2020. In the second quarter of 2020, the permit value for private construction decreased $115.8 million or 14.3 percent compared with the same quarter of 2019. According to the most recent excise tax base data available, current construction put-in-place increased $118.4 million or 5.0 percent in the first quarter of 2020, compared with the same quarter of the previous year.

In the second quarter of 2020, State general fund tax revenues were down $722.6 million or 34.4 percent over the same period of 2019. The net individual income tax revenues decreased $359.7 million or 40.5 percent, the state general excise tax revenue decreased $221.3 million or 24.6 percent, and the transient accommodations tax (TAT) decreased $103.3 million or 68.6 percent. In the first half of 2020, State general fund tax revenues decreased $619.7 million or 16.4 percent, and state general excise tax revenue decreased $166.4 million or 9.2 percent, compared to the same period of the previous year.

Labor market conditions were all negative. In the second quarter of 2020, Hawaii’s non-agricultural wage and salary jobs averaged 535,200 jobs, a decrease of 118,400 jobs or 18.1 percent from the same quarter of 2019.

In this quarter, the private sector lost about 106,300 non-agricultural jobs compared to the second quarter of 2019. The largest decrease was in Food Services and Drinking Places, which lost 35,400 jobs or 50.7 percent. This was followed by Accommodation, which lost 25,800 jobs or 60.8 percent, Transportation, Warehousing & Utilities, which lost 8,500 jobs or 25.1 percent, Retail Trade, which lost 7,300 jobs or 10.3 percent, Professional & Business Services, which lost 7,100 jobs or 9.7 percent, and Arts, Entertainment & Recreation, which lost 6,600 jobs or 47.8 percent in the quarter. For the private sector, in the second quarter of 2020, only Natural Resources, Mining & Construction, added 300 jobs or 0.8 percent in the quarter. The Government sector lost 12,100 jobs or 9.5 percent in the second quarter of 2020 compared to the same quarter of 2019. The Federal Government added 100 jobs or 0.3 percent, the State Government lost 11,700 jobs or 15.6 percent, and the Local Government lost 400 jobs or 2.1 percent, compared to the second quarter of 2019.

In the first quarter of 2020, total annualized nominal GDP increased $995 million or 1.0 percent from the first quarter of 2019. In 2019, total annualized nominal GDP increased $3,484 million or 3.7 percent from the previous year. In the first quarter of 2020, total annualized real GDP (in chained 2012 dollars) decreased $1,081 million or 1.3 percent from the first quarter of 2019. In 2019, total annualized real GDP increased $858 million or 1.0 percent from the previous year.

In the first quarter of 2020, total non-farm private sector annualized earnings increased $186.6 million or 0.5 percent from the first quarter of 2019. In dollar terms, the largest increase occurred in health care and social assistance; followed by finance and insurance, administrative & waste management services, retail trade, and transportation and warehousing. During the first quarter of 2020, total government earnings increased $352.7 million or 2.2 percent from the same quarter of 2019. Earnings from the federal government increased $312.3 million or 3.5 percent. Earnings from the state and local governments increased $40.5 million or 0.8 percent in the quarter.

In the first 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 1.2 percent increase for the U.S. average CPI-U; however, it is lower than the first half of 2019 Honolulu CPI-U increase of 2.0 percent from the same period of the previous year. In the first half of 2020, the Honolulu CPI-U increased the most in Apparel (4.9 percent), followed by Food and Beverages (2.7 percent) and Recreation (2.7 percent), Housing (2.6 percent), and Education and Communication (0.9 percent). The price of Transportation decreased 4.5 percent and the price of Other Goods and Services decreased 1.4 percent compared to the first half of 2019.