UH: Isle economy slowdown, not recession, expected
STORY SUMMARY »
A University of Hawaii report due out today stopped short of saying the state could follow the nation into a recession, but did forecast a continued slump in some key economic indicators here, including employment, real income and tourism.
The UH Economic Research Organization's 2008 annual report anticipates that Honolulu's inflation rate will continue to be "relatively high" this year but will narrow to 4.3 percent from 4.9 percent last year.
Visitor arrivals are expected to drop by 1.9 percent this year. The group's previous report had called for a gain of 0.3 percent. Also, it pared its forecast for real income growth this year from 1.9 percent to 0.3 percent.
FULL STORY »
Hawaii's visitor traffic will take a hit this year, while employment and real income are expected to be lower than previous estimates, but signs of recession on the mainland are not as apparent here, according to a University of Hawaii economic report being released today.
Honolulu's inflation will continue to be "relatively high" but will narrow to 4.3 percent from 4.9 percent last year, slowing by more than half to 2.5 percent in 2009, the University of Hawaii Economic Research Organization said.
Inflation will be buoyed this year by a recent spike in oil prices and high food costs, study authors Carl S. Bonham and Byron Gangnes wrote.
The report said the U.S. economy has cooled into a recession, but stopped short of saying whether Hawaii will soon follow a similar fate.
"You need to have negative growth in more than one sector of the economy, but we don't feel we are going to have that in broad enough sectors of the economy to forecast a recession," Bonham said in an interview.
Economic growth in Hawaii has dropped close to zero, the report says, with the end of moderate growth likely to "feel like recession to many local residents."
The U.S. economy is expected to see a modest recovery begins later this year, the report said, with real GDP expanding by 1.2 percent in 2008 before strengthening to 2.6 percent in 2009.
In Hawaii, real income growth is forecast to drop from a previously estimated 1.9 percent to 0.3 percent on labor market weakness, the report said
"The federal tax rebates due to arrive in May will help keep 2008 real income above the water line and support a modest recovery of growth in 2009," it states.
Isle visitor traffic this year will slip by 1.9 percent -- versus a previous estimate of 0.3 percent -- as two of three NCL America cruise ships leave the state by May, and "extremely weak conditions in the U.S., particularly in California, will contribute to further visitor losses," the report said. They don't expect growth in visitor arrival numbers until 2010.
The UHERO report also forecasts zero growth for payroll jobs this year and a 0.4 percent contraction in employment.
Most sectors will a slump in job growth, with trade, transportation and utilities; finance, insurance and real estate; and the accommodations and food service sector all expected to lose jobs in 2008. One area that should expect moderate job growth during the next three years is health care and social assistance.
Construction in Hawaii is likely to experience a fairly soft landing over the next several years, the report said.
"We expect construction jobs to top out this year and experience only modest job losses over the next few years," it said. "Hawaii can take comfort in a healthier construction sector than the U.S. as a whole, the stabilizing influence of a large military, and limited direct exposure to the subprime mortgage crisis."