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State visitor arrivals seen falling 5.2% in '09


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POSTED: Friday, March 20, 2009

Tough times are ahead for Hawaii businesses and households over the next few years.

Hawaii faces a long and deep recession, according to the annual forecast by the University of Hawaii Economic Research Organization.

               

     

 

Hawaii economic indicators

       

       

       

                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
YEAR200820092010
Visitor arrivals*-10.6%-5.2%0.0%
U.S. visitors*-13.5%-3.3%0.9%
Japan*-10.5%-10.2%-7.8%
Other*3.1%-7.6%4.1%
Unemployment rate4.0%7.0%7.6%
Inflation Rate, Honolulu4.3%0.5%0.7%
Real personal income*-0.6%-2.5%-0.2%

       

        * Year-over-year percentage change
       

Source: UHERO (2008 figures are estimates, 2009 and 2010 figures are forecasts).

       

 

       

“;The visitor industry will languish, as the deepest global recession in decades continues to undermine travel demand,”; says UHERO. “;Local construction activity will weaken further, because of the unwinding residential cycle, a poor business outlook and persistent problems in national credit markets.”;

Job losses will continue to mount, and Hawaii residents - like their mainland counterparts - will become cautious spenders, contributing to local economic weakness.

UHERO's revised outlook predicts a slower recovery for Hawaii's visitor industry, with positive annual growth delayed until 2011. Even then, it will be slow.

Total air visitor arrivals to Hawaii are expected to fall by 5.2 percent this year, and remain flat in 2010.

The construction downturn is more severe than previously anticipated, with a marked falloff in commercial building activity.

The state's highway modernization plan and Oahu rail transit will boost Hawaii's construction industry several years from now, but not in the near term.

Job shedding will continue and be widespread, says UHERO, with the construction, accommodation and food-services sectors hardest hit. But jobs in transportation and utilities also will shrink, along with retail, finance, insurance and real estate.

The unemployment rate is expected to increase to 7 percent this year, and 7.6 percent next year.

The silver lining is that Honolulu's inflation rate is expected to decline to 0.5 percent from 4.3 percent last year due to decreases in energy, fuel prices and apparel.

But real personal income (adjusted for inflation), drawn down by job losses, stagnant wages and investment income losses, is still expected to drop by 2.5 percent this year, and by another 0.2 percent next year.

The federal stimulus plans will give the national economy a boost, but have a smaller impact on the local economy. A recovery will still come in due time, according to UHERO eco-nomists, possibly with a larger-than-expected rebound.