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State lowers economic forecasts


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POSTED: Wednesday, November 18, 2009

Hawaii's economy, which has endured rising unemployment, soaring foreclosures, mass layoffs and business shutdowns over the last 18 months, is expected to worsen before it begins turning the corner.

Sharp decreases in visitor expenditures, along with less-than-expected personal income, prompted the state Department of Business, Economic Development and Tourism to revise lower yesterday its 2009 forecasts for tourism spending, personal income growth and job growth.

“;We're in some of the worst financial times we've been in,”; said state tourism liaison Marsha Wienert. “;I'm not an economist, but whether it's a recession or a depression, we are definitely feeling it. There's not anyone in our state not feeling the impact of the decrease in our economy.”;

Through the first nine months of the year, visitor expenditures have fallen 14.6 percent to $7.4 billion from the same time a year ago, while average daily spending has decreased 9.9 percent to $160.30.

Even though visitor arrivals rose 7.2 percent in September — largely due to the timing of Labor Day and Silver Week holidays, convention traffic and a West Coast marketing blitz — Wienert said visitors are being more frugal.

“;It's just a sign of the times that people are being very cost-conscious right now,”; Wienert said. “;Until consumer confidence gets back to where it needs to be, we're going to be in this cost-conscious mode. At the end of the day, it doesn't help us. Since so much of our economy is based on tourism, it's important for us as we move forward to get tourism back on its feet in order for the economy to improve.”;

DBEDT revised lower its forecast of visitor expenditures to a negative 12.6 percent in 2009 from minus 11.5 percent in its August forecast. It dropped its projection for real, or inflation-adjusted, personal income growth to a negative 0.9 percent from a positive 0.4 percent. And it lowered its forecast for job growth to a negative 3.3 percent — equating to 605,000 jobs — from an earlier projected drop of 3 percent, or 606,600 jobs.

The state left its 2009 forecast for real gross state domestic product growth at negative 1.1 percent, the same as in its August forecast.

On a positive note, DBEDT upgraded its forecast for visitor arrivals in 2009 to a negative 4.5 percent from minus 5.9 percent in its August forecast.

“;Our economy actually started to go down in April 2008 when the two airlines — ATA and Aloha — ceased operations,”; said Eugene Tian, research and statistics officer for DBEDT. “;That caused our visitor industry to decline sharply.”;

Tian said Hawaii's future economic growth will at least keep pace with the rest of the nation.

“;Currently, Hawaii's economic indicators are still better than the U.S., such as in personal income growth, unemployment rate and employment growth,”; he said.

DBEDT said it expects the state's economy to stabilize in 2010 with visitor arrivals increasing a modest 2 percent to 6.6 million, real personal income growth virtually matching 2009 levels and real GDP inching up 0.8 percent. Net job growth is expected to dip slightly at negative 0.9 percent, but inflation will remain low with an increase of just 1.5 percent.

“;Assuming continued improvement in national and international economic conditions, modest growth in the state's economy is forecast to return by 2011,”; DBEDT said.

In 2011, DBEDT is forecasting visitor arrivals to increase 4.1 percent, visitor expenditures to grow 8.8 percent, real personal income to rise 1 percent, real GDP to increase 1.3 percent and the state's job count to rise 0.8 percent.

“;That gradual pace of recovery should continue in 2012, barring unforeseen events,”; DBEDT said.

 

Slow going

The state Department of Business, Economic Development and Tourism's economic forecasts:

                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
 2009%CHG*2010%CHG*2011%CHG*
Total population1.30M+0.8%1.31M+0.8%1.32M+0.8%
Visitor arrivals6.52M-4.5%6.65M+2.0%6.92M+4.1%
Visitor days61.25M-4.6%61.65M+0.7%64.23M+4.2%
Visitor expenditures9.96B-12.6%9.96B0.0%10.84B+8.8%
Honolulu CPI-U (1982-84=100)229.1+0.1%232.6+1.5%237.1+2.0%
Personal income53.74B-0.8%54.56B+1.5%56.21B+3.0%
Real personal income**41.35B-0.9%41.36B0.0%41.79B+1.0%
Total wage & salary jobs605,000-3.3%599,600-0.9%604,100+0.8%
Gross domestic product63.93B+0.1%65.08B+1.8%66.84B+2.7%
Real gross domestic product**49.26B-1.1%49.64B+0.8%50.29B+1.3%

* Percent change from previous year

** Based on price in 2000

 

Source: State Department of Business, Economic Development and Tourism