UHERO reports further declines in tourism, jobs


POSTED: Friday, November 21, 2008

The University of Hawaii Economic Research Organization made sweeping downward revisions to its quarterly economic forecast released yesterday, predicting further declines in tourism and payroll jobs.

The fourth-quarter report, which said the state economy has slumped into a lengthy recession, is the latest in a string of forecasts this month from leading isle economists that have predicted continued state economic contraction and tumbling visitor arrivals.

UHERO is expecting 2008 visitor arrivals to decline 10.8 percent, a widening loss from its previous forecast of a 9 percent decrease. In 2009, UHERO is expecting an additional nearly 6 percent decline, compared to the 1.2 percent contraction forecast in September. Arrivals in the key Japan visitor market are estimated to drop 9 percent next year.

“;The global financial crisis and widening global downturn have materially worsened prospects for the Hawaii economy,”; the report stated. “;Economic conditions are now poor in virtually every visitor market, and as a result we expect the current sharp tourism downturn to continue well into next year, with no significant recovery until 2010.”;

The 2008 Honolulu consumer price index will average 4.5 percent inflation this year, down from 4.9 percent forecast previously because of recent energy price declines. Inflation is expected to average 2.4 percent in 2009 and 1.9 percent in the 2010-2011 period.

Real income growth also will be weaker, declining by 0.2 percent in 2008 followed by a drop of 0.7 percent next year, with significant recovery not starting until 2010. In September, UHERO had forecast zero real income growth this year and next.

Larger job losses are also expected, with the number of payroll jobs expected to decline by 1.4 percent next year, compared with a previous estimate of a 0.8 percent decline.

Jobs will decline by 1.4 percent next year, compared with a previous forecast of 0.8 percent. The state unemployment rate, which remained at 4.5 percent in October from a month earlier, is expected to peak at about 6.2 percent in the second half of 2009, remaining above 5 percent through 2011.

“;The severity and expected duration of U.S. and global recessions will also mean a slower pace of local job recovery,”; the report stated. “;We will not approach the job peak reached in the first quarter of this year until the final quarter of 2011.”;

While construction sector jobs are now declining, strength in the first part of the year means that jobs in the sector will expand by nearly 1 percent for 2008 as a whole, before annual job declines begin in 2009, the report stated.