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Hawaii Economic Forecast for mid-2008

Friday, 13 June 2008

The University of Hawai'i Economic Research Organization (UHERO) has released its second Hawaii Economic Forecast for 2008 (UHERO releases these reports on a quarterly basis). While the current report predicts (more than previously expected) slowing of the Hawaii State Economy, the economic outlook for Hawaii still remains brighter than many mainland and global economies.

Following is a brief summary of the UHERO report:

The 2008 forecast for visitor arrivals growth has been reduced from -1.9% to -4.6% because of the failures of ATA and Aloha Airlines and the surge in oil prices.

The forecast has been reduced for 2008 real income growth by nearly half a percent, from 0.3% to -0.1%. A slight 0.2% contraction in payroll jobs is now expected both this year and next. Employment will fall by about half a percent this year and next.

Higher food and especially energy costs will keep inflation at 5% this year, before significant cooling in 2009.

Prospects for the 2008 Hawai'i economy have worsened significantly since the March Annual Hawai'i Forecast. The failures of ATA and Aloha airlines, the loss of a second NCL cruise ship, and the dramatic surge in oil prices will damage a local economy that was already feeling the effects of the national downturn. Small net declines are now expected in both real income and jobs this year, and higher 5% inflation.

While 2009 should bring improvement, a significant recovery of the local economy will not begin until 2010, making this a relatively shallow but lengthy Hawai'i economic contraction. A deeper slowdown could occur if oil prices remain at their current record levels or if the national housing slump worsens more than expected.

Hawai'i Economic Indicators (Annual % Growth Rates)*

	2005	2006	2007	2008	2009
Visitor Arrivals	7.3	0.6	-1.3	-4.6	1.3
U.S. Visitor Arrivals	8.5	3.3	-1.1	-7.1	0.7
Japan Visitor Arrivals	2.4	-10.2	-3.5	-8.0	-0.2
Payroll Jobs	3.1	2.6	1.1	-0.2	-0.2
Employment	2.6	2.2	0.0	-0.6	-0.5
Unemployment Rate	2.7	2.5	2.7	3.7	4.2
Inflation Rate, Honolulu MSA	3.8	5.8	4.9	5.0	2.2
Real Personal Income	4.0	1.0	1.5	-0.1	0.4

*Source is UHERO. Figures for 2008-2009 are forecasts.

How does all of this affect the Hawaii real estate market? Are all areas of Hawaii affected in the same way? Want to know the current status of the real estate market for the Hawaii area you are interested in? Contact Beverly Molfino today for detailed market reports and accurate explanations.

Complete UHERO Forecast

UHERO Economic Information Service