In its first quarter 2014 economic forecast and report, the Department of Business, Economic Development and Tourism said it expects continued economic growth in 2014 and each year through 2017.
DBEDT economists slightly reduced the projected growth rate due to continued modest tourism growth but identified potential in construction.
"We expect the construction industry to lead our economic growth in the next few years," said DBEDT Director Richard C. Lim. "Externally, economic conditions are improving in the U.S. economy. In Hawaii, tourism’s growth, despite record visitor arrivals last year, is stabilizing, so we are depending on construction to be a strong economic driver."
DBEDT expects Hawaii’s economy to grow by 2.6 percent in 2014. Although the rate is slightly lower than projected three months ago, it remains positive if compared to an average growth rate of 1.0 percent over the past 20 years in Hawaii.
Lim noted that 2013 ended with the following positive economic metrics:
•Hawaii's unemployment rate in 2013 averaged 4.7 percent, the 7th lowest among all the states in the nation.
•Honolulu consumer inflation rate was at 1.8 percent in 2013, a relatively low rate. With expected growth in personal income at 4.0 percent, this represented a real growth in personal income at 2.2 percent in 2013, the highest rate since 2005.
•Hawaii’s personal income grew at 4.1 percent during the third quarter of 2013, higher than the national growth rate of 3.6 percent.
In 2013, Hawaii private non-agricultural firms added 9,600 jobs to their payrolls, representing a 2.0 percent increase from 2012.
The construction industry added 2,500 payroll jobs, followed by food services with 1,750 jobs more and other services with 1,575 jobs added.
Both federal and state government lost jobs during 2013.
The contracting tax base, which is an indicator for construction completed, increased by 10.3 percent during the first nine months of 2013.
In 2013, Hawaii welcomed 8.2 million out-of-state visitors, representing a 2.6 percent increase from 2012. This arrival number was a new record for Hawaii arrivals. Total visitor spending increased at a modest rate of 2.0 percent in 2013, mainly due to the overall decrease in length of stay and a significant decline in Japanese visitor spending resulting from the depreciation of Japanese yen.
Forecast for 2014 visitor arrivals in now at 1.7 percent and visitor spending at 3.4 percent. These forecasts are based on the moderate growth in scheduled air seats, the decrease in schedule cruise ship arrivals, and the continued increase in hotel room rates during 2014.
The current forecast for 2014 real gross domestic product for Hawaii is a 2.6 percent growth, lower than the 2.8 percent forecasted last quarter. Real GDP growth rates in future years are expected to be at the 2.2 percent range.
DBEDT expects the Honolulu Consumer Price Index, a proxy for inflation, to rise by 2.1 percent in 2014 and will increase gradually to the 3.0 percent by 2016. The average Honolulu consumer inflation rate between 1990 and 2013 was 2.7 percent.
Real personal income growth in 2014 is currently forecasted to be 2.8 percent and remains at above 2.0 percent throughout 2017. The civilian unemployment rate is projected to be 4.2 percent in 2014 and 4.0 percent in 2015. The national unemployment rate is projected by the top 50 economic organizations at 6.6 percent for 2014, and 6.1 percent for 2015.
The DBEDT Quarterly Statistical and Economic Report contains more than 100 tables of the most recent quarterly data on Hawai‘i's economy as well as narrative explanations of the trends in these data. The full report is available at http://dbedt.hawaii.gov/economic/qser/