By Howard Dicus - bio | email
HONOLULU (HawaiiNewsNow) - The new economic forecast from the University of Hawaii cautions that it will be a long, slow slog to prosperity, but opens with the welcome words, "Hawaii's economic recovery has begun."
The UH Economic Research Organization sees visitor arrivals rebounding 2.9% this year, with international arrivals a bit stronger than the domestic market, but believes construction will fall another 17%, rebounding 4% in 2011.
"Employment is stabilizing, and many sectors will begin to add modest numbers of jobs as the year progress," UHERO said Friday. "Visitor arrivals and spending will continue to firm...private construction is bottoming out."
The amount of economic recovery UHERO predicts for 2010 is so small that it says Hawaii real gross domestic product, which it calculates using a slightly different formula from the state government, will actually shrink slightly - 0.2% - before expanding 0.5% next year. (The difference in the formula is that other forecasts use national prices, which Hawaii prices seldom mimic. UHERO works from Honolulu prices.)
What is attenuating recovery is "tepid" consumer spending and "drag" from state and county budget shortfalls caused by the sharp drop in tax revenues. "The biggest downside risk for Hawaii is the state budget crisis," UHERO says.
UHERO predicts "modest" job growth this year but cautions the jobless rate is likely to be more than 6% even after a full year of slow rebounding in the overall Hawaii economy. The forecast calls for less than 2% inflation this year, on flat personal income, and only 1.1% inflation next year.
Visitor arrivals fell 0.4% in 2007, 10.5% in 2008 and 4.4% in 2009, but UHERO thinks arrivals will improve 2.9% in 2010 and 3.1% in 2011. Hawaii economists remind us that the tourism slump was even worse than these numbers indicate because of the deep discounting of prices over the past year particularly.
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