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Products: Hawaii's Economy

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Global Economic Forecast: World Recovery Falters

Global economic recovery is proceeding, but in an uneven fashion. The developing Asian countries that were the first to show signs of life last year continue to expand at a healthy pace, driven by rebounding trade but also by strong domestic demand. Growth in the developed world remains decidedly subpar and insufficient to bring about a timely reduction in unemployment. With the pace of U.S. growth weakening in recent months and fiscal stimulus winding down, prospects are for slower growth in much of the world in 2011. True to form, recovery from the recent financial crisis is shaping up to be a long slog.

Forecast summary


UHERO Brief: China's Real Estate Bubble

What will be the consequences of China’s real estate bubble deflating? One is tempted to equate the Chinese real estate bubble with the U.S. experience, but the differences between the Chinese and American real-estate and financial sectors are striking and will likely lead to a very different, and a much more moderate, outcome.

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UHERO State Forecast Update: Strong Summer for Tourism

Hawaii's recovery continues, led by a better-than-expected performance from tourism. The visitor industry's summer strength is sustaining moderate job gains in related sectors. Much of the rest of the state economy remains relatively weak, and we continue to see net job losses in some areas. The cooling of growth in the U.S. and overseas markets will be a challenge for tourism over the next year. We expect continued Hawaii expansion, but at a restrained pace through 2011.

A summary of this forecast is available as a service to the public. For more detailed analysis, subscribe to UHERO's Forecast Project.

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Technical Progress in Transport and the Tourism Area Life Cycle

Richard Butler’s tourism area life cycle envisions tourism destinations to evolve in stages from exploration to rapid growth followed by slackening, stagnation, and even decline. The eventual slow-down in tourism growth is attributed to the destinations reaching their physical and social carrying capacities. This article examines the evolution of Hawaii as a tourism destination from 1922 to 2009. We demonstrate that tourism growth in Hawaii has declined but not because the destination has reached its carrying capacity but primarily because of the slowdown in technical progress in passenger air transportation and competition from newer destinations. We conclude that for destinations that depend on transportation improvements to attract tourists, technical progress in transport may provide a better explanation of the evolution of their destinations than their carrying capacities.

Working Paper

 


Construction Forecast: Construction Begins to Stabilize

Hawaii's construction industry continues to seek a bottom to what has been a bruising downturn. Recent months have brought some encouraging news, with permitting numbers beginning to stabilize and employment losses tapering off. The home resale market appears healthier, although this can be explained in part by the now-expired Federal tax credits. At the same time, non-resedential permitting remains very weak and focused on just a small number of large projects. Until private demand picks up, the industry will find its most promising support in public sector projects, which are expected to ramp up further in coming months.

forecast summary


Limits to Growth: Tourism and Regional Labor Migration

The paper provides a methodology for considering the carrying capacity and limits to growth of a labor-constrained mature tourism destination. A computable general equilibrium model is used to examine the impacts of visitor expenditure growth and labor migration on Hawaii's economy. Impacts on regional income, welfare, prices, sector-level output, and gross state product are considered under alternative migration scenarios. Labor market constraints impose limits to growth in real visitor expenditures. Labor market growth with constrained visitor demand generates falling per capita household welfare.  

working paper

 


County Economic Forecast:
Counties Begin Recovery After Record Downturn

Recovery will take hold across Hawai'i's four counties during 2010.  Visitor numbers have stabilized and will gradually improve as growth strengthens in major tourism markets.  After record-setting job losses, limited net hiring will begin this year, building as we move into 2011 and 2012.  Private construction is bottoming out, and the sector will begin to see more benefit from Federal and State spending programs.  While growth is resuming, the pace of recovery will be slow, and it will take a number of years to return to relative economic health.  The challenge is greatest on the Neighbor Islands, which have suffered a much deeper downturn than O'ahu over the past two years.

forecast Summary


Annual Hawaii Economic Forecast:
Hawai'i Recovery Takes Hold

Hawai'i's economic recovery has begun. Employment is stabilizing, and many sectors will begin to add modest numbers of jobs as the year progresses. Visitor arrivals and spending will continue to firm along with economic conditions in our major tourism markets. Private construction is bottoming out, and the sector will begin to see more benefit from Federal and State spending programs. While growth is resuming, the pace of recovery will be slow, constrained by tepid U.S. consumer spending and the drag from the State and local fiscal conditions. As a result, unemployment will recede only gradually from current high levels.

Forecast summary


PBS Hawaii - Island Insights: 2010 Legislative Preview

UHERO Executive Director Dr. Carl Bonham joins Represntative Marcus Oshiro, Representative Gene Ward, Senator Russell Kokubun and Moderator Dan Boyland to discuss how the state can live within its means.

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Hawaii Economic Forecast Update:
Weak Growth Expected in New Year

Prospects are good for an early-2010 return to growth in Hawai'i. Recent data suggest we are past the trough of the visitor industry downturn, and gradual improvement will occur as the global recovery takes hold. The construction cycle is expected to bottom out late next year. After steep losses, most industries will begin to start adding jobs early in the new year. The pace of recovery will be modest, because of lingering weakness in the U.S. and Japan and the disastrous State budget picture.

forecast summary


Global Economic Forecast:
Asia Leads World Recovery

After a deep, synchronized recession, growth is resuming across a broad swath of the global economy. Leading the rebound are the dynamic Asian economies. These countries, which were hit hard by last year's collapse of world trade, have now seen a return to export-led growth, much of it originating from demand within the region. Growth has also returned to the U.S. and Japan, but the depth of the decline, lost household wealth, and lingering credit problems mean that full recovery will take a number of years.

forecast executive summary


Using the Property Tax to Appropriate Gains from Tourism

This paper describes and evaluates the merits of Kauai County’s use of the property tax to capture rents from tourism and provide property tax relief to local homeowners. Because tourist accommodations are more capital intensive than other real estate, Kauai’s proposal to split the standard uniform rate into two separate rates—one on land and the another higher rate on improvements—results in heavier tax burdens for the tourist industry relative to other sectors of the local economy. We conclude that such an approach works well for Kauai and communities that desire slower and lower density development but may not work as well for others that wish to encourage tourism investment.

working paper


Small State, Giant Tax Credit: Hawaii’s Leap into High Technology Development

This paper chronicles the evolution of Hawaii’s high technology tax credits, describes their provisions and the ensuing problems in attempting to ascertain whether or not they have achieved the results desired by lawmakers who passed them, and offers lessons that other states can use when designing their own business investment tax credit programs.

Published: Kato, A., S. LaCroix, J. Mak. 2009. Small State, Giant Tax Credit: Hawaii's Leap into High Technology Development. Pages 641-652 State Tax Notes. Tax Analysts, Falls Church, Virginia.

working paper version


Hawaii Economic Forecast Update:
Recovery Still Around the Corner

Things are looking up for the U.S. and global economies. Japan returned to growth in the second quarter, and it appears likely that the US will post positive growth for the current quarter. It is harder to find evidence of a turnaround in the Hawai'i economy, although we expect recovery to begin by early next year. A technical recovery will not mean a rapid return to economic health. Because of anticipated weak US and Japanese consumer spending and the drag from continuing State fiscal problems, the local economy will take a number of years to fully recover.

forecast summary


Hawaii Construction Forecast:
No Bottom Yet to Construction Downturn

The U.S. recession is easing, but prospects for a quick Hawai'i construction recovery remain poor. At the national level, expansion is just now getting underway. We expect U.S. output to grow by more than 2% during the current quarter, but job losses will continue into the first part of 2010. And, while overall credit conditions have improved, commercial lending is still being affected by the weak economic outlook and the hangover from past excesses. For Hawai'i, this means that commercial and resort development will continue to suffer for some time. The downturn in residential permitting has actually deepened, and we will not see any marked improvement until home prices bottom out in 2011.

forecast summary


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