UHERO Seal photo from Hawaii Bus Mag

 

 

 

 

 

Economic Currents ...

none Quarterly Hawai'i Forecast Update:
Oil Surge Fuels Inflation, Threatens Deeper Downturn

Prospects for the Hawai'i economy have worsened significantly since our 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.

County Economic Forecast: Zero Growth Expected Statewide

To varying degrees, each of the four counties has shared in the state's broad pattern of slowing over the past several years, a process that became more pronounced in 2007. This synchronized slowing is no mistake, reflecting broad statewide—and even global—slowing trends in construction, visitor spending and overall economic activity. There are similarly common adverse developments that will influence the county economies over the next several years. This year, job and real income growth will fall in a fairly tight range around 0% in each of the four county economies. Our expectation is that it will be several years before the islands return to a moderate pace of economic expansion.

UHERO Sponsors Hawai'i Economic Conference: "Housing, Development and Hawaii's Economic Outlook"

UHERO is partnering with the Bank of Hawaii, the State Department of Business, Economic Development, and Tourism, and the Hawai'i Economic Association to present an exciting conference on April 25, 2008. Conference topics include a lunch time keynote by the Honorable Linda Lingle, Governor of the State of Hawaii, and sessions on

  • Alternative visions for growth in Hawai'i
  • Experiences from the field in development
  • Hawai'i Economic Outlook

Download Conference Schedule and Registration Form


Annual Hawai'i Forecast: Economy Grinds to a Halt

The Hawai'i economy that powered its way through much of this decade slowed to a standstill in 2007. The drag from a weakening visitor industry and an unwinding construction cycle spread to the broader economy. A U.S. recession is now underway. The mainland slump, national credit market problems, and soft local fundamentals mean there will be little growth in Hawai'i for the next two years. Some sectors will see net job losses. Moderate growth is not expected to resume until 2010.

Hawai'i Construction Forecast Update: Slow Decline But No Contracting Crunch
While the external environment has become decidedly more risky since last fall, this forecast makes only a small downward revision to the forecast path. Construction employment and income will slow to very small positive gains this year, before turning negative in 2009. Some downward drift in home prices will occur, but Hawai'i will avoid the large-scale contraction that is occurring in many mainland cities that must work off home price bubbles. The overall construction cycle will continue to be stabilized by relative strength in nonresidential segments of the industry.

Riding the Wave: Transformations and Cycles in the Hawaii Economy
Dr. Bonham, UHERO's executive director will give the Plenary Address at the Western Regional Science Association's 47th Annual Meeting in Kona on Sunday February 17th. The meetings are being held at the Hilton Waikoloa Village Resort February 17th through the 20th, and will include presentations by UHERO research associates Dr. Denise Konan on the effects of Tourism Demand on Labor Migration, and Greenhouse Gas Emissions and Economic Activities in Hawai'i.

UHERO Hawai'i Quarterly Forecast Update: Cooling Economy Faces U.S. Headwinds
The weakening U.S. economy and the persistence of high energy prices lead us to mark down a bit our Hawai'i growth estimates for the end of this year and 2008. However, we do not yet see an end to the current long economic expansion. Moderate job growth will continue next year, and real income will recover to nearly 2% growth. The visitor industry, which saw modest declines in arrivals and sluggish spending this year, will be essentially flat in 2008 before strengthening U.S. and Japanese economies begins to resuscitate travel in 2009. As we noted in our recent global outlook report, risks to the world economy have risen, and this leaves Hawai'i more exposed should a broad mainland downturn occur.

 

UHERO Global Economic Forecast: Faltering American Economy Will Cause Global Slowing
The world economy began to slow in 2007, after peaking at nearly 4% growth in real gross world product in 2006. Slowing has been centered in the developed world, particularly in North America, where contraction in U.S. residential investment and fallout from the sub-prime mortgage collapse is taking a substantial toll. So far this weakness has not spread significantly to other countries. Prospects are for further global slowing in 2008. Now the question is how soft or hard the landing will be. While no sharp downswing is yet in evidence, the configuration of risks appears heavily weighted toward the negative.

International Conference on Sustainability Science for Watershed Landscapes
The Southeast Asian Regional Center for Graduate Study and Research in Agriculture (SEARCA), University of Hawaii, Manoa (Chancellor's office and Water Resources Research Center) and the East West Center are co-sponsoring an International Conference on "Sustainability Science for Watershed Landscapes" to be held at the East-West Center, Imin Conference Center on November 13-14, 2007.

Dr. James Roumasset, conference organizer and director of UHERO's research area in Environmental Economics and Sustainable Economic Development, will join leading social scientists, biologists, hydrologists, and engineers to help synthesize a third wave in sustainability science that goes beyond the nature of interactions in order to facilitate policy analysis.

The aim of conference is to present the state of the art in sustainability science research for watershed management, examine specific case studies especially in Southeast Asia and the Pacific, and to advance the development of a transdisciplinary method of organizing research to inform general and specific instruments of public policy concerning watershed management, conservation and restoration. The conference will also identify critical issues for research and policy analysis at the regional, national, and international levels.

Contributions will be synthesized into a volume on sustainability science and watershed management.

UHERO Hawai'i Quarterly Forecast Update: Mainland Woes Pose Risks for Visitor Sector
Moderate economic expansion is expected to continue in Hawai'i for the remainder of the year, with further slowing into 2008 and 2009. The visitor industry will continue to be challenged by a weak American mainland economy. Despite recent financial market turmoil, Hawai'i's construction industry continues to settle toward a soft landing. Fallout from mainland housing and mortgage markets poses a risk, primarily to the visitor industry.

 

Dr. Bonham to discuss outlook
Dr. Carl Bonham will present UHERO's latest forecast for the State Economy at an informational briefing for the House Committee on Finance and the Senate Committee on Ways and Means on Thursday, September 13, 2007. The briefing will be held in Conference Room 325 of the State Capitol beginning at 10 am.

 

UHERO Annual Hawai'i Construction Forecast: Despite Credit Concerns, Soft Landing Expected
Despite concerns related to recent financial market turmoil, Hawai'i's construction industry still appears to be poised for a soft landing. Growth in real contracting receipts will slow in 2007 and turn negative in 2008-09, with hotel renovation and industrial and commercial construction providing a stabilizing influence in the face of a steadily weakening residential sector. The construction job count is expected to peak in 2008 and decline only slightly in 2009. While real construction spending will turn downward, the nominal tax base will continue to rise as construction costs push up nominal values. While there are currently no signs of a significant and prolonged downturn in Hawai'i's construction sector, any further worsening in the availability or cost of credit will adversely impact this forecast.

 

Carl Bonham and Byron Gangnes To Receive Prestigious Community Service Award
Carl Bonham and Byron Gangnes will receive this year's Hung Wo and Elizabeth Lau Ching Foundation Award for Faculty Service to the Community from the University of Hawaii at Manoa. The Convocation ceremony will be on Wednesday, September 5th, at 10:00 a.m., at UH Manoa's Orvis Auditorium.

The Hung Wo and Elizabeth Lau Ching Foundation Award for Faculty Service to the Community honors significant contributions that strengthen ties between the university and the community.

 

UHERO Hawai'i Quarterly Forecast Update: Another Year with No Visitor Growth
The poor start for tourism and a restrained external outlook means that the visitor industry can expect to see no annual growth this year, and perhaps a slight decline. Construction slowing continues, although a late surge in non-residential activity will help to moderate the cycle. Slowing in the broader economy will proceed in the face of still very tight local labor markets.

 

UHERO County Economic Forecast: County Economies Steadily Slowing
The overall outlook for Hawai‘i’s county economies is for continued slowing along a path that has been evident since at least the middle of 2005. The pace of slowing will vary, depending on relative stage in the construction cycle, health of each county’s tourism market, and other factors. By 2008, it is expected that each of the four counties will have slowed to a pace that is broadly consistent with sustainable trend growth.

 

UHERO Hawai'i Construction Forecast: Surge in Nonresidential Building Sustains Cycle
Hawai‘i’s construction cycle is near or past its peak,depending on which sector you look at. While the homebuilding peak occurred in 2005-06, the peak in nonresidential construction is likely in 2007 or 2008. The end of this cycle will be characterized by a slow decline in total real construction spending, but continued increase in the nominal tax base as construction costs rise between 4% and 5% each year. With home price appreciation over and affordability at recent lows, real residential construction will continue to recede gradually.

 

Community forums with Representative Lyla Berg
UHERO research associates are contributing to the discussion of Hawaii's future in a 3-part series of community forums. The forums are held on Wednesdays at Kahala Elementary School from 7-8:30 pm. After each forum, you will find links to the presentations below:


UHERO Annual Hawai'i Forecast: Tourism Pause Means Further Slowing Ahead
There was a pause in Hawai'i tourism growth last year, held back by capacity constraints and relatively soft visitor demand. It will be several years before additions to the accommodation inventory permit a resumption of moderate growth in arrivals and expenditure. Together with the residential construction slowdown, the weak near-term visitor outlook means that two pillars of Hawai'i's economic expansion have been sidelined, at least for now.

At the same time, there are no warning signs on the horizon of an outright end to Hawai'i's economic expansion. Job and income growth will slow further, but not cease, and the unemployment rate will gradually ease upward from recent record-low levels. As home price appreciation continues to feed through to shelter costs, we will have to contend with higher-than-normal inflation for the next several years.  (March 2, 2007)

 

 





 





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