State economy to see less growth, report says
University of Hawaii economists have weighed in on the state’s economy, and the story is a familiar one.
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University of Hawaii economists have weighed in on the state’s economy, and the story is a familiar one:
Slowing growth, a tourism industry exceeding expectations and a once-booming construction sector that appears to be leveling out.
The University of Hawaii Economic Research Organization’s latest forecast, set to be released today, carries the same theme as last month’s projection by the state Department of Business, Economic Development and Tourism.
And just like DBEDT, the UH researchers lowered their 2017 forecast for the state’s inflation-adjusted gross domestic product, the broadest measure of economic output. UHERO is now projecting the state economy to grow by
0.6 percent this year. That is down from 1.4 percent in its May report and 2 percent in its March report. In its last
report, DBEDT lowered its GDP forecast to 1.4 percent from the 1.9 percent it forecast in May.
“As expected, the pace of growth has eased, now that the long recovery from the 2008-2009 recession is complete,” UHERO said. “With unemployment low, further job gains must fall in line with the natural growth of the local labor force. Even tourism, which has added visitors for longer than we had expected, faces capacity limits. … The growth impetus from construction has also ended, even if the level of activity will remain high for some time.”
The UHERO report, which was headed by professor Carl Bonham, said this year’s record-breaking pace of visitors and their healthy spending have been a boon for the industry. Visitor arrivals were up more than 4 percent through the first seven months compared with the year-earlier period while visitor spending was up 6 percent in inflation-adjusted terms.
UHERO expects slowing arrivals growth from about
4 percent this year to
1.5 percent growth in 2018 and below 1 percent in 2020.
The construction industry is now past the peak of the building cycle after adding 6,000 jobs between mid-2014 and mid-2016. There has been an overall reduction in construction activity and jobs as condo and retail projects finish and fewer new buildings break ground, UHERO said. Construction jobs are down more than
4 percent, or 1,600 jobs, so far in 2017 compared with a year ago, according to UHERO.