Post on 31-Jul-2020
© 20162424 MAILE WAY, SAUNDERS HALL 540 • HONOLULU, HAWAII 96822 • (808) 956-2325 UHERO.HAWAII.EDU
UHERO STATE FORECAST UPDATE, SPONSORS EDITION
FEBRUARY 26, 2016
Growing in a Riskier World
Like the U.S. economy overall, Hawaii continues on a
moderate growth path despite financial market volatility, a
surging dollar, and global slowing. To be sure, record-setting
levels of visitor activity are beginning to feel the adverse
effects, but construction strength and a pause in federal
sequestration have arrived at just the right time. While risks
have clearly heightened in recent months, our outlook is for
fairly decent growth over the next several years.
ARRIVALS WILL REMAIN STRONG, BUT THE
DOLLAR WEIGHS ON SPENDING
Last year proved to be yet another record breaking
one for Hawaii tourism. In total we hosted more than 8.5
million visitors, about 4% more than in 2014. Each county
saw an increase in visitor days. Occupancy rates on Oahu
have remained in the lofty 85% range they have inhabited
since 2012, an unprecedented period of very high capacity
utilization. (Data is from Hospitality Advisors LLC.) And still,
arrivals have grown, with additional visitors apparently being
absorbed by alternative accommodations.
The strong arrivals figures mask a substantial
deceleration of visitor spending, related in part to the
strengthening US dollar. Since 2011 the Australian,
Canadian, and Japanese currencies have all fallen by roughly
30% against the US dollar. Trade and commodity related
weakness in several overseas markets is also a concern, but
the biggest spending dropoff has been among Japanese
travelers, whose daily spending has declined by almost 25%
over the past three years. This has had the biggest impact on
Oahu, where international tourists make up nearly half of all
Hawaii’s expansion remains on track, but could the global economy derail it?
visitors, compared with less than a quarter on the Neighbor
Islands. But even among US visitors, inflation adjusted daily
spending is flat, posing risks for the industry statewide. We
will have much more to say about the outlook for the four
counties in our County Forecast report, due out in the second
quarter.
The airline seat outlook reflects anticipated slowing of
the North American markets and continuing challenges in
Japan, with more upbeat expectations for other international
markets. For the US, after first quarter gains from expanded
Delta, Alaska, and Virgin America offerings, the annual
number of scheduled seats is expected to be flat. A similar
story holds for the Canadian market, where new Westjet
routes lift scheduled seats in the first quarter, but leave
anticipated annual figures more or less unchanged. Airlift is
JAPANESE DAILY VISITOR SPENDING HAS FALLEN BY ALMOST 25% OVER THE PAST THREE YEARS.
2015201320112009200720052003
350
300
250
200
150
Real Daily Spending per Visitor ($2015/Day)
US JapanAll Others
UHERO STATE FORECAST UPDATE FEBRUARY 26, 2016 - PAGE 2
© 20162424 MAILE WAY, SAUNDERS HALL 540 • HONOLULU, HAWAII 96822 • (808) 956-2325 UHERO.HAWAII.EDU
expected to be higher for Australia and China, although this
will be offset by further declines in Japanese flights.
Some lift to the industry may come from lower travel
costs. So far the massive decline in oil prices has been slow
to translate into lower airfares. In the first half of 2015 (the
latest data available), the average roundtrip airfare on flights
from the US mainland to Honolulu declined by roughly 5%
year over year; during that same period the price of oil fell by
nearly half. Japanese carriers have, however, been removing
fuel surcharges. Of course, as we have seen nationally, the
positive effects of lower energy costs can be offset by their
adverse effects on investment in affected countries and
regions.
The overall visitor outlook remains favorable, but gains
will fall short of recent years. Restored capacity will provide
more space on Oahu, and the Neighbor Isles still have spare
capacity, but global economic conditions and the cautious
stance by airlines are sobering. We expect arrivals to rise by
1.3% this year and just 1% in 2017. The dollar will continue
to weigh on spending, which will be essentially flat in real
terms this year. Sharper currency movements could take a
bit more off our already cautious forecast for international
arrivals, as well.
EMPLOYMENT GAINS WILL LIFT WAGES
Labor market conditions continue their trend
improvement. Employment growth is outpacing expansion
of the labor force, driving the unemployment rate down
to a seasonally adjusted 3.2% in December, its lowest rate
since early 2008. At the same time, the pace of growth in
payroll jobs has eased as we have moved from the business
cycle recovery period onto a more typical long-run path.
Job growth averaged more than 2% in 2012-2013; last year
payrolls increased by 1.4%, fewer than 9,000 jobs.
As we have discussed in past reports, the impetus for
growth has increasingly shifted away from travel and tourism,
which led the state’s emergence from recession. Now it is
construction that is generating the greatest job gains. The
sector really kicked into high gear in 2015, accounting for
nearly one-third of all jobs created. Recent months have
come in particularly strong. According to our in-house
estimates of the upcoming government benchmark revision,
we now estimate an 8% gain in construction jobs last year. All
other sectors combined increased by about 1%.
The principal drag on growth continues to be the public
sector, which shed more than 900 jobs last year. While recent
legislation has deferred the next round of federal budget
battles until after the presidential election, the medium-term
prospects for federal employment remain bleak. Things
look a bit better at the state and local levels, where budget
constraints are likely to be less severe.
There are several areas of ongoing strength outside
the construction sector. Healthcare had a very strong year,
expanding nearly 3% and accounting for about a fifth of all
jobs created. This may reflect increased Medicaid transfers
under the Affordable Care Act. Transportation and utilities THE STRONG ARRIVALS FIGURES MASK A SUBSTANTIAL
DECELERATION OF VISITOR SPENDING.
2018201620142012201020082006
85
80
75
70
65
60
55
17
16
15
14
13
12
11
10
Mil. $Bil2015
Visitor DaysReal Visitor Spending (Right Scale)
UHERO STATE FORECAST UPDATE FEBRUARY 26, 2016 - PAGE 3
© 20162424 MAILE WAY, SAUNDERS HALL 540 • HONOLULU, HAWAII 96822 • (808) 956-2325 UHERO.HAWAII.EDU
surged 3%. Despite the stronger than expected arrivals
gains, jobs in the accommodations and food services sector
managed only 1.4% growth last year, in part because of
temporary closure of several resorts for renovation. Retail
trade employment rose less than 1%, and the broad “other
services” category by only 0.7%. Business services saw limited
growth that was partially offset by softness in the information
industry and private sector education services.
Tightening of the labor market is now prompting
significant gains in personal income. Real income per
employed person last year posted its strongest growth
since 2012, according to UHERO estimates. Still, the data
suggest that pockets of labor market weakness remain. For
example, temporary service employment continues to play a
disproportionate role in job gains. Further improvement in
employment conditions will drive a broad based increase in
wages, as unemployment rates edge further downward and
pockets of worker shortage emerge in some industries.
Employment in several important sectors will be
significantly affected by downsizing, business closures,
and ownership change. Alexander & Baldwin’s recently-
announced closure of Hawaii Commercial & Sugar, the
state’s last remaining sugar plantation, will lead to the layoff
of roughly 650 employees by 2017, about 1% of the Maui
labor force. Kaiser Permanente has agreed to take control
of the state-run hospitals on Maui and Lanai by mid-year,
reducing uncertainty over jobs at three Hawaii Health
Systems Corporation facilities.
The Army will be cutting by 8% the number of active
duty army troops stationed at Schofield Barracks by the
end of fiscal 2017; this will result in a loss of roughly 1,200
troops. The Army will cut roughly 17,000 civilian workers
nationwide during the same period, although the details of
where those layoffs will occur are yet to be determined. Over
the longer run, the anticipated relocation of Marines from
Okinawa to Hawaii will be a stabilizing factor.
Overall, we expect the payroll job count in the islands to
expand by 1.3% this year, in line with last year’s growth. As
the construction upswing matures, growth will drop below
1% by 2018.
THE CONSTRUCTION SECTOR ACCOUNTED FOR
NEARLY A THIRD OF ALL JOB GAINS IN 2015.
20152013201120092007200520032001
4
2
0
-2
-4
-6
Contribution to Job Growth (%)
Construction All Other Sectors
OAHU HOME PRICES CONTINUE TO MOUNT, BUT AT A RESTRAINED PACE.
20182013200820031998
800
600
400
200
0
$Thou.
Single Family Home Prices Condo Prices
UHERO STATE FORECAST UPDATE FEBRUARY 26, 2016 - PAGE 4
© 20162424 MAILE WAY, SAUNDERS HALL 540 • HONOLULU, HAWAII 96822 • (808) 956-2325 UHERO.HAWAII.EDU
CONSTRUCTION CYCLE IS THE CLEAR GROWTH
IMPETUS
The construction sector is bustling. Last year, the real
(cost-adjusted) value of private permits rose nearly 14%, the
second year of double-digit gains. The main driving force
remains the residential sector on Oahu, but the Neighbor
Islands have also picked up steam, with an 11% surge in
construction jobs last year.
Prospects for residential construction continue to look
favorable statewide. Notable recent developments include
a Supreme Court ruling that clears the way for D.R.
Horton’s Hoopili project on the Ewa Plain, planned 2016
groundbreaking on several more Kakaako condo towers, and
progress on residential developments on the Big Island. On
the flip side, we have seen our first cancellation of a planned
Kakaako residential tower, the luxury Vida project, because
of weak sales. Other luxury projects, such as Park Lane,
have had very successful pre-sales, so it is unclear whether
this reflects a topping out of the high end market or merely
characteristics and timing of this particular project.
Home prices continue to mount, but at a fairly restrained
pace. The median price of a single family home on Oahu
increased to $700,000 in 2015, or about 3%. The median
price for a condo rose to $360,000. Homes and condos
continue to sell at a very rapid clip, with median time on
market of about 20 days. Home prices across the Neighbor
Islands have continued their recovery as well. Kauai saw
the most substantial growth last year, with the median price
for a single family home jumping more than 15%; the Big
Island and Maui saw more modest gains of 4% and 2%,
respectively.
Activity on the nonresidential side has been more
moderate, with some falloff of permitting in the second half
of the year. While new retail and resort-related projects are
in the works or ongoing, others are now winding down. The
half-billion-dollar development of Ala Moana Center’s Ewa
Wing was completed last fall. We expect an uptick in non-
residential permits this year and next, falling off thereafter.
Public construction surged last year, in part due to a
second quarter spike in contracts awarded for roadway
and car rental improvements at Kahului airport and the
appearance of Honolulu rail stations in the statistics. Looking
forward, rail has lept another hurdle with the recent approval
by the Honolulu City Council of the GET surcharge through
2027, and there are ongoing upgrades to Hilo Harbor, and
new road work on the Big Island. As we noted in our last
report, the future of the Thirty Meter Telescope is uncertain,
as the entire permitting process has to be restarted, which
is likely to take years rather than months. In the meantime,
TMT management is actively searching for alternative sites.
INFLATION RESPITE WILL END, AND INCOME
GAINS WILL TAPER OFF
Inflation remained muted in the second half of 2015,
largely thanks to falling energy prices. For 2015 as a whole,
Honolulu consumer prices increased 1%, the lowest rate since
2009. The energy component of the Honolulu CPI declined
by 25% as the price of oil dropped from an average of $100/
bbl in 2014 to $37/bbl by the end of 2015.
LABOR INCOME GAINS ARE NOW THE DRIVING FACTOR IN OVERALL INCOME GROWTH.
2018201320082003199819931988
80
78
76
74
72
70
68
66
64
$Thou2015
Labor Income Per Job
UHERO STATE FORECAST UPDATE FEBRUARY 26, 2016 - PAGE 5
© 20162424 MAILE WAY, SAUNDERS HALL 540 • HONOLULU, HAWAII 96822 • (808) 956-2325 UHERO.HAWAII.EDU
While headline inflation has remained low, it is clear that
prices for many goods and services are beginning to increase.
Core inflation, which excludes the volatile food and energy
components, ticked up to 2.7%, the fastest pace since 2007.
The shelter component of the CPI increased by 3%, also
the highest inflation since 2007. As the dampening effect of
energy price decline fades, these factors will push inflation
above 2-½% by 2017 and to nearly 3% in 2018.
Moderating inflation has helped to boost income.
Through the first three-quarters of last year, real personal
income increased 4%, the fastest income growth since 2004.
Labor income is now the driving factor, led by double-digit
gains in the construction sector. But income growth will
taper off across nearly all sectors over the next several years,
with particular weakness expected in the public sector. Real
income growth will slow to 2.3% this year and drop to 1.4%
late in the decade.
Since the beginning of the recovery we have seen
relatively limited gains in real gross domestic product for
Hawaii. In 2014, the latest data available, per-capita real
GDP remained more than 8% lower than the pre-recession
peak. However, based on currently available data we estimate
that real GDP increased 4% in 2015, and we expect 3.2%
growth this year. As with income, GDP growth will slow in
coming years, falling to 1.6% late in the decade.
WORRIED ABOUT THE REST OF THE WORLD
So, Hawaii seems more or less on track. The problem
is a rising risk that global economic conditions could derail
us. Marked slowing in China and the adverse effects on
developing countries of plunging commodity prices have
prompted concerns about the resiliency of global demand
going forward. This has come right when the Federal Reserve
has begun its move away from ultra-low interest rates. The
result has been growing financial market volatility and
weakness, and depreciation of many currencies against the
dollar. To keep their economies afloat, policymakers abroad
have scrambled to come up with new monetary stimulus.
This does not yet mean we are in for a global recession,
or that global conditions will deteriorate enough to badly hurt
Hawaii. The US economy has held up well so far. Yes, exports
have suffered from poor demand and the strong dollar, and
the oil price collapse has had a marked negative effect on
capital investment. But US consumer spending remains
steady and confidence high, and the drag from government
cuts has eased for now. With the US still by far our largest
visitor market, this is certainly good news. And while foreign
economies have weakened, there remains considerable upside
potential for these markets over the medium term.
Still, the situation remains precarious. With the US only
managing 2+% growth, and with little room for monetary
easing and zero appetite for fiscal stimulus, prolonged
financial market turmoil, additional dollar appreciation, or
excessive Fed tightening could tip things downward. Since the
US is the sole growth engine at present, that would swing the
global economy toward recession. If that were to happen, all
bets would be off for Hawaii growth.
THE OIL PRICE COLLAPSE HAS HAD A NEGATIVE EFFECT ON CAPITAL INVESTMENT.
IVIIIIIIIVIIIIII20152014
3.0
2.0
1.0
0.0
-1.0
Contribution to US Real GDP Growth (%)
Consumption Private Investment
UHERO STATE FORECAST UPDATE FEBRUARY 26, 2016 - PAGE 6
© 20162424 MAILE WAY, SAUNDERS HALL 540 • HONOLULU, HAWAII 96822 • (808) 956-2325 UHERO.HAWAII.EDU
2013 2014 2015 2016 2017 2018
Visitor Arrivals 1.7 2.3 4.3 1.3 1.0 1.2U.S. Visitor Arrivals 0.7 2.2 5.7 1.5 1.2 1.1Japan Visitor Arrivals 3.6 -0.4 -0.8 -0.5 0.1 1.2Other Visitor Arrivals 3.2 5.0 4.7 2.1 1.1 1.5
Non-farm Payrolls 2.0 1.3 1.4 1.3 1.1 0.9Unemployment Rate (%) 4.9 4.4 3.7 3.0 2.8 2.9
Inflation Rate, Honolulu MSA (%) 1.8 1.4 1.0 1.7 2.6 2.8Real Personal Income -1.0 3.2 3.9 2.3 1.7 1.4Real GDP 0.8 1.3 4.0 3.2 2.1 1.6
Non-farm Payrolls for 2014 and 2015 are UHERO estimates of the forthcoming benchmark revision.
HAWAII ECONOMIC INDICATORSYEAR-OVER-YEAR PERCENT CHANGE
Note: Source is UHERO. Figures for income and GDP for 2015 are UHERO estimates. Figures for 2016-2018 are forecasts.
UHERO STATE FORECAST UPDATE FEBRUARY 26, 2016 - PAGE 7
© 20162424 MAILE WAY, SAUNDERS HALL 540 • HONOLULU, HAWAII 96822 • (808) 956-2325 UHERO.HAWAII.EDU
2013 2014 2015 2016 2017 2018
Non-farm Payrolls (Thou) 618.6 626.6 635.4 643.5 650.6 656.5 % Change 2.0 1.3 1.4 1.3 1.1 0.9
Employment (Thou) 619.5 639.0 651.3 661.3 666.8 672.8 % Change 1.7 3.1 1.9 1.5 0.8 0.9
Unemployment Rate (%) 4.9 4.4 3.7 3.0 2.8 2.9
Population (Thou) 1,409.0 1,419.6 1,429.4 1,438.5 1,447.9 1,457.0 % Change 1.2 0.8 0.7 0.6 0.7 0.6
Personal Income (Mil$) 62,437.3 65,348.0 68,595.8 71,388.1 74,448.1 77,654.3 % Change 0.7 4.7 5.0 4.1 4.3 4.3
Inflation Rate, Honolulu MSA (%) 1.8 1.4 1.0 1.7 2.6 2.8
Real Personal Income (Mil 2015$) 63,971.9 66,001.3 68,595.8 70,166.1 71,328.4 72,339.3 % Change -1.0 3.2 3.9 2.3 1.7 1.4
Real Per Capita Income (Thou 2015$) 45.4 46.5 48.0 48.8 49.3 49.7 % Change -2.2 2.4 3.2 1.6 1.0 0.8
Real GDP (Mil 2015$) 75,978.6 76,932.6 79,984.8 82,577.1 84,342.0 85,666.7 % Change 0.8 1.3 4.0 3.2 2.1 1.6
TOURISM SECTOR DETAILTotal Visitor Arrivals by Air (Thou) 8,003.5 8,183.7 8,534.0 8,641.4 8,727.9 8,832.4
% Change - Total Visitor Arrivals by Air 1.7 2.3 4.3 1.3 1.0 1.2U.S. Visitors 4,913.3 5,021.5 5,307.0 5,385.4 5,449.8 5,510.1
% Change - U.S. Visitors 0.7 2.2 5.7 1.5 1.2 1.1Japanese Visitors 1,518.5 1,511.7 1,499.2 1,491.9 1,493.8 1,511.5
% Change - Japanese Visitors 3.6 -0.4 -0.8 -0.5 0.1 1.2Other Visitors 1,571.7 1,650.5 1,727.8 1,764.1 1,784.3 1,810.8
% Change - Other Visitors 3.2 5.0 4.7 2.1 1.1 1.5
Avg. Length of Stay (Days) 9.3 9.2 9.1 9.2 9.2 9.2Visitor Days (Thou) 74,049.8 74,982.9 77,749.3 79,262.2 80,363.0 81,026.2
% Change 0.5 1.3 3.7 1.9 1.4 0.8Average Daily Room Rate ($) 229.5 235.7 244.1 250.9 256.5 264.7
% Change 12.2 2.7 3.6 2.8 2.2 3.2Occupancy Rate (%) 76.6 77.1 78.1 78.3 78.1 77.5Real Visitor Expenditures (Mil 2015$) 14,705.2 14,926.2 15,118.9 15,080.0 14,928.2 14,815.1
% Change -0.6 1.5 1.3 -0.3 -1.0 -0.8
TABLE 1: MAJOR ECONOMIC INDICATORSSTATE OF HAWAII FORECAST
Note: Source is UHERO. Historical figures for occupancy rate and daily room rate are from Hospitality Advisors LLC. Figures for income, GDP, average daily room rate and occupancy rates for 2015 are UHERO estimates. Figures for 2016-2018 are forecasts. Non-farm Payrolls for 2014 and 2015 are UHERO estimates of the forthcoming benchmark revision.
UHERO STATE FORECAST UPDATE FEBRUARY 26, 2016 - PAGE 8
© 20162424 MAILE WAY, SAUNDERS HALL 540 • HONOLULU, HAWAII 96822 • (808) 956-2325 UHERO.HAWAII.EDU
2013 2014 2015 2016 2017 2018
Non-farm Payrolls (Thou) 618.6 626.6 635.4 643.5 650.6 656.5
% Change 2.0 1.3 1.4 1.3 1.1 0.9
Construction and Mining 31.0 32.1 34.8 37.0 38.3 38.8
% Change 5.5 3.5 8.3 6.5 3.4 1.4
Manufacturing 13.6 13.9 14.2 14.2 14.2 14.3
% Change 1.8 2.5 1.9 0.5 -0.5 0.7
Trade 87.4 87.6 88.4 89.1 89.7 90.3
% Change 1.0 0.2 0.9 0.8 0.7 0.6
Transportation and Utilities 29.5 30.2 31.1 31.8 32.2 32.6
% Change 4.2 2.2 3.1 2.2 1.4 1.2
Finance, Insurance and Real Estate 27.2 27.1 27.4 27.8 28.1 28.2
% Change 1.6 -0.1 0.9 1.7 0.9 0.3
Services 305.5 310.0 314.8 318.2 322.0 325.6
% Change 3.0 1.5 1.6 1.1 1.2 1.1
Health Care and Soc. Assistance 64.1 65.0 66.8 68.0 69.0 70.1
% Change 3.0 1.4 2.8 1.8 1.4 1.7
Accommodation and Food 99.3 101.2 102.6 103.7 104.8 106.1
% Change 3.2 1.9 1.4 1.1 1.1 1.2
Other 142.1 143.8 144.9 146.5 148.3 149.4
% Change 2.9 1.2 0.7 1.1 1.2 0.8
Government 124.5 125.7 124.7 125.3 126.1 126.7
% Change -0.9 1.0 -0.8 0.4 0.7 0.5
Federal Government 33.9 33.2 32.7 32.9 33.0 33.1
% Change -3.0 -2.0 -1.4 0.5 0.4 0.2
State and Local Government 90.6 92.5 92.0 92.4 93.1 93.7
% Change 0.0 2.1 -0.5 0.4 0.7 0.6
Note: Source is UHERO. Figures for 2016-2018 are forecasts. Industry job counts for 2014 and 2015 are UHERO estimates ofthe forthcoming benchmark revision.
STATE OF HAWAII FORECASTTABLE 2: JOBS BY INDUSTRY
UHERO STATE FORECAST UPDATE FEBRUARY 26, 2016 - PAGE 9
© 20162424 MAILE WAY, SAUNDERS HALL 540 • HONOLULU, HAWAII 96822 • (808) 956-2325 UHERO.HAWAII.EDU
2013 2014 2015 2016 2017 2018
Real Personal Income (Mil 2015$) 63,971.9 66,001.3 68,595.8 70,166.1 71,328.4 72,339.3
% Change -1.0 3.2 3.9 2.3 1.7 1.4
Labor & Proprietors' Income 46,194.1 47,211.1 49,094.9 50,356.5 51,133.5 51,711.2
% Change 0.2 2.2 4.0 2.6 1.5 1.1
Construction 3,296.1 3,443.5 3,915.0 4,279.2 4,478.7 4,544.0
% Change 2.2 4.5 13.7 9.3 4.7 1.5
Manufacturing 839.5 867.1 883.6 896.9 901.3 912.4
% Change 0.8 3.3 1.9 1.5 0.5 1.2
Trade 4,090.2 4,124.7 4,213.1 4,308.4 4,351.5 4,404.5
% Change 1.6 0.8 2.1 2.3 1.0 1.2
Transportation and Utilities 2,301.8 2,364.4 2,476.2 2,515.6 2,567.9 2,609.8
% Change 6.5 2.7 4.7 1.6 2.1 1.6
Finance, Insurance & Real Estate 3,041.2 3,031.4 3,239.0 3,351.6 3,440.9 3,502.7
% Change -6.4 -0.3 6.8 3.5 2.7 1.8
Services 17,799.9 18,233.2 18,895.4 19,439.2 19,810.2 20,143.3
% Change 2.2 2.4 3.6 2.9 1.9 1.7
Health Care & Soc. Assist. (% ch.) 2.4 1.9 5.1 3.1 2.2 2.3
Accommodation & Food (% ch.) 4.0 3.2 4.3 3.3 1.6 1.7
Other (% ch.) 1.3 2.3 2.6 2.6 1.9 1.4
Government 14,481.8 14,773.6 15,046.6 15,142.0 15,179.0 15,186.4
% Change -2.5 2.0 1.8 0.6 0.2 0.0
Federal, civilian (% ch.) -6.1 1.4 1.8 1.0 0.9 0.8
State & Local (% ch.) 1.3 4.5 2.9 0.7 0.6 0.1
Less Social Security Taxes (-) 5,541.8 5,478.6 5,588.1 5,677.9 5,765.5 5,830.7
% Change 14.4 -1.1 2.0 1.6 1.5 1.1
Transfer Payments 10,080.9 10,571.6 10,963.6 11,198.8 11,483.1 11,769.7
% Change 1.6 4.9 3.7 2.1 2.5 2.5
Dividends, Interest and Rent 13,238.7 13,697.2 14,125.2 14,288.7 14,477.3 14,689.0
% Change -1.7 3.5 3.1 1.2 1.3 1.5
Population (Thou) 1,409.0 1,419.6 1,429.4 1,438.5 1,447.9 1,457.0
% Change 1.2 0.8 0.7 0.6 0.7 0.6
Real Per Capita Income (Thou 2015$) 45.4 46.5 48.0 48.8 49.3 49.7
% Change -2.2 2.4 3.2 1.6 1.0 0.8
Inflation Rate, Honolulu MSA (%) 1.8 1.4 1.0 1.7 2.6 2.8
Nominal Personal Income (Mil. $) 62,437.3 65,348.0 68,595.8 71,388.1 74,448.1 77,654.3
% Change 0.7 4.7 5.0 4.1 4.3 4.3
Note: Source is UHERO. Figures for income for 2015 are UHERO estimates. Figures for 2016-2018 are forecasts.
TABLE 3: PERSONAL INCOME BY INDUSTRYSTATE OF HAWAII FORECAST
UHERO STATE FORECAST UPDATE FEBRUARY 26, 2016 - PAGE 10
© 20162424 MAILE WAY, SAUNDERS HALL 540 • HONOLULU, HAWAII 96822 • (808) 956-2325 UHERO.HAWAII.EDU
2013 2014 2015 2016 2017 2018
BUILDING PERMITS (Mil 2015$)Total Commitments to Build 4,391 4,639 5,518 5,760 5,897 5,895 % Change 9.1 5.6 19.0 4.4 2.4 0.0
Real Private Building Permits 3,052 3,486 3,964 4,283 4,537 4,431 % Change -2.1 14.2 13.7 8.1 5.9 -2.3
Real Residential Building Permits 1,150 1,037 1,651 1,816 1,874 1,844 % Change 16.5 -9.8 59.3 10.0 3.2 -1.6
Real Non-Residential Building Permits 1,902 2,449 2,312 2,466 2,663 2,587 % Change -10.7 28.8 -5.6 6.7 8.0 -2.9
Government Contracts Awarded 1,340 1,153 1,555 1,477 1,360 1,464 % Change 47.1 -13.9 34.8 -5.0 -7.9 7.7
CONSTRUCTION ACTIVITYReal GE Contracting Tax Base (Mil 2015$) 8,223 7,385 8,162 9,157 9,578 9,743 % Change -0.4 -10.2 10.5 12.2 4.6 1.7
Nominal GE Contracting Tax Base (Mil $) 7,330 7,024 8,162 9,788 10,923 11,723 % Change 4.6 -4.2 16.2 19.9 11.6 7.3
Construction Job Count (Thou) 31.0 32.1 34.8 37.0 38.3 38.8 % Change 5.5 3.5 8.3 6.5 3.4 1.4
Real Construction Income (Mil 2015$) 3,296 3,444 3,915 4,279 4,479 4,544 % Change 2.2 4.5 13.7 9.3 4.7 1.5
PRICES & COSTS (HONOLULU)Honolulu Median Home Price (Thou $) 647.0 675.6 697.5 739.3 773.7 797.5 % Change 3.5 4.4 3.2 6.0 4.7 3.1
Honolulu Median Condominium Price (Thou $) 333.6 350.4 362.1 388.4 413.9 433.5 % Change 5.6 5.0 3.3 7.3 6.6 4.7
Honolulu Housing Affordability Index 87.5 78.4 81.4 79.0 74.6 72.2 % Change -3.1 -10.4 3.8 -2.9 -5.6 -3.2
Honolulu Construction Cost Index (2015=100) 89.1 95.1 100.0 106.9 114.0 120.3 % Change 5.1 6.7 5.1 6.9 6.7 5.5
30-Year Mortgage Rate (%) 4.0 4.2 3.9 4.2 4.7 5.1
Income is deflated by Honolulu CPI. Housing affordability index is the ratio of median family income to qualifying income for a loanthe sum of private permits and public contracts awarded. Permits and tax base are deflated by Honolulu Construction Cost Index.
STATE OF HAWAII FORECASTTABLE 4: CONSTRUCTION INDICATORS
Note: Source is UHERO. Figures for 2015 are UHERO estimates. Figures for 2016-2018 are forecasts. Commitments to Build are
for the median-priced home (times 100).
UHERO STATE FORECAST UPDATE FEBRUARY 26, 2016 - PAGE 11
© 20162424 MAILE WAY, SAUNDERS HALL 540 • HONOLULU, HAWAII 96822 • (808) 956-2325 UHERO.HAWAII.EDU
2013 2014 2015 2016 2017 2018
U.S. FACTORS
Employment (Thou) 143,929.3 146,305.3 148,833.4 150,943.1 152,165.0 152,834.7
% Change 1.0 1.7 1.7 1.4 0.8 0.4
Unemployment Rate (%) 7.4 6.2 5.3 4.7 4.6 4.8
Inflation Rate (%) 1.5 1.6 0.2 1.7 1.9 1.9
Real GDP (Bil 2009$) 15,583.3 15,961.7 16,352.5 16,734.4 17,101.9 17,464.8
% Change 1.5 2.4 2.4 2.3 2.2 2.1
Population (Thou) 316,839.0 319,173.0 321,368.9 323,995.5 326,625.8 329,256.5
% Change 0.7 0.7 0.7 0.8 0.8 0.8
JAPAN FACTORS
Employment (Thou) 63,110.0 63,502.5 63,759.2 63,624.5 63,339.8 63,089.4
% Change 0.7 0.6 0.4 -0.2 -0.4 -0.4
Unemployment Rate (%) 4.0 3.6 3.4 3.5 3.7 3.8
Inflation Rate (%) 0.4 2.7 0.8 0.5 2.2 2.0
Real GDP (Bil 2005 yen) 526,472.1 525,878.8 529,873.6 534,752.4 539,236.4 546,651.6
% Change 1.4 -0.1 0.8 0.9 0.8 1.4
Population (Thou) 126,985.0 126,794.6 126,573.5 126,323.7 126,045.2 125,738.4
% Change -0.1 -0.2 -0.2 -0.2 -0.2 -0.2
Exchange Rate (Yen/$) 97.6 105.9 121.0 122.7 121.1 117.7
Note: Source is UHERO. Figures for Japanese GDP and population for 2015 are UHERO estimates. Figures for 2016-2018 are forecasts.
TABLE 5: EXTERNAL INDICAT0RSSTATE OF HAWAII FORECAST
UHERO STATE FORECAST UPDATE FEBRUARY 26, 2016 - PAGE 12
© 20162424 MAILE WAY, SAUNDERS HALL 540 • HONOLULU, HAWAII 96822 • (808) 956-2325 UHERO.HAWAII.EDU
2015 2016 2017 2018 2019 2020
Non-farm Payrolls (Thou) 635.4 643.5 650.6 656.5 661.1 664.8 % Change 1.4 1.3 1.1 0.9 0.7 0.6
Employment (Thou) 651.3 661.3 666.8 672.8 676.7 679.8 % Change 1.9 1.5 0.8 0.9 0.6 0.5
Unemployment Rate (%) 3.7 3.0 2.8 2.9 3.3 3.6
Population (Thou) 1,429.4 1,438.5 1,447.9 1,457.0 1,467.9 1,479.1 % Change 0.7 0.6 0.7 0.6 0.8 0.8
Personal Income (Mil$) 68,595.8 71,388.1 74,448.1 77,654.3 80,349.8 82,730.4 % Change 5.0 4.1 4.3 4.3 3.5 3.0
Inflation Rate, Honolulu MSA (%) 1.0 1.7 2.6 2.8 2.1 1.7
Real Personal Income (Mil 2015$) 68,595.8 70,166.1 71,328.4 72,339.3 73,285.1 74,219.7 % Change 3.9 2.3 1.7 1.4 1.3 1.3
Real Per Capita Income (Thou 2015$) 48.0 48.8 49.3 49.7 49.9 50.2 % Change 3.2 1.6 1.0 0.8 0.6 0.5
Real GDP (Mil 2015$) 79,984.8 82,577.1 84,342.0 85,666.7 86,945.3 88,331.6 % Change 4.0 3.2 2.1 1.6 1.5 1.6
TOURISM SECTOR DETAILTotal Visitor Arrivals by Air (Thou) 8,534.0 8,641.4 8,727.9 8,832.4 8,893.8 8,954.1
% Change - Total Visitor Arrivals by Air 4.3 1.3 1.0 1.2 0.7 0.7U.S. Visitors 5,307.0 5,385.4 5,449.8 5,510.1 5,545.9 5,573.3
% Change - U.S. Visitors 5.7 1.5 1.2 1.1 0.7 0.5Japanese Visitors 1,499.2 1,491.9 1,493.8 1,511.5 1,515.0 1,524.6
% Change - Japanese Visitors -0.8 -0.5 0.1 1.2 0.2 0.6Other Visitors 1,727.8 1,764.1 1,784.3 1,810.8 1,832.9 1,856.2
% Change - Other Visitors 4.7 2.1 1.1 1.5 1.2 1.3
Avg. Length of Stay (Days) 9.1 9.2 9.2 9.2 9.1 9.2Visitor Days (Thou) 77,749.3 79,262.2 80,363.0 81,026.2 81,349.9 81,953.7
% Change 3.7 1.9 1.4 0.8 0.4 0.7Average Daily Room Rate ($) 244.1 250.9 256.5 264.7 272.3 279.2
% Change 3.6 2.8 2.2 3.2 2.9 2.5Occupancy Rate (%) 78.1 78.3 78.1 77.5 76.9 76.9Real Visitor Expenditures (Mil 2015$) 15,118.9 15,080.0 14,928.2 14,815.1 14,724.8 14,723.0
% Change 1.3 -0.3 -1.0 -0.8 -0.6 0.0
TABLE 6: MAJOR ECONOMIC INDICATORSEXTENDED STATE OF HAWAII FORECAST
Note: Source is UHERO. Historical figures for occupancy rate and daily room rate are from Hospitality Advisors LLC. Figures for income, GDP, average daily room rate and occupancy rates for 2015 are UHERO estimates. Figures for 2016-2020 are forecasts. Non-farm Payrolls for 2015 are UHERO estimates of the forthcoming benchmark revision.
UHERO STATE FORECAST UPDATE FEBRUARY 26, 2016 - PAGE 13
© 20162424 MAILE WAY, SAUNDERS HALL 540 • HONOLULU, HAWAII 96822 • (808) 956-2325 UHERO.HAWAII.EDU
2015 2016 2017 2018 2019 2020
Non-farm Payrolls (Thou) 635.4 643.5 650.6 656.5 661.1 664.8
% Change 1.4 1.3 1.1 0.9 0.7 0.6
Construction and Mining 34.8 37.0 38.3 38.8 38.7 38.0
% Change 8.3 6.5 3.4 1.4 -0.3 -1.8
Manufacturing 14.2 14.2 14.2 14.3 14.3 14.4
% Change 1.9 0.5 -0.5 0.7 0.5 0.4
Trade 88.4 89.1 89.7 90.3 90.7 91.1
% Change 0.9 0.8 0.7 0.6 0.5 0.4
Transportation and Utilities 31.1 31.8 32.2 32.6 32.9 33.2
% Change 3.1 2.2 1.4 1.2 1.0 0.8
Finance, Insurance and Real Estate 27.4 27.8 28.1 28.2 28.2 28.1
% Change 0.9 1.7 0.9 0.3 0.0 -0.2
Services 314.8 318.2 322.0 325.6 329.0 332.1
% Change 1.6 1.1 1.2 1.1 1.0 1.0
Health Care and Soc. Assistance 66.8 68.0 69.0 70.1 71.2 72.3
% Change 2.8 1.8 1.4 1.7 1.6 1.5
Accommodation and Food 102.6 103.7 104.8 106.1 106.9 107.6
% Change 1.4 1.1 1.1 1.2 0.8 0.6
Other 144.9 146.5 148.3 149.4 150.8 152.2
% Change 0.7 1.1 1.2 0.8 0.9 1.0
Government 124.7 125.3 126.1 126.7 127.3 127.9
% Change -0.8 0.4 0.7 0.5 0.4 0.4
Federal Government 32.7 32.9 33.0 33.1 33.1 33.2
% Change -1.4 0.5 0.4 0.2 0.1 0.2
State and Local Government 92.0 92.4 93.1 93.7 94.2 94.7
% Change -0.5 0.4 0.7 0.6 0.6 0.5
Note: Source is UHERO. Figures for 2016-2020 are forecasts. Industry job counts for 2015 are UHERO estimates of the forthcomingbenchmark revision.
TABLE 7: JOBS BY INDUSTRYEXTENDED STATE OF HAWAII FORECAST
UHERO STATE FORECAST UPDATE FEBRUARY 26, 2016 - PAGE 14
© 20162424 MAILE WAY, SAUNDERS HALL 540 • HONOLULU, HAWAII 96822 • (808) 956-2325 UHERO.HAWAII.EDU
2015 2016 2017 2018 2019 2020
Real Personal Income (Mil 2015$) 68,595.8 70,166.1 71,328.4 72,339.3 73,285.1 74,219.7
% Change 3.9 2.3 1.7 1.4 1.3 1.3
Labor & Proprietors' Income 49,094.9 50,356.5 51,133.5 51,711.2 52,181.2 52,587.9
% Change 4.0 2.6 1.5 1.1 0.9 0.8
Construction 3,915.0 4,279.2 4,478.7 4,544.0 4,522.5 4,426.9
% Change 13.7 9.3 4.7 1.5 -0.5 -2.1
Manufacturing 883.6 896.9 901.3 912.4 921.7 930.1
% Change 1.9 1.5 0.5 1.2 1.0 0.9
Trade 4,213.1 4,308.4 4,351.5 4,404.5 4,455.3 4,504.4
% Change 2.1 2.3 1.0 1.2 1.2 1.1
Transportation and Utilities 2,476.2 2,515.6 2,567.9 2,609.8 2,646.4 2,681.6
% Change 4.7 1.6 2.1 1.6 1.4 1.3
Finance, Insurance & Real Estate 3,239.0 3,351.6 3,440.9 3,502.7 3,546.6 3,573.9
% Change 6.8 3.5 2.7 1.8 1.3 0.8
Services 18,895.4 19,439.2 19,810.2 20,143.3 20,436.7 20,700.9
% Change 3.6 2.9 1.9 1.7 1.5 1.3
Health Care & Soc. Assist. (% ch.) 5.1 3.1 2.2 2.3 2.2 1.9
Accommodation & Food (% ch.) 4.3 3.3 1.6 1.7 1.7 1.5
Other (% ch.) 2.6 2.6 1.9 1.4 1.0 0.9
Government 15,046.6 15,142.0 15,179.0 15,186.4 15,242.2 15,357.0
% Change 1.8 0.6 0.2 0.0 0.4 0.8
Federal, civilian (% ch.) 1.8 1.0 0.9 0.8 0.7 0.6
State & Local (% ch.) 2.9 0.7 0.6 0.1 -0.1 0.1
Less Social Security Taxes (-) 5,588.1 5,677.9 5,765.5 5,830.7 5,883.6 5,929.5
% Change 2.0 1.6 1.5 1.1 0.9 0.8
Transfer Payments 10,963.6 11,198.8 11,483.1 11,769.7 12,075.6 12,397.1
% Change 3.7 2.1 2.5 2.5 2.6 2.7
Dividends, Interest and Rent 14,125.2 14,288.7 14,477.3 14,689.0 14,911.9 15,164.2
% Change 3.1 1.2 1.3 1.5 1.5 1.7
Population (Thou) 1,429.4 1,438.5 1,447.9 1,457.0 1,467.9 1,479.1
% Change 0.7 0.6 0.7 0.6 0.8 0.8
Real Per Capita Income (Thou 2015$) 48.0 48.8 49.3 49.7 49.9 50.2
% Change 3.2 1.6 1.0 0.8 0.6 0.5
Inflation Rate, Honolulu MSA (%) 1.0 1.7 2.6 2.8 2.1 1.7
Nominal Personal Income (Mil. $) 68,595.8 71,388.1 74,448.1 77,654.3 80,349.8 82,730.4
% Change 5.0 4.1 4.3 4.3 3.5 3.0
Note: Source is UHERO. Figures for income for 2015 are UHERO estimates. Figures for 2016-2020 are forecasts.
TABLE 8: PERSONAL INCOME BY INDUSTRYEXTENDED STATE OF HAWAII FORECAST
UHERO STATE FORECAST UPDATE FEBRUARY 26, 2016 - PAGE 15
© 20162424 MAILE WAY, SAUNDERS HALL 540 • HONOLULU, HAWAII 96822 • (808) 956-2325 UHERO.HAWAII.EDU
2015 2016 2017 2018 2019 2020
BUILDING PERMITS (Mil 2015$)Total Commitments to Build 5,518 5,760 5,897 5,895 5,519 5,159 % Change 19.0 4.4 2.4 0.0 -6.4 -6.5
Real Private Building Permits 3,964 4,283 4,537 4,431 4,117 3,707 % Change 13.7 8.1 5.9 -2.3 -7.1 -10.0
Real Residential Building Permits 1,651 1,816 1,874 1,844 1,739 1,543 % Change 59.3 10.0 3.2 -1.6 -5.7 -11.3
Real Non-Residential Building Permits 2,312 2,466 2,663 2,587 2,378 2,164 % Change -5.6 6.7 8.0 -2.9 -8.1 -9.0
Government Contracts Awarded 1,555 1,477 1,360 1,464 1,402 1,451 % Change 34.8 -5.0 -7.9 7.7 -4.2 3.5
CONSTRUCTION ACTIVITYReal GE Contracting Tax Base (Mil 2015$) 8,162 9,157 9,578 9,743 9,695 9,559 % Change 10.5 12.2 4.6 1.7 -0.5 -1.4
Nominal GE Contracting Tax Base (Mil $) 8,162 9,788 10,923 11,723 12,048 11,958 % Change 16.2 19.9 11.6 7.3 2.8 -0.7
Construction Job Count (Thou) 34.8 37.0 38.3 38.8 38.7 38.0 % Change 8.3 6.5 3.4 1.4 -0.3 -1.8
Real Construction Income (Mil 2015$) 3,915 4,279 4,479 4,544 4,522 4,427 % Change 13.7 9.3 4.7 1.5 -0.5 -2.1
PRICES & COSTS (HONOLULU)Honolulu Median Home Price (Thou $) 697.5 739.3 773.7 797.5 806.9 801.4 % Change 3.2 6.0 4.7 3.1 1.2 -0.7
Honolulu Median Condominium Price (Thou $) 362.1 388.4 413.9 433.5 444.9 447.3 % Change 3.3 7.3 6.6 4.7 2.6 0.5
Honolulu Housing Affordability Index 81.4 79.0 74.6 72.2 71.4 71.8 % Change 3.8 -2.9 -5.6 -3.2 -1.0 0.4
Honolulu Construction Cost Index (2015=100) 100.0 106.9 114.0 120.3 124.3 125.1 % Change 5.1 6.9 6.7 5.5 3.3 0.7
30-Year Mortgage Rate (%) 3.9 4.2 4.7 5.1 5.3 5.5
TABLE 9: CONSTRUCTION INDICATORS
the sum of private permits and public contracts awarded. Permits and tax base are deflated by Honolulu Construction Cost Index.
STATE OF HAWAII FORECAST
for the median-priced home (times 100).Income is deflated by Honolulu CPI. Housing affordability index is the ratio of median family income to qualifying income for a loan
Note: Source is UHERO. Figures for 2015 are UHERO estimates. Figures for 2016-2020 are forecasts. Commitments to Build are
UHERO STATE FORECAST UPDATE FEBRUARY 26, 2016 - PAGE 16
© 20162424 MAILE WAY, SAUNDERS HALL 540 • HONOLULU, HAWAII 96822 • (808) 956-2325 UHERO.HAWAII.EDU
2015 2016 2017 2018 2019 2020
U.S. FACTORS
Employment (Thou) 148,833.4 150,943.1 152,165.0 152,834.7 153,684.1 154,659.7
% Change 1.7 1.4 0.8 0.4 0.6 0.6
Unemployment Rate (%) 5.3 4.7 4.6 4.8 4.9 4.9
Inflation Rate (%) 0.2 1.7 1.9 1.9 2.0 2.0
Real GDP (Bil 2009$) 16,352.5 16,734.4 17,101.9 17,464.8 17,829.7 18,212.0
% Change 2.4 2.3 2.2 2.1 2.1 2.1
Population (Thou) 321,368.9 323,995.5 326,625.8 329,256.5 331,884.0 334,503.5
% Change 0.7 0.8 0.8 0.8 0.8 0.8
JAPAN FACTORS
Employment (Thou) 63,759.2 63,624.5 63,339.8 63,089.4 62,836.6 62,594.7
% Change 0.4 -0.2 -0.4 -0.4 -0.4 -0.4
Unemployment Rate (%) 3.4 3.5 3.7 3.8 3.9 4.0
Inflation Rate (%) 0.8 0.5 2.2 2.0 1.7 1.5
Real GDP (Bil 2005 yen) 529,873.6 534,752.4 539,236.4 546,651.6 553,305.7 559,443.1
% Change 0.8 0.9 0.8 1.4 1.2 1.1
Population (Thou) 126,573.5 126,323.7 126,045.2 125,738.4 125,402.9 125,039.0
% Change -0.2 -0.2 -0.2 -0.2 -0.3 -0.3
Exchange Rate (Yen/$) 121.0 122.7 121.1 117.7 113.5 109.2
Note: Source is UHERO. Figures for Japanese GDP and population for 2015 are UHERO estimates. Figures for 2016-2020 are forecasts.
TABLE 10: EXTERNAL INDICAT0RSEXTENDED STATE OF HAWAII FORECAST
UHERO STATE FORECAST UPDATE FEBRUARY 26, 2016 - PAGE 17
© 20162424 MAILE WAY, SAUNDERS HALL 540 • HONOLULU, HAWAII 96822 • (808) 956-2325 UHERO.HAWAII.EDU
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