Hawaiʻi Enters “Expansion Phase” in Economic Forecast
By Wendy Osher
Hawaiʻi has entered a phase of new expansion for business “after leaving the Great Recession behind,” according to economist Dr. Jack Suyderhoud in his 2014 Economic Forecast for the state.
The information was released during the First Hawaiian Bank Business Outlook Forum held on Thursday on Oʻahu.
According to Suyderhoud: tourism will taper, as the sector continues to grow but at a more moderate pace; construction will pick up, adding jobs; and state and local government will contribute to growth while federal spending will not.
Earlier this year, Dr. Suyderhoud released a similar forecast for the County of Maui in which he said, ““Maui’s tourism boom will slow down, but its continued strength will support the rest of the economy.”
Dr. Suyderhoud’s state-wide economic forecast includes forecast increases in 2014 for: visitor arrivals by air, +3%; visitor spending growth, +5.3%; construction completed (tax base), +15%; total job growth, +2.5%; unemployment rate, 4.3%; real personal income growth, +3%; and inflation +2.8%.
“We forecast 2014 to be a continuation of what we have seen since 2010 — continued overall growth with strength in most sectors,” said Dr. Suyderhoud, in a press release statement.
Dr. Suyderhoud, who serves as an economic adviser to First Hawaiian Bank and is professor of business economics at the University of Hawaiʻi-Mānoa, highlighted a strong increase in completed construction, with rates up 10% this year, and 15% in 2014.
“As tourism returns to less spectacular growth rates, construction will accelerate into 2014. Construction permit trends plus continued pent-up demand for housing will show up in robust double-digit percentage increases in construction completed,” he said.
Dr. Suyderhoud answered questions of why some may not be feeling better about the economy, “given all this good news.”
“One reason,” he said, “may be that the recovery of tourism in the neighbor islands has not been as fast as on Oʻahu. While Maui finally returned to pre-2008 arrival figures in 2012, both Hawaiʻi Island and Kauaʻi are still below their 2008 peaks.”
In the area of employment, Suyderhoud said Maui has been the fastest to recover among the neighbor islands and is now within 6% of the prior peak while Hawaiʻi Island and Kauaʻi are still 7% below their peak jobs.”
Overall, “There is much to be happy about in tourism, incomes, jobs, retailing and real estate. Yet, not all sectors and islands have benefited equally from the rebound, creating a sense among some that the economy is less robust than it actually is,” Suyderhoud concluded.
Dr. Suyderhoud called the forecasts “happily optimistic,” but said there are always “things that can go wrong,” such as continuing dysfunction in Washington, DC; Federal Reserve policy changes going forward; the possibility of more struggles in the roll-out for Obamacare; and Middle East worries.”
“That said and hoping for the best out of Washington, I believe that 2014 will be a good year for Hawaii’s economy,” said Dr. Suyderhoud.