Economic Outlook 2000

Hawaii Economic Association Annual Conference April 28, 2000

Hawaii Economic Association Conference April 28, 2000

http://www2.hawaii.edu/~UHERO

Economic Outlook 2000

• 1999 Year in ReviewBusiness Cycle Expansion Signals Clear End to Growth Recession

• 2000 Economic Outlook* US Economic expansion continues amazing run

* Japanese Economy showing some signs of growth

* Hawai’i economic engine firing on all cylinders

Hawaii Economic Association Conference April 28, 2000

http://www2.hawaii.edu/~UHERO

1999 Year in Review

• Visitor Industry Returns to Growth* Decline in Eastbound Arrivals slows

* Westbound Arrivals growth strong

* Room rates rise 1.7 %

1997 1998 1999Eastbound Visitors -1.0 -10.9 -5.9Westbound Visitors 1.8 4.1 6.1Total Visitors 0.7 -2.0 1.6

Hawaii Economic Association Conference April 28, 2000

http://www2.hawaii.edu/~UHERO

1999 Year in Review

• Construction Sector Bottoms Out* Real contracting tax base ?

* Home Resales continue strong

* Permits growth signals rebound in construction

1997 1998 1999Real Contracting -9.9 2.5 -1.9SF Home Resales 26.0 15.0Total Permiting 5.5 -10.6 33.0

Hawaii Economic Association Conference April 28, 2000

http://www2.hawaii.edu/~UHERO

1999 Year in Review

• Job Growth Resumes* Non Ag Job growth resumes

* Employment growth continues

* Unemployment nears US average

1997 1998 1999 2000Q1Non Ag Jobs 0.2 -0.1 0.5 1.9Employment 0.2 0.2 0.7 3.1Unemployment Rate 6.4 6.2 5.6 4.8

Hawaii Economic Association Conference April 28, 2000

http://www2.hawaii.edu/~UHERO

1999 Year in Review

• Expanding Economy Grows Real Tax Base * Retail tax base grows with visitor industry

* Hotel Tax Base down in real terms --looks like allocation problem!

* Overall tax base expanding more slowly than income

1997 1998 1999Retail -1.4 -1.2 0.3Hotel Room 4.0 -0.1 -0.6Total GE Tax Base -2.0 -1.2 0.8

Hawaii Economic Association Conference April 28, 2000

http://www2.hawaii.edu/~UHERO

1999 Year in Review

• Income Growth and Prices * Nominal income growth exceeds 2% for third year

* Inflation returns to islands

* Real income growth expected above 2%

1997 1998 1999*CPI Inflation .7 -.3 1.1Real Income 1.8 2.7 2.2Real GSP 1.5 2.2 1.9

Hawaii Economic Association Conference April 28, 2000

http://www2.hawaii.edu/~UHERO

Year 2000: Global Outlook

• US fairytale expansion continues to set records* No clear signs of end to expansion with consumer and

business spending strong

* Inflation still moderate

• Japanese Economy still plugging along* Real GDP grew by just 0.3% in 1999

* Government spending 47% of 1999 growth

* Business expectations and profit rates improving

Hawaii Economic Association Conference April 28, 2000

http://www2.hawaii.edu/~UHERO

US Income Growth StrongJapan ? Were Still Waiting

19991997199519931991198919871985

8

6

4

2

0

-2

-4

US Japan

Hawaii Economic Association Conference April 28, 2000

http://www2.hawaii.edu/~UHERO

NASDAQ Growth Forecast

Hawaii Economic Association Conference April 28, 2000

http://www2.hawaii.edu/~UHERO

2000 Outlook:All Sectors Contribute to Growth

• Visitor growth expected to exceed 3.5 %• Real contracting will expand at a 4.5 % rate• Job and employment growth continue at near 1%• Real income to grow at 2.4%• Inflation will accelerate to 1.8% rate

Hawaii Economic Association Conference April 28, 2000

http://www2.hawaii.edu/~UHERO

Visitor Arrivals Growth Expected to top 3%

19991997199519931991198919871985

20

15

10

5

0

-5

-10

-15

Eastbound Westbound Total

Hawaii Economic Association Conference April 28, 2000

http://www2.hawaii.edu/~UHERO

Expected Contracting Growth Strongest in 10 years

200019981996199419921990

30

20

10

0

-10

-20

-30

40

20

0

-20

-40

Real Contracting Tax Base Permits

Hawaii Economic Association Conference April 28, 2000

http://www2.hawaii.edu/~UHERO

Labor Market Firms

19991997199519931991198919871985

6

4

2

0

-2

-4

Jobs Employment

Hawaii Economic Association Conference April 28, 2000

http://www2.hawaii.edu/~UHERO

Moderate Real Income Growth Continues

19991997199519931991198919871985

6

4

2

0

-2

-4

Real TPI Real GSP

Hawaii Economic Association Conference April 28, 2000

http://www2.hawaii.edu/~UHERO

Honolulu Inflation Still Playing Catch Up

19991997199519931991198919871985

8

6

4

2

0

-2

Hawaii U.S.

Hawaii Economic Association Conference April 28, 2000

http://www2.hawaii.edu/~UHERO

2000 Outlook

1998 1999 2000Personal Income (Current $) 2.4 3.3 4.4Real Personal Income 2.7 2.2 2.6Real Gross State Product 2.2 1.9 2.4

Consumer Price Inflation -0.3 1.1 1.8

Visitor Arrivals -2 1.6 4.0East Bound -10.9 -5.9 1.0West Bound 4.1 6.1 5.5

Real Contracting 2.7 -1.9 4.5

Non Ag Jobs -0.1 0.5 1.1Employment 0.2 0.7 1.4