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