Economists, DBEDT predict deep recession throughout 2009

On Friday, Nov. 21, University of Hawaii Economic Research Organization released their bleakest assessment of the Hawaii economy to date. The UH economists say the state is in a recession that started last quarter and will remain “deep and drawn-out” at least through 2009.

On the same day, the U.S., Department of Labor announced that the state had nine mass layoffs in October, which resulted in the loss of 910 jobs for at least 31 days. That announcement predated news that Servco Pacific is laying off 118 employees. Although a dramatic drop in crude oil prices led to a consumer price plunge during October -- by the biggest percentage in 61 years -- the forecast remains bleak.

Three days earlier, on Nov. 18, the Hawaii Department of Business, Economic Development and Tourism reported that Hawaii’s economy is expected to come to a standstill in 2009. DBEDT projected that financial conditions in the U.S. and international markets will put a damper on growth.

Real gross domestic product is forecast to show only slight growth in 2008 and no growth in 2009. Personal income is expected to decline in both 2008 and 2009, wage and salary jobs will likely show no growth in 2008 and slightly decline in 2009, according to DBEDT's quarterly report.

Ted Liu, DBEDT director, said there are a few “bright spots” in the report, including federal and military spending as well as the acceleration of capital improvement construction projects by the state.

However, Hawaii no longer lags the economic troubles felt on the Mainland, the group said in its quarterly forecast, and will lose about 8,800 jobs next year as visitor arrivals fall nearly 11 percent this year and 6 percent next year, or about 835,000 fewer visitors this year and 385,000 fewer next year.

Three quarterly economic forecasts released in mid-November all found the state’s economy to be worse off than just 90 days ago as a result of fallout from the global financial crisis.