DBEDT economists revise 2011 forecasts downward

The Honolulu Star-Advertiser reported on Aug. 25 that the Department of Business, Economic Development and Tourism’s economic outlook for Hawaii for this year has been downgraded due to weaker-than-expected visitor arrivals and lower job growth, among other things. The quarterly outlook, released on Aug. 24, now forecasts the state's economy to grow by 1.3 percent in 2011, down from the May prediction of 1.6 percent.

In addition, the department revised its 2012 and 2013 growth rate forecasts downward slightly. Personal income, after adjusting for inflation, is expected to grow 0.8 percent this year, down from the 1 percent growth in the previous forecast.

Visitor arrivals from Japan have recovered from March’s earthquake and tsunami, but since June mainland visitor numbers have been running below 2010 levels, DBEDT said. The department trimmed its forecast for growth in visitors by 3 percent to 7.3 million this year, down from the 3.8 percent increase predicted in May. DBEDT also cut its job growth and inflation-adjusted personal income forecasts.

Rising hotel room rates and inflation are expected to increase visitor spending faster than previously predicted. In addition, there was a 9.7 percent jump in excise tax revenues during the first half of 2011, the highest rate in five years, and first-time claims for unemployment insurance fell by 10.8 percent through mid-August compared with last year. Hawaii's unemployment rate was 6.1 percent in July, the ninth lowest in the country.