The University of Hawaiʻi Economic Research Organization (UHERO) forecast predicts that Hawaiʻi’s economy in 2015 will look a lot like last year’s.
Tourism will see only marginal gains, but steady labor market improvement will continue and there will be moderate income growth. While not all damage from the past recession has been repaired, by many measures, economic activity in the state is returning to normal.
- The visitor industry posted another record year in 2014. After languishing early in the year, the industry had a strong fourth quarter and visitor arrivals climbed above 8.1 million.
- Conditions in the local construction industry remain decidedly mixed. In 2014 Hawaiʻi saw a surge in non-residential permitting, particularly on retail and medical facilities, but there was a dramatic slowdown in permits for new residential building, particularly on Oʻahu. (UHERO will issue its construction forecast in late March.)
- The top line indicators of local labor market conditions have now recovered all of their recession-induced losses, but the industry and household surveys paint somewhat different pictures of the pace of recent improvements. The industry survey points to only a 1.2 percent increase in nonfarm jobs in 2014, the slowest rate of expansion since 2011. The household survey paints a more encouraging picture—in response to better job prospects, individuals are now returning to the labor force, which expanded by 2.3 percent last year.
- Aggregate income growth accelerated in 2014. With labor market conditions still far from tight, gains in total labor income largely reflected larger payrolls, as opposed to higher wages. The lion’s share of income gains for state residents last year came from increases in property income and transfer payments, particularly expanded Medicaid coverage.