According to the newest University of Hawaiʻi Economic Research Organization (UHERO) report, economic outlook this year has turned out a bit better than anticipated, and prospects remain good for 2016.
Next year will see some easing of visitor growth, but no retreat from the high levels of activity that have built up in recent years. The construction expansion will continue, and tightening labor market conditions will support income gains. Arrayed against this positive outlook are important global challenges, ranging from the surging dollar to Chinese slowing and renewed terrorism threats.
- The global conditions facing Hawaiʻi’s economy have weakened over the past year. Moderate growth has continued in the U.S., Hawaiʻi’s largest tourism market.
- Some relief is expected in 2016, but no sharp global rebound.
- Growth in the visitor industry was surprisingly strong this year, with Japanese market weakness offset by healthy demand from other international markets and from the US.
- The labor market is now much healthier than it was a year or two ago, with the unemployment rate receding to 3.3 percent recently.
- The construction cycle is now in full swing. The pace of new permitting and job creation has picked up considerably this year,and we are finally beginning to see increased activity on the Neighbor Islands, which experienced a pronounced boom-bust housing cycle in the 2000s.
- Declining oil prices have kept a lid on inflation in Honolulu this year.
- This year will see the biggest gains in personal income of the current expansion, with nearly 4 percent growth.