The newest University of Hawaiʻi Economic Research Organization (UHERO) report focuses on how conditions weakened over the course of the past year, posing risks to Hawaiʻi’s long expansion.
UHERO reports that Hawaiʻi’s economy continues to grow, but with expected slowing as the cycle matures. Tourism is booming, construction remains on a healthy plateau and jobs are plentiful.
The big story this quarter is the federal tax cuts that went into effect on January 1. These will provide a modest boost for Hawaiʻi families, who have seen little income growth in the expansion so far. Tightness in tourism and labor markets will limit the overall effect on the state’s economy.
Visitors keep on coming
Hawaiʻi tourism rounded out 2017 with another strong quarter. The number of arrivals surged nearly 5 percent, bringing the annual total to more than 9.2 million, a gain of 435,000 visitors. And still the industry continues to be bullish.
Labor can’t get any tighter
Hawaiʻi’s unemployment rate plunged to 2 percent in December, the lowest rate on records extending back more than four decades. The long expansion has driven employment gains year after year, so that now virtually everyone who wants a job has one.
Income is AWOL
Stagnant income has been a problem throughout much of this expansion. After some progress in 2014–2015, income gains fell off once again. The picture was particularly bleak last year.
Ruminating on risk
The past quarter has both reinforced ongoing trends in Hawaiʻi and introduced important new elements. Robust visitor growth has continued in the face of now record-low unemployment, but with scant evidence that households are seeing improved incomes.
For the full public summary go to the University of Hawaiʻi Economic Research Organization website and for a detailed analysis, subscribe to UHERO’s Forecast Project.