1. Hawai‘i Outlook Byron Gangnes, Carl Bonham April 15, 2003
UHERO Hawaii Outlook, April 15, 2003
Hawai‘i Outlook Byron Gangnes, Carl Bonham April 15, 2003
Copyright UHERO All rights reserved.
Copyright UHERO 2003

2. Tourism Struggle Won’t Derail Economy
UHERO Hawaii Outlook, April 15, 2003
Tourism Struggle Won’t Derail Economy
War and SARS have created tourism setback
Japan side will take quite a while to recover
But Hawaii economy will continue to grow
Moderately strong income growth and now a bona fide job market recovery
Uneven performance by sector
Big risks
UHERO Hawaii Outlook, April 15, 2003
Copyright UHERO 2003
Copyright UHERO 2003

3. Visitor Market Not Quite Recovered Before War Fears
UHERO Hawaii Outlook, April 15, 2003
Visitor Market Not Quite Recovered Before War Fears
02q4 Total arrivals down 6% from 00q4.
Feb 2003 US arrivals off just 5%,
Japanese arrivals up 9% (but still dowen 20% from 2001 levels) – down 30% recently
UHERO Hawaii Outlook, April 15, 2003
Copyright UHERO 2003
Copyright UHERO 2003

4. Job Market Recovery is Here
UHERO Hawaii Outlook, April 15, 2003
Job Market Recovery is Here
No of filled jobs hit an all-time high in Dec.
Significant employment growth has occurred in past couple months—Jan and Feb up 3% from 2002.
Urate fell to 3% in February, lowest in more than a decade
UHERO Hawaii Outlook, April 15, 2003
Copyright UHERO 2003
Copyright UHERO 2003

5. Job Picture Uneven Percent Change in Jobs Year over Year
UHERO Hawaii Outlook, April 15, 2003
Job Picture Uneven
Percent Change in Jobs Year over Year
Oct-Dec Average
Apr-June 2002 Average
Jan-Feb 2003 Average
Total Non-Ag. Jobs
-1.7%
-0.5%
3.1%
Construction
-4.3
3.9
8.9
Profess, Business
1.5
3.0
5.9
Health Care
2.8
1.9
3.2
Accommod., Food
-5.9
-3.0
3.1
Telecomm
-6.1
-9.6
-4.8
Government
1.7
3.7
Air transportation: -8.9, -10.9, 4.0
Telecomm: -6.1, -9.6, -4.8
Information
UHERO Hawaii Outlook, April 15, 2003
Copyright UHERO 2003
Copyright UHERO 2003

6. Robust Income Growth UHERO Hawaii Outlook, April 15, 2003
Income growth generally in same sectors showing job growth (low interest rate sectors: fin svcs, construction; state & local gov; drops in transport, communi, utils, hotels)
Fourth quarter income numbers due out next week
UHERO Hawaii Outlook, April 15, 2003
Copyright UHERO 2003
Copyright UHERO 2003

7. Hot Home Resales UHERO Hawaii Outlook, April 15, 2003
March: Oahu condo sales up 48%, condo price up 23%
SF home sales up 7.2%, prices up 17.1%
AND PERMITS ARE STILL WAY UP (31% in 4th qtr)
UHERO Hawaii Outlook, April 15, 2003
Copyright UHERO 2003
Copyright UHERO 2003

8. Looking Forward: The External Environment
UHERO Hawaii Outlook, April 15, 2003
Looking Forward: The External Environment
US economy has faltered
War jitters reinforced weak consumer confidence, profitability, labor market
Expect gradual strengthening now that war uncertainty gone, but no snap back
Japanese economy still struggling to grow
Has expanded for the past year
Business outlook still negative and consumer sentiment has worsened.
Deflation and underlying structural problems persist.
Expect further muddling on…
US: RGDP last year was 2.4% higher than in 2001 (considerable quarter-to-quarter volatility)
Japan output has been growing since 1st qtr of 2002, but much is climb back from recession levels.
For 2002 as a whole, RGDP up just 0.3%
UHERO Hawaii Outlook, April 15, 2003
Copyright UHERO 2003
Copyright UHERO 2003

9. Global Economy No Support UHERO/LINK Fall Forecast
UHERO Hawaii Outlook, April 15, 2003
Global Economy No Support UHERO/LINK Fall Forecast
UHERO 4/03; EU is Economist 4/19/03
UHERO Hawaii Outlook, April 15, 2003
Copyright UHERO 2003
Copyright UHERO 2003

10. UHERO Spring Forecast Another weak year for Hawaii tourism
UHERO Hawaii Outlook, April 15, 2003
UHERO Spring Forecast
Another weak year for Hawaii tourism
Job market’s newfound strength will continue, as will moderate income growth
Service areas, health, finance, construction will lead
Some income cooling in 2004.
Inflation will pick up, only a little
UHERO Hawaii Outlook, April 15, 2003
Copyright UHERO 2003
Copyright UHERO 2003

11. Arrivals will be weak US vis. will rise 1.6% JA vis. will fall 8.6%
UHERO Hawaii Outlook, April 15, 2003
Arrivals will be weak
US vis. will rise 1.6%
US arrivals have been running about even with last year; JA down 30%
Recent NW and JAL announced lift reductions seem to assure that this will continue into the Spring
US: 1.6% in 2003, 4.8% in 2004
JA: -8.6% in 2003, 25.5% in 2004
Total arrivals: -1.3 in 2003 and 9.8 in 2004
JA vis. will fall 8.6%
UHERO Hawaii Outlook, April 15, 2003
Copyright UHERO 2003
Copyright UHERO 2003

12. Job Growth Will Continue
UHERO Hawaii Outlook, April 15, 2003
Job Growth Will Continue
Payroll jobs up 2.3% in 2003 and 2.2% in 2004
Construction jobs up another 10% this year
Employment growth will be even higher because rebound has just occurred: 3.4% in 2003
UHERO Hawaii Outlook, April 15, 2003
Copyright UHERO 2003
Copyright UHERO 2003

13. And So Will Income Growth
UHERO Hawaii Outlook, April 15, 2003
Copyright UHERO 2003

14. Inflation Will Rise a Little
UHERO Hawaii Outlook, April 15, 2003
Copyright UHERO 2003

15. Summary and Risks
More of the “disconnect” between tourism and the broader economy.
Aggregate strength will hide weakness in some sectors, regions
More than normal uncertainty about the external environment
Security situation, illness, and economy
A mixed view: optimistic about local economic strength but nervous about external dangers.
UHERO Hawaii Outlook, April 15, 2003
Copyright UHERO 2003

16. Hawai‘i Outlook Byron Gangnes, Carl Bonham April 15, 2003
UHERO Hawaii Outlook, April 15, 2003
Hawai‘i Outlook Byron Gangnes, Carl Bonham April 15, 2003
Copyright UHERO All rights reserved.
Copyright UHERO 2003