The Maui News
Declining investment due to increasing interest rates and inflation is driving down Hawaii’s expected economic growth in the coming months, the state Department of Business, Economic Development and Tourism announced.
Hawaii’s economy is now projected to grow at 2.6 percent in 2022 and 1.7 percent in 2023, both lower than the projections made in the previous quarter, DBEDT said as it released its third quarter 2022 Statistical and Economic Report last week.
Locally, tourism has continued to recover. During the first seven months of 2022, 5.4 million visitors came to Hawaii, an 86.8 percent recovery from the same period in 2019.
Through July, visitor spending totaled $11.2 billion, 5.8 percent higher than in the same period in 2019.
The labor market is also performing well overall, with unemployment at 4.2 percent seasonally adjusted and 3.7 percent not seasonally adjusted through the first seven months of 2022.
State tax collections are also on the rise — during the first seven months of 2022, state general fund tax revenue reached $6 billion, 35.1 percent growth from the same period in 2019. The increase in tax revenues was partially due to the higher inflation rate and partially due to economic growth, DBEDT said.
Construction activity and home sales, meanwhile, have been declining, with 11,914 homes sold statewide during the first half of 2022, a 5.5 percent decrease from the same period in 2021. Of the homes sold during first half of 2022, 8,833 units or 74.1 percent were sold to local buyers and 3,801 units or 25.9 percent were sold to out-of-state buyers.
Going forward, DBEDT is projecting visitor arrivals to be 9.2 million in 2022, increasing to 9.8 million in 2023. Visitor spending is projected to be $19.1 billion in 2022, which is more than previously projected, due to the higher than expected average visitor daily spending.
The department also expects non-agricultural payroll jobs to increase by 4.2 percent in 2022, lower than previously projected due to the slowing down in construction, and by 3.2 percent in 2023.
During the pandemic, personal income surged due to government transfers related to unemployment insurance payments and other CARES Act funds. As government support was reduced in 2021, personal income is expected to decrease in 2022 by 0.9 percent, and then grow between 2.5 and 3.0 percent for the following years until 2025.
In 2023 Hawaii is expected to exceed $100 billion in GDP for the first time ever.
To view the full report, visit dbedt.hawaii.gov/economic/qser.
