forecast of the University of Hawai’i Economic Research Organization
The University of Hawaii Economic Research Organization (UHERO) collects and analyses economic data for the State of Hawaii. The following is their latest forecast on March 26, 2010.
Hawaii’s economic recovery has begun. Employment is stabilizing, and many sectors will begin to add modest numbers of jobs as the year progresses. Visitor arrivals and spending will continue to firm along with economic conditions in our major tourism markets. Private construction is bottoming out, and the sector will begin to see more benefit from Federal and State spending programs. While growth is resuming, the pace of recovery will be slow, constrained by tepid U.S. consumer spending and the drag from the State and local fiscal conditions. As a result, unemployment will recede only gradually from current high levels.
Visitor industry in slump; slight increase in arrivals
• While the visitor industry remains in a deep slump, arrivals numbers edged up slightly over the course of 2009 and visitor spending stabilized by year end. With a mild recovery underway across the globe and more airlift planned, we expect a 2.9% gain in arrivals this year. International markets will be relatively stronger than the domestic market. We continue to expect a very attenuated recovery over the next several years. Discounting will continue to be the norm, continuing to exert downward pressure on profits.
• Quarterly UHERO forecast reports now include forecast figures for major construction industry indicators. The sector contracted sharply in 2009, but the pace of job losses had slowed by year end and building permits flattened out. Stirrings of private sector recovery and the short-term impulse from government contracts will lead to net hiring in coming months. Overall construction spending will be 17% lower this year than in 2009, but will rise more than 4% in 2011.
• Job losses last year were severe. The stabilization of recent months sets the stage for a resumption of modest job growth in 2010. Some sectors have already seen an uptick in jobs in the final quarter of 2009; most others will begin to add jobs during the first or second quarter of this year. Because of low job counts at the end of 2009, annual figures for 2010 will still show a net decline, masking these early gains.
• The private sector job turnaround does not mean a quick rebound from the steep losses incurred over the past two years. And additional public sector job losses are likely. The aggregate non-farm job count will show a small 0.7% net loss for 2010 as a whole, and we see only a 0.9% gain in 2011. This pace of job creation will leave the unemployment rate high for an extended time period. We expect statewide unemployment to average 6.9% this year, edging down to 6.4% in 2011.
• As we had anticipated last March, Honolulu inflation decelerated to just half a percent last year, with lower oil prices and moderating shelter costs causing a sharp cooling compared with 2008. Because there will be considerable slack in the local economy for the next several years, we expect relatively low inflation to be the norm in the Islands in coming years. After energy costs cause inflation to tick up to 1.9% this year, the Honolulu CPI will show just 1.1% inflation in 2011.
• Real personal income has not seen the same sharp drop as jobs, partly because of the surge in unemployment compensation but also because labor and proprietor income did not fall dramatically. We expect income to be flat in 2010. These are very restrained rates of income growth compared with the roughly 4% average during the 2004-2005 period.
• This report marks the first time we are releasing UHERO forecasts for Hawaii real Gross Domestic Product (GDP). Using a somewhat different methodology than that of the Federal government, UHERO estimates that Hawaii real GDP was down 0.4% in 2009 after contracting 1.3% in 2008. Real GDP will fall a slight 0.2% in 2010, before expanding by roughly 0.5% in 2011.
• While the past year has brought the anticipated business cycle turning point, there have been no developments that would warrant a substantially stronger forecast path. World growth appears sufficiently strong to support only a slow pace of Hawaii recovery for now, and there is a downside risk that premature fiscal contraction in the U.S. and Europe could further weaken global economic conditions. The biggest downside risk for Hawaii is the State budget crisis, where we are only now feeling the full impact of job losses and furloughs/ pay cuts. Luckily, the revenue picture already appears healthier than what is reflected in the Council on Revenues projections, and so the drag from State and local government will ease as the recovery progresses, so the drag from State and local government will ease as the recovery progresses.
Judge orders HTH/Pacific Beach Hotel to obey law
HTH must abide by the NLRB order to rehire five fired workers and bargain with the ILWU on a contract for workers of the Pacific Beach Hotel in Waikiki.
The National Labor Relations Board (NLRB) sought the court injunction when HTH officers continued to defy the law. Attorneys for the Honolulu NLRB Office argued that the hotel’s “discharge of leading union activists and bargaining committee members has conveyed to their employees that the Union is powerless to effectively represent them, and that the government is powerless to restrain such conduct.”
Judge orders HTH Corp. to comply with NLRB
On March 8, 2010, Federal District Court Judge J. Michael Seabright ordered the company to comply with the NLRB’s order. HTH has appealed the NLRB’s actions, but Judge Seabright concluded it was unlikely the appeal would be upheld.
The court injunction requires HTH to:
1. Read the judge’s order to all employees in the presence of an NLRB agent;
2. Reinstate fired negotiating committee members Ruben Bumanglag, Darryl Miyashiro, Virgie Recaido, Virbina Revamonte, and Rhandy Villanueva.
3. Recognize the ILWU as the union representing their workers.
4. Immediately resume negotiations and honor all the agreements reached earlier with the union. 5. Restore conditions changed by the company without negotiating with the ILWU. Under the court order the ILWU has the right to decide what changes to keep or remove.
On April 1, ILWU Oahu Division Director Dave Mori met with HTH Vice President Mitch Minicola. However, Minicola continues to believe the company will win its appeal.
The company has sent letters to the fired negotiating committee members workers, offering to rehire them.
The ILWU is holding membership meetings with the Pacific Beach Hotel workers and will request meetings with the company to resume collective bargaining.
Japanese supporters of the boycott have been meeting regularly in Japan and will be informed of the latest news at their next meeting on April 15.
The international boycott of the hotel will remain in place until a union contract is negotiated and approved by the hotel’s workers.
Hawaii Tourism Careers website offers help for workers
Tourism is Hawaii’s number one industry. Nearly 75% of jobs in Hawaii are directly or indirectly related to the tourism industry.
Hawaii attracts visitors with its beautiful beaches, warm climate, and unique culture, but many other destinations have become increasingly competitive. The question: Why should a visitor come to Hawaii when there are other places to visit?
The answer is: The aloha and skills of Hawaii’s workforce that meet and exceed expectations of visitors and encourage them to return.
The tourism industry is continually seeking to recruit new workers into the industry as well as encourage incumbent workers to move up the career ladder. One tool available to the workforce is a user-friendly online website called Hawaii Tourism Careers:hitourismcareers.org. The website is a “one-stop shop” for those interested in finding a career or pursuing additional education or training in the industry.
Hawaii Tourism Careers website offers a comprehensive list of tourism-related degree and certification programs in the state and a growing list of career options as well as short video-clips highlighting individuals in the industry who share how they have used training and education. The website also features an “Announcements” section for up-to-date information on upcoming application deadlines, events, and new job postings.
If you’re interested in a career in tourism, or would like to upgrade your career options as a worker currently in the industry, please visit http://hihtourismcareers.org.
