University of Hawaii economists have titled their latest quarterly economic forecast "Recovery Still Around the Corner."
"Things are looking up for the U.S. and global economies," but in Hawaii the prospect is for more tough times, the University of Hawaii Economic Research Organization said today.
Since the last quarterly estimate, UHERO has brightened a bit on three fronts. The numbers remain negative, but not as negative as a few weeks ago:
* Real income is predicted to fall 1 percent, which is better than the 2.7 percent estimated in June. Next year, income will drop, but "only a very small net loss."
* Average consumer prices will fall 0.5 percent. Three months ago, UHERO was forecasting a 0.5 percent increase.
* Japanese tourism was expected to be better than expected because Japanese visitors have recovered somewhat from the their H1N1 flu jitters. Earlier, UHERO had forecast a 13.9 percent drop from already-low head counts.
This news will have more impact on Oahu than on Maui, which relies heavily on West Coast visitors and minimally on those from Japan. Overall visitor arrivals now are forecast to be down 4.4 percent for the year. Earlier, the drop had been expected to be 6.8 percent.
The measure of consumer-price movement is somewhat equivocal, rather like the rises and falls in the yen, which can be good for tourism but bad for buyers of Japanese cars. In the case of deflating consumer prices, the news is good for consumers, especially those with falling incomes.
But it is unwelcome for sellers, since it means they are having to accept less for their goods and services, even if their own costs may not be shrinking.
The most obvious example of deflation is hotel-room rates, where falling prices are luring more visitors who spend less overall.
There is no separate consumer price index for Maui County, and it is measured only twice a year on Oahu.
"Honolulu inflation was nearly nonexistent in the year's first half, primarily because of low energy prices and stable rents," UHERO reported. Since then, energy prices have risen.
Compared to the national economy, "it is harder to find evidence of a turnaround in the Hawaii economy, although we expect recovery to begin by early next year," the report said.
The visitor industry is forecast to lag the reviving overall economy, and UHERO does not expect arrivals to reach 7 million again until 2012. Hotel-occupancy rates, now around 66 percent, are not expected to reach 70 percent through 2011.
Nonfarm jobs fell below 600,000 in the state in August, the lowest number since February 2005. "Job losses will end by early 2010," the report said, but job gains cannot be expected for some time after that.
"Recovery means a return to growth, not a return to business as usual," the report said.
* Harry Eagar can be reached at email@example.com.