DBEDT report lowers projection for 2024 growth rate

The Maui News

The state has lowered its growth rate projection for 2024, from 1.5 percent down to 1.3 percent, the state Department of Business, Economic Development and Tourism reported on Monday.

DBEDT released its fourth quarter 2023 Statistical and Economic Report, which revised the economic growth projections as measured by the growth of real gross domestic product (GDP). In the previous quarter, growth projection for 2024 was 1.5 percent.

DBEDT said that the decrease in growth expectations for next year is "mainly due to the projected global economic slowdown."

The DBEDT said the Aug. 8 Maui wildfires have had a significant impact on the state's economy, which impacts are most pronounced for Maui County.

Between August and October, visitor arrivals by air to Maui County decreased 51.4 percent compared to the same period in 2022.

But visitor arrivals on other major islands increased to offset most of the decreases on Maui, according to a news release.

During the August to October period, visitor arrivals on Oahu increased 12.7 percent; on Kauai it increased 6.5 percent and on Hawaii island it increased 1.9 percent. These increases offset most of the decrease in Maui County, which translated to a 6.2 percent decline in statewide total visitor arrivals during the three-month period.

Spending by visitors by air to the state between August and October, was down 7 percent compared to the same three months in 2022. Spending by visitors by air in Maui County was down 41.4 percent during the period.

During August to October, state general excise tax collection decreased 1.7 percent from the same period in 2022.

The DBEDT said the job market performed better during the three months after the Maui wildfires, mainly due to the increase in visitors in other counties and the recovery of other industry sectors.

But in Maui County, the number of unemployed persons (not seasonally adjusted) increased by 87.1 percent for the period of August to October, compared to the same period in 2022.

Maui County's monthly unemployment rate (not seasonally adjusted) in September was 8.3 percent, the highest it has been since June 2021. Maui County's unemployment rate (not seasonally adjusted) in October was lower at 7.1 percent.

The near-term outlook for construction is favorable, the DBEDT said. In the first 10 months of 2023, the average level of construction jobs increased 2.4 percent over the same period of 2022.

Several large construction projects were approved across the state during the November 2022 to October period.

Among the projects approved for Maui are the Kuihelani Solar + Storage Project ($26.3 million), Maui Bay Villas ($76.2 million), Grand Wailea ($36.3 million), a new hotel planned for the old Maui Palms site in Kahului ($34.8 million), and Kapalua Bay Villas ($32.2 million).

While the state continues to recover, more residents may decide to move out of state. Hawaii's declining population continues to be a concern, the DBEDT said.

Labor force growth slowed over the last three quarters of 2023 and began to decrease in the third quarter. The shortage of labor remains a challenge for Hawaii's economy.

Although it appears that the Federal Reserve may not increase rates further, interest rates and mortgage rates may remain high for some time, according to the news release. This will cause sales in the real estate market to remain low. The number of home sales in the first nine months of 2023 decreased by 32.1 percent compared to the same period of 2022.

Bankruptcy filings continue to increase. In the first three quarters of 2023, bankruptcy filings increased by 9.8 percent compared to the same period in 2023.

DBEDT Director James Kunane Tokioka said: "The Maui wildfires have had clear impacts on our state's economy. DBEDT continues to work with federal, state, and county agencies as well as private organizations, with an emphasis on recovery and rebuilding efforts to support the affected residents on Maui. We encourage everyone to support our local businesses and communities, especially during this holiday season."

Tokioka added that while visitor arrivals from the U.S. mainland continue weakening, the state expects international arrivals will pick up in 2024. "During my recent visit to Japan with Gov. Josh Green, we were encouraged by leaders in both the government and private sectors that travel to Hawaii will increase in the near future," Tokioka said.

The full report is available at: dbedt.hawaii.gov/economic/qser/.