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Products: Hawaii's Economy

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Impact of Population Aging on Japanese International Travel to 2025

In this article, the authors forecast Japanese international travel to 2025. In addition to the usual economic variables, their model also captures both population aging and birth cohort effects on Japanese travel abroad. They predict the number of future Japanese overseas trips for males and females separately by 5-year age groups and in 5-year increments and conclude that the Japanese will continue to travel abroad in increasing numbers but that population aging will dramatically slow the rate of growth of future Japanese overseas travel. Although the number of overseas trips taken by “seniors” is predicted to increase sharply, the authors foresee fewer trips taken by the Japanese in the 20s and early 30s age groups. Finally, they examine the responses of the industry and the public sector in Japan to implications of a rapidly aging population on future international travel.

Published:  Mak, J., Carlile, L. and Dai, S., 2005.  Impact of population aging on Japanese international travel to 2025.  Journal of Travel Research, 44 (2), 151-162.

Construction Forecast Update:
Tremendous Strength as Cycle Peak Approaches

This forecast update sees continued growth in the seven-year construction cycle. As affordability declines, costs rise, and the macroeconomic environment becomes less supportive, we expect construction activity to approach its cyclical peak over the next several years.

forecast Summary

Hawaii Economic Forecast Update:
Growth On Track, But Oil Risks Real

There was some slowing of visitor arrivals growth in the second quarter, but the industry remains buoyant. Residential construction and allied sectors are seeing exceptional job and income gains. Aggregate real (inflationadjusted) income growth continues to surprise, leading us to upgrade once again our income forecast for 2005. At the same time, we may now be seeing early signs of the gradual slowing that we expect to occur over the next several years. Inflation in Hawai‘i has probably not yet peaked, and the continuing surge in energy prices raises the risk of a more pronounced slowdown for the local economy.

forecast Summary

Tourism Demand and Output in the U.S. Tourism Satellite Accounts: 1998-2003

The Bureau of Economic Analysis’s (BEA) latest estimates of the U.S. travel and tourism satellite accounts for 1998-2003 do not account for changes in the prices of travel goods and services. This brief article estimates real travel and tourism output and demand by using a travel price index computed by the Travel Industry Association of America. The article shows that after accounting for price changes, U.S. tourism output and demand in 2003 did not surpass their pre-2001 peaks, as was suggested by the BEA.

Published: Mak, J., 2005.  Tourism demand and output in the U.S. Tourism Satellite Accounts: 1998-2003.  Journal of Travel Research, 44 (1), 4-5.

County Economic Forecast:
Counties Share Strength and Concerns

The robust outlook for the state economy is shared to varying degrees by each of the four counties. The county economies will all experience healthy growth in jobs and income this year, followed by gradual deceleration in the face of very tight labor markets and other capacity constraints.

forecast Summary

Hawaii Economic Forecast Update:
2005 Growth Revised Upward

UHERO’s Hawai‘i forecast for 2005 has been revised upward. This reflects newly-available data for the fourth quarter of 2004 and the first quarter of 2005, as well as upward revisions by the U.S. Bureau of Economic Analysis to their 2004 state income figures. As a result, visitor arrivals, employment and income growth are now expected to be a bit stronger than the figures we reported in our March Annual Hawai‘i Forecast report. We continue to expect gradual slowing of the economy as capacity constraints begin to bite.

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Annual Hawaii Construction Forecast:
The Cycle is Alive and Well

From its trough in the late 90s Hawai‘i construction activity has grown for seven years. This report predicts that growth will continue, resulting in the longest uninterrupted expansion since the 1960s. Forty years ago, the impetus of newly-achieved Statehood and a dramatic decade of in-migration set the tone for Hawaii’s growth for the next half century. More modest growth in construction activity during the current expansion, along with uneven participation across residential, nonresidential, and public sector construction, has set the stage for a more prolonged expansion than in prior cycles. Still, the investment cycle is alive and well. The UHERO Annual Construction Forecast predicts continued growth and discusses the probability of a cyclical turning point further in the future.

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Annual Hawaii Economic Forecast:
Economy Poised for Another Banner Year

Hawai‘i is set for a continuation of last year’s robust growth. 2004 was a great year for the tourism industry; this year should be even better. Construction industry strength continues, even if the residential boom may be peaking. Job and income growth accelerated in the second half of last year, and further gains are likely in 2005, with some deceleration as we head into 2006.

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Global Economic Forecast:
World Outlook Good, But Oil and Deficits Are Worries

The global expansion is running up against the biggest energy price increases in many years. While nothing like 1970s stagflation is expected, high oil prices have slowed the economy moderately. The global business cycle will peak this year, but with healthy growth continuing in 2005. Unlike past business cycle expansions, China has joined the U.S. as an important engine for global growth.

forecast Summary

Tourism and the Economy, Understanding the Economics of Tourism


Tourism and the Economy, Understanding the Economics of Tourism, James Mak, (Honolulu: University of Hawai‘i Press, 2004)


Hawai'i Economic Forecast Update:
Robust Growth and Inflation Will Continue in 2005

Hawai'i's economic prospects continue to look good. Both job and real income growth will finish the year with greater than 2% gains, and there is plenty of momentum heading into 2005. The Japanese visitor recovery has been a bit more attenuated than we expected a year ago, but U.S. mainland visitors have taken up any slack. While income growth in construction has been weaker than expected in the year's first half, we expect the industry to be a substantial support for growth over the next several years. Persistent high energy prices have taken a bit off performance this year and will continue to act as a drag on the economy. Over the next two years the economy will remain healthy, with a slowing of job growth as the expansion runs up against capacity constraints and a slower external environment.

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Identifying Long-run Cointegrating Relations: An Application to the Hawaii Tourism Model

Abstract Cointegration analysis has gradually appeared in the empirical tourism literature. However, the focus has been exclusively on the demand side, neglecting supply influences and risking endogeneity bias. One reason for this may be the difficulty identifying structural relationships in a system setting. We estimate a demand-supply model of Hawaii tourism using a theory-directed sequential reduction methodology suggested by Hall, Henry, and Greenslade (2002). The resulting model illustrates the viability of such an approach as well its challenges.

Published: “Modeling Tourism: A fully identified VECM approach”, with Byron Gangnes and Ting Zhou, International Journal of Forecasting, Vol. 25, 2009, 531-49.

working paper

Annual Hawaii Construction Forecast:
Moderate But Stable Growth Ahead

Construction in Hawai'i is poised to continue growing for the next several years at a moderate pace. The forecast for 6.2 percent growth in contracting receipts this year continues the pattern of slow but sure expansion. Military projects will "step up" the construction growth trajectory to a higher level. As a result, the current construction cycle is looking more sustainable than the late 1980s cycle.

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Hawai'i Economic Forecast Update:
Tourism Adds to Hawai'i Expansion

Hawai'i 's economic expansion is now mature. Tourism has joined construction and the service sectors to create broad-based economic strength. Our outlook sees continued strong growth for the next two years, but also an evolution away from residential housing as a key engine for growth. Constraints to growth have once again become apparent.

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Hawai'i Economic Forecast:
Expansion Remains Solid

The Hawaii economy continues to grow strongly. A hot housing market and associated construction spending support expansion in jobs and income, despite a less-than-complete recovery the Japanese tourism market. Plans for military spending will provide support for the construction industry over the next several years. Together with an improving external environment, these factors promise continued strong growth.

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