Products: Hawaii's Economy
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Global Economic Forecast:
Asia Leads World Recovery
After a deep, synchronized recession, growth is resuming across a broad swath of the global economy. Leading the rebound are the dynamic Asian economies. These countries, which were hit hard by last year's collapse of world trade, have now seen a return to export-led growth, much of it originating from demand within the region. Growth has also returned to the U.S. and Japan, but the depth of the decline, lost household wealth, and lingering credit problems mean that full recovery will take a number of years.
Using the Property Tax to Appropriate Gains from Tourism
This paper describes and evaluates the merits of Kauai County’s use of the property tax to capture rents from tourism and provide property tax relief to local homeowners. Because tourist accommodations are more capital intensive than other real estate, Kauai’s proposal to split the standard uniform rate into two separate rates—one on land and the another higher rate on improvements—results in heavier tax burdens for the tourist industry relative to other sectors of the local economy. We conclude that such an approach works well for Kauai and communities that desire slower and lower density development but may not work as well for others that wish to encourage tourism investment.
Small State, Giant Tax Credit: Hawaii’s Leap into High Technology Development
This paper chronicles the evolution of Hawaii’s high technology tax credits, describes their provisions and the ensuing problems in attempting to ascertain whether or not they have achieved the results desired by lawmakers who passed them, and offers lessons that other states can use when designing their own business investment tax credit programs.
Published: Kato, A., S. LaCroix, J. Mak. 2009. Small State, Giant Tax Credit: Hawaii's Leap into High Technology Development. Pages 641-652 State Tax Notes. Tax Analysts, Falls Church, Virginia.
Hawaii Economic Forecast Update:
Recovery Still Around the Corner
Things are looking up for the U.S. and global economies. Japan returned to growth in the second quarter, and it appears likely that the US will post positive growth for the current quarter. It is harder to find evidence of a turnaround in the Hawai'i economy, although we expect recovery to begin by early next year. A technical recovery will not mean a rapid return to economic health. Because of anticipated weak US and Japanese consumer spending and the drag from continuing State fiscal problems, the local economy will take a number of years to fully recover.
Hawaii Construction Forecast:
No Bottom Yet to Construction Downturn
The U.S. recession is easing, but prospects for a quick Hawai'i construction recovery remain poor. At the national level, expansion is just now getting underway. We expect U.S. output to grow by more than 2% during the current quarter, but job losses will continue into the first part of 2010. And, while overall credit conditions have improved, commercial lending is still being affected by the weak economic outlook and the hangover from past excesses. For Hawai'i, this means that commercial and resort development will continue to suffer for some time. The downturn in residential permitting has actually deepened, and we will not see any marked improvement until home prices bottom out in 2011.
Hawaii Economic Forecast:
State Budget Crisis Threatens Recovery
Two recent developments have caused us to mark down a bit our already weak outlook for the Hawai‘i economy. The H1N1 flu epidemic has worsened prospects for Japanese tourism, which will lead to somewhat larger visitor losses this year. But the bigger concern is fallout from the State fiscal crisis. Government actions to address the growing revenue shortfall will further depress jobs and especially income this year and next, with the risk that recovery could be further delayed.
County Economic Forecast:
Neighbor Islands Bear Brunt of Recession
Hawai‘i’s counties face the most challenging economic environment in many years. The severe U.S. and global recessions will last through much of 2009, and when recovery does begin it is likely to be anemic by historical standards. This means a long and deep downturn for the Hawai‘i visitor industry. Construction activity will continue to decline for the next several years, acting as a further drag on the economy. The downturns in tourism and construction are most severe on the Neighbor Islands, and so these counties will suffer a more severe recession than O‘ahu. Government stimulus will help to support growth, but it will not be sufficient to avoid a long and painful contraction. The spread of the A/H1N1 virus poses a risk that is impossible to quantify at this time.
Hawaii Economic Forecast:
After Sharp Drop, Recovery Will Take Time
The next several years will be difficult ones for Hawai‘i businesses and households. The visitor industry will languish, as the deepest global recession in decades continues to undermine travel demand. Local construction activity will weaken further, because of the unwinding residential cycle, a poor business outlook and persistent problems in national credit markets. Like their counterparts on the mainland, Hawai‘i residents have become more cautious in their spending, which is contributing to local economic weakness. Deteriorating labor market conditions over the next two years will prevent a quick rebound of their purchasing power and confidence. Add in a looming state government fiscal crisis, and the result will be a long and deep Hawai‘i recession.
The Contribution of the University of Hawai‘i at Manoa to Hawai‘i’s Economy in 2007
The University of Hawai‘i at Manoa (UHM) had its beginnings in 1907 as a college of agriculture and mechanical arts. In 1912, the first permanent building was erected in Manoa valley in UHM’s current location. With the establishment of the College of Arts and Sciences in 1920, the College of Hawai‘i became a university. Statehood and the establishment of the University of Hawai‘i as the "state university" marked the beginning of a period of accelerating enrollment that resulted in the formation of a large diverse system. In 1965, the State Legislature created a statewide system of community colleges and placed it within the University of Hawai‘i, and in 1972, the flagship Manoa campus became the University of Hawai‘i at Manoa.
Hawaii Construction Forecast Update:
Global Downturn Hammers Construction
The global credit crisis and deepening recession have materially worsened prospects for the Hawai‘i construction industry. Commercial and resort building are in retreat, hampered by a bleak national outlook and financing constraints. The residential construction downturn will continue as income and wealth losses undermine housing demand. We now expect a deeper ajustment in the local real estate market, although somewhat milder than past Hawai‘i experience and much less severe than the steep contractions in some mainland regions. Government spending initiatives may provide substantial support for the industry in the medium term, but they will provide very little stimulus over the next two years.
The Passenger Vessel Services Act and America’s Cruise Tourism Industry working paper
The Passenger Vessel Services Act (PVSA), a 123-year old cabotage law, attempts to shield U.S. maritime shipping from foreign competition. It also applies to the U.S. cruise ship industry. The PVSA requires foreign cruise ships that carry passengers between U.S. ports to also stop at foreign ports. Norwegian Cruise Line America (NCLA), which operates one U.S. flagged cruise ship in Hawaii, wants the U.S. Customs and Border Protection to require foreign cruise ships offering Hawaii itineraries from the U.S. west coast to spend more time in foreign ports. We analyze the merits of NCLA’s proposal. We argue that rather than making the PVSA even more protectionist, the law should be repealed.
Published: Mak, J. Sheehey, C. and Toriki, S., 2010. The passenger vessel services act and America's cruise tourism industry. Research in Transportation Economics, 26 (1), 18-26.
PBS Hawaii - Island Insights: Focus on Hawaii's Economy
UHERO Executive Director, Carl Bonham joins Howard Dicus, Paul Brewbaker, and Pearl Imada Iboshi on Island Insights
Taxing Timeshare Occupancy
In this paper, we evaluate the manner in which timeshare occupancy is taxed in the State of Hawaii. Our objective is to ascertain how best to design a timeshare occupancy tax that treats all types of visitor accommodations equitably and enhances tourism’s net economic benefit to Hawaii’s residents. In particular, we address two concerns. First, what is the incidence of the timeshare occupancy tax? Second, what is its appropriate tax base? Answers to these two questions inform optimal timeshare taxation policy in Hawaii and elsewhere in the U.S.
PBS Hawaii - Everybody's Business: Energy in Hawaii
UH Manoa economics professor Denise Eby Konan joins Howard to talk about energy prices. This conversation originally aired on December 5, 2008 and was recorded in the PBS Hawaii studio.
PBS Hawaii - Everybody's Business: Health Care and Insurance Issues
Jerry Russo, chair of the UH Manoa Dept. of Economics, meeds with Hower to review health care and insurance issues.