Hawaii, contrast to the period 1980 to 1993,

Hawaii, contrast to the period 1980 to 1993,

Hawaii, with an area of 28,313 sq. km (10,932 sq. mi.), is the 43rd largeststate in the U.

S.; 6.9% of the land is owned by the federal government. Itconsists mainly of the Hawaiian Islands, eight main islands and 124 islets,reefs, and shoals. The major islands in order of size are Hawaii, Maui,Oahu, Kauai, Molokai, Lanai, Nihau, and Kahoolawe.

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Population growth hasincreased by 80,000 persons over the past five years. Demographics show alarge number of Hispanic origin: Asian Hispanics are the most populatedwith white Hispanic and Asian non-Hispanic following. Hawaii’s economy hasbeen long dominated by plantation agriculture and military spending. Asagriculture has declined in importance, the economy has diversified toencompass a large tourist business and a growing manufacturing industry.Hawaii’s economy has changed drastically since statehood. In 1958, defense,sugar, and pineapple were the primary economic activities, accounting for40% of Gross State Product (GSP).

In contrast, visitor-related expendituresstood at just over 4% of Hawaii’s GSP prior to statehood. Today thepositions are reversed; sugar and pineapple constitute about 1% of GSP,defense accounts for just under 11%, while visitor-related spending comesclose to 24% of Hawaii’s GSP.The movement toward a service- and trade-based economy becomes even moreapparent when considering the distribution of Hawaii’s jobs across sectors.The share of the economy’s jobs accounted for by manufacturing andagriculture have declined steadily since 1959 and each currently makes upless than 4% of total jobs in the economy.

At the same time, the shares ofjobs in wholesale and retail trade and in services have risen, standing atabout 23% and 28%, respectively.Since 1991, Hawaii’s economy has suffered from rising rates of unemployment. This stands in marked contrast to the period 1980 to 1993, when the stateenjoyed very low unemployment rates relative to the nation as a whole. Butby 1994 the recession had raised Hawaii’s unemployment rate to the nationalaverage (6.1%) for the first time in 15 years.

In 1995, the state’sunemployment rate improved slightly in the first eleven months of the yearto 5.4 percent, a 0.6 percentage point decline from the first eleven monthsof 1994. Despite the lower unemployment rate, the total number of wage andsalary jobs declined by 0.6 percent during the first eleven months of 1995.This was due in part to a fall in part-time jobs which are often held bypersons who also have primary jobs elsewhere in the economy.

The number ofconstruction jobs declined by more than 7 percent in the same period. Otherindustries–namely, manufacturing, agriculture, transportation,communications/utilities, and finance, insurance, and realestateexperienced declines in the number of jobs as well. Jobs in retailtrade and services, however, increased 2.

2 percent and 0.5 percent,respectively, reflecting an increase in visitor spending since 1994.Following a dismal first quarter due to the Kobe earthquake, there wassteady growth in the tourism sector in 1995 with increases in the number ofvisitor arrivals and hotel room rates. The number of visitor arrivals tothe State increased 3.2 percent during the first eleven months of 1995. Theincrease in the value of the Japanese yen vis-a-vis the U.S.

dollar duringthis period contributed to a rise in eastbound visitors in the second andthird quarter of 1995 by 11.8 percent and 15.4 percent, respectively.

However, in the first eleven months of 1995, the number of westboundvisitors remained flat.This year is the 11th year in a row that the U.S. has experienced reducedspending on national defense.

The continued reduction is due to the declinein superpower tensions and the political disintegration of the Soviet andEast European-block during this decade which have prompted the Congress andAdministration to initiate significant cuts in the level of defenseexpenditures in recent years. However, because of the strategic location ofHawaii in the Pacific this changing military posture has not significantlyaffected Hawaii’s $3.7 billion Federal defense sector.

The constructionindustry continued its decline in the first eleven months of 1995. Thisloss was mainly due to decreasing demand exacerbated by higher interestrates during the first half of 1995, following a 12.4 percent drop in 1994.Another reason is that construction costs rose by 15 percent from 1992 to1995, which is much higher than the consumer inflation rate of 8 percentduring the same period.Agriculture jobs, including self-employed, showed a 6.6 percent decline inthe first eleven months of 1995 from the same period in 1994.

In theearlier part of the year, the agricultural work force fell to its lowestlevel in 21 years. Agriculture accounts for slightly less than 2percent ofjobs in the state.Latest data from the Bureau of Economic Analysis ranked Hawaii 26th amongthe 50 states in terms of growth in personal income between the first andsecond quarters of 1995. During the second quarter of 1995, personal incomewas estimated to be an annualized 29.2 billion dollars, up 4.0 percent atan annual rate from the second quarter of 1994.

The growth in personalincome is mainly attributed to an increase in rents, dividends andinterest, along with transfer payments of 7.6 percent and 7.5 percent inthe second quarter, respectively. The largest component of personal income,wages and salaries, increased by 2.3 percent over the period as compared toonly 1.

0 percent in 1994.The consumer inflation rate, as reflected in the percentage change of theHonolulu Consumer Price Index, increased by 2.1 percent between the firsthalf of 1994 and the first half of 1995. In the second half of 1995, theinflation rate slowed to 0.7 percent as compared to the second half of1994. If the current trend continues, overall inflation for Hawaii in 1995will be slightly lower than 2.

0 percent, the lowest since 1986.DBEDT expects the Honolulu Consumer Price Index to increase about 2.0percent in 1995 and 2.

5 percent in 1996. This is lower than the expectedconsumer price increases of 3.0 to3.5 percent for the nation as a whole in1996, reflecting the relatively slower growth of Hawaii’s economy. RealGross State Product (RGSP) is expected to grow at an annual rate ofapproximately 2.

2% between 1995 and 2000. Average annual growth in thenumber of civilian jobs is projected to rise by 1.8% per year over the nextfive years. Over the same period, the unemployment rate should declinegradually from 5.

5% in 1995 to 5.3% over 1996-2000. Growth of realdisposable income is anticipated to rise to 1% next year and to an averageof 1.2% each year to 2000.Hawaii’s people have seen dramatic changes in the economic structure overthe last generation.

The military and agriculture, the traditional pillarsof the Hawaii economy, have declined and no longer employ the bulk of thelabor force. At the same time, Hawaii’s increasing reliance on serviceindustries, especially tourism, makes them particularly sensitive toexternal economic events. To some extent, the effects of this sensitivityare reflected in the unprecedented long period of low growth in recentyears.

At no time since statehood has Hawaii grown at such low rates for such asustained period. The initial downturn was clearly associated with thecyclical recession on the mainland and eventually in Japan. This cyclicaldownturn was exacerbated by important structural changes in Hawaii’seconomy. While Hawaii cannot ignore and must still address these structuralissues, it appears that it is now rebounding from the cyclical downturn.Fourth quarter economic data for 1995 show that it is entering an economicrecovery and prospects for the medium term are good.

Economic Analysis of HawaiiThesis: As military and agriculture decline, Hawaii’s economy hasdiversifiedto encompass a large tourist business and a growing manufacturing industry.I. HawaiiA. LandB. PopulationC. DemographicsII.

ChangesA. DefenseB. AgricultureC. TourismD. IndustryIII. Labor Force and JobsA. DistributionB.

Decline1. Manufacturing2. AgricultureC. Increase1. Trade2.

ServicesIV. UnemploymentV. TourismVI. DefenseVII. ConstructionVIII. AgricultureIX. IncomeX.

InflationXI. Price and ProductXII. Recovery1.

HTTP://www.hawaii.gov.html, internet.2.”Hawaii,” Microsoft (R) Encarta.

Copyright (c) 1994 MicrosoftCorporation.Copyright (c) 1994. Funk & Wagnall’s Corporation.3. “Hawaii,” World Book Encyclopedia. C1996.

Worldbook, Inc.Chicago, London, Sydney, Toronto.4. Hawaii. Sylvia McNair.

C1990. Childrens Press. Chicago.5. “Hawaii” 1995 Almanac. Microsoft Bookshelf.

C1995.6. Hawaii. Bureau of Economic Analysis. C1996.

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