The state just released a revised economic forecast, predicting that the slump may not be as bad as originally forecast. The improved outlook is due to inflation being more subdued than state economists had anticipated, while Hawai'i's biggest economic stimulus - tourism - is expected to be worse than before and result in increased job losses.

As reported by the Honolulu Advertiser, the Department of Business, Economic Development, and Tourism's new report projects that gross state product adjusted for inflation will decline 1.1 percent this year. That's an improvement from the 1.6 percent decline forecast in their May report.

A report released earlier this month by the U.S. Bureau of Labor Statistics said Honolulu's Consumer Price Index rose a scant 0.3 percent from July 2008 to June 2009. This was the smallest gain in 11 years, and compares with a 4.3 percent gain for all of last year.  The state expects a 3.0 percent decline in the average job count this year. In DBEDT's May report the decline was projected at 2.1 percent.

Visitor spending is expected to decrease by 11.5 percent this year, the new report said. That contrasts with the May report expecting a 7.9 percent decrease. The worsened tourism industry picture is partly a reflection of vacation prices falling and partly due to visitors shortening their trips a bit, on average.

"We do not believe it is prudent to predict an economic recovery yet, and all indications are that any recovery will be gradual," DBEDT Director Ted Liu said in a press statement.  Next year is when the state expects the local economy to stabilize, followed by modest growth in 2011.

Read more statistics in the Honolulu Advertiser article.

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