housing, the economy, and covid-19 - salecore
TRANSCRIPT
Copyright 2020
Paul H. Brewbaker, Ph.D., CBE
Housing, the Economy, and COVID-19Presentation prepared for the
Honolulu Board of REALTORS®
Mahalo: Leeward RegionLivestream via ZOOM
by Paul H. Brewbaker, Ph.D., CBE
TZ Economics, Kailua, Hawaii
March 18, 2020
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COVID-19 in the United States
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COVID-19 cases in the United States by date of illness onset,
January 12, 2020, to March 16, 2020, at 16:00 ET (n = 1,295)
0
20
40
60
80
100
January February March
COVID-19 cases by date of illness onset
*Does not include U.S.-identified cases where the date of illness onset has not yet been reported; excludes cases among
persons repatriated to the United States from Wuhan, China (3) and Japan aboard the Diamond Princes cruise ship (46).
*
Sources: U.S. Centers for Disease Control (https://www.cdc.gov/coronavirus/2019-ncov/cases-updates/cases-in-us.html#epi-curve)
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Cumulative COVID-19 cases in U.S. by date of illness onset, 1/12 – 3/18,
(known date n = 1,295; total known U.S. cases 7,038) vs. WHO U.S. total
*Does not include U.S.-identified cases where the date of illness onset has not yet been reported; excludes cases among
persons repatriated to the United States from Wuhan, China (3) and Japan aboard the Diamond Princes cruise ship (46).
*
Sources: U.S. Centers for Disease Control (https://www.cdc.gov/coronavirus/2019-ncov/cases-updates/cases-in-us.html#epi-curve); World Health Organization (https://www.who.int/emergencies/diseases/novel-coronavirus-
2019/situation-reports)
0
500
1,000
1,500
2,000
2,500
3,000
3,500
Cumulative COVID-19 cases by date of illness onset
January February March
CDC
WHO3,536
World Health Organization
Situation Report March 18,
2020
Epidemic curve of confirmed
COVID-19, by date of report
and WHO region
15,000
10,000
5,000
0
ChinaEurope
Americas
Source: WHO (https://www.who.int/docs/default-
source/coronaviruse/situation-reports/20200318-sitrep-58-
covid-19.pdf?sfvrsn=20876712_2)
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Number of specimens tested for SARS CoV-2 through March 11, 2020
by CDC labs (n = 4,255), U.S. public health laboratories (n = 27,623)†
†Non-respiratory specimens were excluded. For state public health labs, the date represents the date of sample collection, if available, or the date
tested. For CDC labs, the date represents the date specimen was received at CDC. Results reported as of 4:00 pm ET on March 16 were included.
All data are preliminary and may change as more reports are received.
*
Sources: U.S. Centers for Disease Control (https://www.cdc.gov/coronavirus/2019-ncov/cases-updates/cases-in-us.html#epi-curve)
0
1,000
2,000
3,000
4,000
January February March
CDC
Public health laboratories
https://www.vox.com/policy-and-politics/2020/3/13/21178289/confirmed-coronavirus-cases-us-countries-italy-iran-singapore-hong-kong
Source: Covid Tracking Project, Business Insider, The Atlantic, Taiwan CDC (ttps://www.vox.com/policy-and-politics/2020/3/13/21178289/confirmed-coronavirus-cases-us-countries-
italy-iran-singapore-hong-kong)
A snapshot of early
Covid-19 testing
per capita
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Murphy’s Law, meet COVID-19
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+2𝜎
−2𝜎
3,200
2,800
2,400
2,000
2016 2017 2018 2019 2020
Index, 1941-43 = 10 (log scale)
Daily S&P 500 Index closing values through March 17, 2020:
displaced by Trump’s Trade War, now by a novel coronavirus
Sources: S&P Dow Jones Indices LLC, S&P 500 [SP500], from FRED, Federal Reserve Bank of St. Louis (https://fred.stlouisfed.org/series/SP500), daily closing values through March 17, 2020; trend regression on natural
logarithm of daily closing values, April 1, 2016 – November 25, 2017, and two standard-error bandwidth by TZ Economics, projected forward through 2020 as if bad trade policy never happened after the tax cut.
Tax
Cut
Bubble
The China
SyndromeBurst
Trump
Jump
95%
Powell
Put
Tariff
Man 2
Tariff
Man 1
Tariff
Man 3
Hilary
Fade
Post-
Shanghai
Bubble
COVID-19
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Conditional annualized daily volatility of the S&P 500 Index
through March 17, 2020
0.0
0.2
0.4
0.6
0.8
1.0
1.2
1.4
1.0 = “100 percent”
1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 2020
1987
Crash
Lehman
Brothers
Tea
Party
COVID-19
Dot.com
OPEC
Sources: S&P Dow Jones Indices LLC, S&P 500 [SP500], from FRED, Federal Reserve Bank of St. Louis (https://fred.stlouisfed.org/series/SP500), daily closing values through March 17, 2020; conditional annualized standard
deviations of log changes of daily closing values of the S&P 500 Index estimated in a Threshold Autoregressive Conditional Heteroskedasticity (TARCH) model by TZ Economics.
Desert
Storm
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Economists’ expectations for next recession better only one month
ago; Q: “When will the U.S. economy enter the next recession?”
13%
37% 37%
13%
0
10
20
30
40
2020 2021 2022 2023
February 2019 August 2019 February 2020Percent of respondents
Source: National Association for Business Economics (February 24, 2020) (https://files.constantcontact.com/668faa28001/4343463d-1a6b-4fa7-8c4a-8a80fd8d4123.pdf)
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Your mileage may vary: because Hawaii had hit a couple idiosyncratic
headwinds, its real GDP growth lagged the U.S. average twice in 2010s
-4
-2
0
2
4
Quarterly annual percent changes (y-o-y)
2006 2008 2010 2012 2014 2016 2018 2020
Yen depreciation
Kilauea
East Rift
eruption
Tohoku
Seismic
Event
H1N1-A
The Great Recession
Aloha/ATA
shutdowns
Sources: Bureau of Economic Analysis, U.S. Department of Commerce (https://www.bea.gov/data/gdp/gross-domestic-product, https://www.bea.gov/data/gdp/gdp-state); U.S. quarterly data through 2019Q4, Hawaii
quarterly data through 2019Q3 including revisions, year-over-year growth rate calculations by TZE
U.S.
Hawaii
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Oahu visitor arrivals were engaged in the first breakout in 25 years
following years exposed to Japan’s persistent economic stagnation
Monthly, thousands, s.a. (log scale)
550
500
450
400
350
300
2501990 1995 2000 2005 2010 2015 2020
Sources: Hawaii Tourism Authority (https://www.hawaiitourismauthority.org/research/), Hawaii DBEDT (http://dbedt.hawaii.gov/economic/mei/): monthly data estimated through March 2020; seasonal adjustment by TZ
Economics
Desert
Storm
Y2K
9/11
SARS
Aloha
AlohaTohoku
seismic
event
U.S.
recessions
shaded
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.0
.1
.2
.3
.4
.5
0.2 = “20 percent p.a.”
1990 1995 2000 2005 2010 2015 2020
VR
ClampdownH1N1-A
Early
Easter
SARS
9/11
Y2K
Desert
Storm
Conditional monthly annualized volatility of domestic Oahu arrivals:
Oh snap, you picked this moment for a vacation rental clampdown?
Sources: Monthly data through December 2019 from Hawaii Tourism Authority, Hawaii DBEDT (http://dbedt.hawaii.gov/economic/mei), Threshold Autoregressive Conditional Heteroskedasticity (TARCH) estimates of
annualized standard deviation of log changes of seasonally-adjusted monthly visitor arrivals by TZE
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Oahu visitor arrivals, at the tail end of a long run, were gifted entry by
Southwest Airlines, and a lump of coal from Honolulu’s City Council
Monthly, thousands, s.a. (log scale)
560
540
520
500
480
460
440
420
4002015 2016 2017 2018 2019 2020
Vacation
rental
clampdown
COVID-19
Southwest
Airlines
Sources: Hawaii Tourism Authority (https://www.hawaiitourismauthority.org/research/), Hawaii DBEDT (http://dbedt.hawaii.gov/economic/mei/): monthly data estimated through March 2020; seasonal adjustment and
regression by TZ Economics
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Monthly, thousands, s.a. (log scale)
80
70
60
50
40
30
202015 2016 2017 2018 2019 2020
Source: Hawaii Tourism Authority (https://www.hawaiitourismauthority.org/research/monthly-visitor-statistics/); monthly data through December 2019, seasonal adjustment using, nonlinear trend regression through July 2019
by TZE [ ln(VREVOVR3_D11) = −34.2837734267 + 0.0508333271106*t − 1.20633926677e-14*t5 ]; trend growth rate through July 2019 was 20.2 percent p.a. (2.2 percent p.a. for hotel-condo-timeshare visitors)
Through January 2020: monthly Oahu visitor arrivals (staying in a
rental house, private room, or shared room in a private house)
16k
+2𝜎
−2𝜎
28k
Vacation
Rental
Clampdown
August-December 2019 estimates:
Foregone vacation rental visitors −57,731
evaluated at 10 days LOS, $180 pppd: $103.97 million
August 2019 – July 2020 estimates:
Foregone vacation rental visitors −196,118
evaluated at 10 days LOS, $180 pppd: $353.01 million
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0
10
20
30
40
1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 2020
Apt/Hotel, B&B, Condo Hotel,
Hostels, Hotel, Timeshare, Other
≈4X capacity increase / 20 years
Thousand lodging units
Source: Hawaii DBEDT annual Visitor Plant Inventory reports (http://dbedt.hawaii.gov/visitor/visitor-plant/), disaggregation by TZ Economics
Ha
wa
ii Vis
itors
Bu
rea
u d
id n
ot s
urv
ey
Oahu traditional lodging capacity growth ended 34 years ago; capacity
growth since was in vacation rentals subverting exclusionary zoning
Vacation Rental39.010
39.240
35.4193.821
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41.314
36.238
31.580
0
10
20
30
40
1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 2020
Haw
aii V
isito
rs B
ure
au
did
no
t su
rve
y
≈13X capacity increase / 27 years
Neighbor Isle traditional lodging capacity growth ended 28 years ago;
one-quarter now vacation rentals contesting global brands’ oligopoly
Vacation Rental 9.734
Thousand lodging units
Apt/Hotel, B&B, Condo Hotel,
Hostels, Hotel, Timeshare, Other
Source: Hawaii DBEDT annual Visitor Plant Inventory reports (http://dbedt.hawaii.gov/visitor/visitor-plant/), disaggregation by TZ Economics
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Tourism as a channel of transmission of economic impacts
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Monthly, thousands, s.a. (log scale)
240
200
160
120
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
International passengers
(excl. Canada)
International visitor arrivals
H1N1-A
Tohoku
NE Japan
seismic
event
COVID-19
Japan recessions shaded
Hawaii international passenger counts (excluding Canada) help predict
visitor arrivals, monthly estimates based on daily data through March 9
Sources: Monthly arrivals through January 2020, daily passengers through March 9, 2020 (at monthly rates) from Hawaii Tourism Authority and Hawaii DBEDT (http://dbedt.hawaii.gov/economic/mei,
http://dbedt.hawaii.gov/visitor/daily-passenger-counts/), Federal Reserve Bank of St. Louis, OECD-based Recession Indicators for Japan from the Peak through the Period preceding the Trough [JPNRECP]
(https://fred.stlouisfed.org/series/JPNRECP); seasonal adjustment by TZE
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Statewide international visitor arrivals estimates from daily passenger
arrivals data through March 16, 2020: a 35-40 percent drop, so far
Monthly, thousands, s.a. (log scale)
260
240
220
200
180
1602015 2016 2017 2018 2019 2020
Sources: Hawaii Tourism Authority (https://www.hawaiitourismauthority.org/research/), Hawaii DBEDT (http://dbedt.hawaii.gov/economic/mei/): monthly data estimated through March 2020 based on dailiy passenger counts
through March 16, 2020; seasonal adjustment by TZ Economics
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International visitor arrivals’ history for the last thirty years provide
several precedents from which to calibrate the current Sudden Stop
Monthly, thousands, s.a. (log scale)
240
200
160
120
801990 1995 2000 2005 2010 2015 2020
Sources: Hawaii Tourism Authority (https://www.hawaiitourismauthority.org/research/), Hawaii DBEDT (http://dbedt.hawaii.gov/economic/mei/): monthly data estimated through March 2020 based on dailiy passenger counts
through March 16, 2020; seasonal adjustment by TZ Economics
Desert
Storm
Y2K
9/11
SARS H1N1-A
Tohoku
seismic
event
Japan recessions
shaded
COVID-19
Kobe
earthquake
23
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Domestic visitor arrivals have more muted reactions to Black Swan
events (less information asymmetry); COVID-19 could be the winner
Monthly, thousands, s.a. (log scale)
600
500
400
300
2001985 1990 1995 2000 2005 2010 2015 2020
Desert
Storm
Y2K
9/11
COVID-19
UAL
pilots’
strike
Southwest
Sources: Hawaii Tourism Authority (https://www.hawaiitourismauthority.org/research/), Hawaii DBEDT (http://dbedt.hawaii.gov/economic/mei/): monthly data estimated through March 2020 based on dailiy passenger counts
through March 16, 2020; seasonal adjustment by TZ Economics
U.S. recessions shaded
Aloha
Aloha
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Domestic visitor arrivals, elevated by Southwest Airlines’ entry, set up
like a bowling pin by HNL vacation rental crackdown for COVID-19
Monthly, thousands, s.a. (log scale)
640
600
560
520
480
4402014 2015 2016 2017 2018 2019 2020
COVID-19
Southwest
Airlines
Vacation
rental
crackdown
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Oahu housing market reactions
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Looks like a pile-up in the condominium resale market: Oahu months of
inventory remaining at current absorption broke link after Clampdown
Source: Honolulu Board of Realtors, monthly data through January 2020 (https://members.hicentral.com/images/Documents/msr/MSR_Jan2020.pdf), seasonal adjustment by TZ Economics
0
1
2
3
4
Months remaining, seasonally-adjusted
2013 2014 2015 2016 2017 2018 2019 2020
Vacation
Rental
Clampdown
Condominium
Single-family
Correlation January 2013 – July 2019: 0.891118
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Remember: existing home prices on Oahu were already stagnating
before last summer’s vacation rental clampdown; no obvious impacts
Thousand dollars, s.a. (log scale)
800
600
400
2002009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Single-family
Condominium
Vacation
Rental
Clampdown
5% p.a.
4% p.a.
Source: Honolulu Board of Realtors, monthly data through January 2020 (https://members.hicentral.com/images/Documents/msr/MSR_Jan2020.pdf), seasonal adjustment by TZ Economics
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Oahu median existing home sales prices: last two valuation cycles
(bubbles?) in 2010s returned to longer-term, stable appreciation
Source: Honolulu Board of Realtors; monthly median prices, seasonal adjustment by TZE
Thousand dollars, s.a. (log scale)
700
600
500
400
300
200
1001990 1995 2000 2005 2010 2015 2020
U.S. recessions shaded
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FHFA all-transactions index of Oahu housing valuations, adjusted for
inflation, converged to trend during 2010s but slipped after mid-2018
+3𝜎
−3𝜎
2.4%
Index (constant dollars): 2019 = 100 (log scale)
120
100
80
60
40
201980 1985 1990 1995 2000 2005 2010 2015 2020 2025
Source: Federal Housing Finance Agency (https://www.fhfa.gov/DataTools/Downloads/Documents/HPI/HPI_AT_metro.csv), Bureau of Labor Statistics (https://data.bls.gov/cgi-bin/surveymost?r9); quarterly data through
2019Q3, seasonal adjustment, deflation, and trend regression on the stationary component (change in the natural logarithm) of constant-dollar valuations by TZE.
U.S. recessions shaded
100.999.4
75.9
53.9
53.0
42.0
37.5
75.7
48.0
30
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Index (constant dollars): 2019 = 100 (log scale)
110
100
90
80
70
602009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
FHFA all-transactions index of Oahu housing valuations, adjusted for
inflation, converged to trend during 2010s but slipped after mid-2018
Break
100.5 100.9
+3𝜎
2.4%
−3𝜎Trend 1977-2019
Real valuation index
U.S. recession shaded
Source: Federal Housing Finance Agency (https://www.fhfa.gov/DataTools/Downloads/Documents/HPI/HPI_AT_metro.csv), Bureau of Labor Statistics (https://data.bls.gov/cgi-bin/surveymost?r9); quarterly data through
2019Q3, seasonal adjustment, deflation, and trend regression on the stationary component (change in the natural logarithm) of constant-dollar valuations by TZE.
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De-trended real Oahu housing valuations give you the best feel for the
nature of the housing cycle over four decades, absence in late-2010s
-20
-10
0
10
20
Percent of real trend value
1980 1985 1990 1995 2000 2005 2010 2015 2020 2025
U.S. recessions shaded
Inflation
hedging
Japan
Bubble
Sub-prime
Bubble
Smooth
Sailing?
Source: Federal Housing Finance Agency (https://www.fhfa.gov/DataTools/Downloads/Documents/HPI/HPI_AT_metro.csv), Bureau of Labor Statistics (https://data.bls.gov/cgi-bin/surveymost?r9); quarterly data through
2019Q3, seasonal adjustment, deflation, and deviations from projections based on trend regression on the stationary component (change in the natural logarithm) of constant-dollar valuations estimated by TZE.
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Interest rates and monetary policy
33
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0
1
2
3
4
5
2008 2010 2012 2014 2016 2018 2020 2022
Percent
U.S. Treasury yields, FOMC fed funds rate projections reversed paths
from September 2018-2019, long-run “neutral” fed funds rate slipped
Taper
Tantrum
Source: Federal Reserve Board, monthly average constant-maturity yields through August 2019 (https://www.federalreserve.gov/releases/h15/) and FOMC Summary of Economic Projections (September 2019)
(https://www.federalreserve.gov/monetarypolicy/fomcprojtabl20190918.htm) (median long-run rate is 2.5 percent), along with earlier S.E.P. postings in September 2018, December 2018, March 2019, and June 2019).
Trump Tax
Jump Cut30y
10y
U.S. recession shaded
Lehman
Brothers
September 2019 S.E.P.
FOMC fed funds rate
projections (means)
2.8
%2.6%
Sep 2018Dec 2018
March 2019
2y
June 2019
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Fed’s actions over the weekend, this week: take fed funds rate to zero,
restore CP funding facility (CPFF), primary dealer credit facility (PDCF)
0
1
2
3
4
5
Percent
2008 2010 2012 2014 2016 2018 2020 2022
10y
30y
O/N
Source: Federal Reserve Board (https://www.federalreserve.gov/releases/h15/; https://www.federalreserve.gov/datadownload/Choose.aspx?rel=H15)
3y
2y
U.S. recession shaded
Lehman
Brothers
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-3
-2
-1
0
1
2
Percentage points
1980 1985 1990 1995 2000 2005 2010 2015 2020
Spreads between yields on 10-year and 2-year U.S. Treasury Notes
narrowed to near zero; past reliable precursor of incipient recession
Source: Federal Reserve Board, monthly averages through March 2020 (https://www.federalreserve.gov/releases/h15)
U.S. recessions shaded
(10yr minus 2yr)
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U.S. average 30-year fixed rate mortgage rates (+0.7 fees/points)
actually up slightly from record low 3.29% (week ending March 5)
Sources: Freddie Mac, 30-Year Fixed Rate Mortgage Average in the United States (http://www.freddiemac.com/pmms/) and FRED, Federal Reserve Bank of St. Louis; (https://fred.stlouisfed.org/series/MORTGAGE30US).
0
4
8
12
16
Percent
1975 1980 1985 1990 1995 2000 2005 2010 2015 2020
18.63%
3.36%
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10
20
30
40
50
60
1980 1985 1990 1995 2000 2005 2010 2015 2020 2025
Oahu conventional mortgage debt service-to-income ratio, a measure
of housing affordability, currently among the most affordable ever
Sources: Bank of Hawaii, Honolulu Board of Realtors, U.S. Department of Housing and Urban Development, Federal Reserve Bank of St. Louis (https://fred.stlouisfed.org/series/MORTGAGE30US; annual average of
weekly rates); TZE calculations on annual data for single-family homes, 1976-2018 (full-year calculation) and estimate for first half 2019, under conventional mortgage lending assumptions
*Fannie Mae (May 30, 2017) Selling Guide (https://www.fanniemae.com/content/guide/selling/b3/6/02.html)†FHFA (https://www.fhfa.gov/Media/PublicAffairs/Pages/FHFA-Limiting-Fannie-Mae-and-Freddie-MacLoan-Purchases-to-Qualified-Mortgages.aspx)
Not Affordable Debt-to-income
thresholds
45%*
43%†
[3.5]−1
28.57%
Mortgage debt-service to median 4-person family income ratio (percent), Oahu single-family homes
Relatively
Affordable28.5%29.4% 29.96%
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Same as it ever was? Life after the 1918-19 Spanish Flu pandemic, etc.
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Monthly, thousands (staying 2 days or longer), s.a. (log scale)
2.0
1.6
1.21.0
0.8
0.6
0.4
0.21922 1924 1926 1928 1930 1932 1934 1936 1938
Monthly Hawaii visitor arrivals in the 1920-30s—excluding passengers
on ships in transit—exhibited business cycle and jumps just as now
U.S. recessions shaded The Great Depression
Stock
Market
Crash
Maritime
Strikes
Oct. 1936 to
Feb. 1937
Sources: George T. Armitage, Hawaii Tourist Bureau, “Hawaii’s Tourist Business,” Hawaii Territorial Planning Board An Historic Inventory of the Physical, Social and Economic and Industrial Resources of the Territory of
Hawaii (February 8, 1939), p. 317; U.S. Bureau of Labor Statistics "The Maritime Strikes of 1936-37." Monthly Labor Review 44, no. 4 (1937): 813-27. Accessed January 29, 2020 (www.jstor.org/stable/41815101)
Pan-Am Hawaii Clipper
The Roaring Twenties
West Coast
Waterfront
Strike
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Domestic arrivals 6-months before and 6-months after the 9/11 event
(“month 7”), and after that: “is it L-shaped, U-shaped, or V-shaped?”
Thousands, s.a. (log scale)
300
290
280
270
260
250
240
230
220
210
200
190
180
170
160
150
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18
Oahu domesticNeighbor Isle domestic
Sources: Hawaii Tourism Authority, Hawaii DBEDT (http://dbedt.hawaii.gov/economic/mei/), seasonal adjustment using Census X-13 ARIMA filter; seasonally-adjusted data may be downloadable from UHERO and the
DBEDT Data Warehouse. Simply translating month six values to a base period (divide all other months by its values) will index proportionate impacts to that starting point.
Oahu (right scale)
Neighbor Isles
(left scale)
Months
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Thousands, s.a. (log scale)
180
160
140
120
100
80
100
90
80
70
60
50
40
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18
Oahu internationalNeighbor Isle international
International arrivals 6-months before and 6-months after the 9/11 event
(“month 7”), and after that: “is it L-shaped, U-shaped, or V-shaped?”
Sources: Hawaii Tourism Authority, Hawaii DBEDT (http://dbedt.hawaii.gov/economic/mei/), seasonal adjustment using Census X-13 ARIMA filter; seasonally-adjusted data may be downloadable from UHERO and the
DBEDT Data Warehouse. Simply translating month six values to a base period (divide all other months by its values) will index proportionate impacts to that starting point.
Oahu (right scale)
Neighbor Isles
(left scale)
Months
The SARS math (the bottom line):
Foregone visitor days, March-July 2003: 1.0411 mil.
Avg. daily intl. visitor expenditure (2003): $228.22
Foregone intl. tourism receipts (2003$): $237.60 mil.
Ratio of Urban Hawaii CPI-U 2019/2003:
(281.585/184.5) = 1.526 (inflation factor)
Foregone intl. tourism receipts (2019$): $362.58 mil.
Assumption: zero Iraqnaphobia impacts, international
impacts only to Japan, Asia, and Canada (half-weight)
Hawaii international visitor days (millions, s.a., log scale)
-.12
-.08
-.04
.00
.04
.08
.12
1.4
1.3
1.2
1.1
1.0
0.9
0.8
2002 2003 2004 2005
Residual
Actual
Fitted
Dependent Variable: Hawaii international visitor days (millions, s.a.)Method: Least SquaresDate: 02/05/20 Time: 15:02Sample: 2002M06 2005M12Included observations: 43
Variable Coefficient Std. Error t-Statistic Prob.
C 71.04634 30.08115 2.361823 0.0233@TREND -0.092303 0.039725 -2.323561 0.0255
@TREND^4 2.25E-11 9.64E-12 2.330655 0.0250DUMMYSARS -0.208211 0.026497 -7.857914 0.0000
R-squared 0.678778 Mean dependent var 1.201553Adjusted R-squared 0.654069 S.D. dependent var 0.089668S.E. of regression 0.052739 Akaike info criterion -2.958507Sum squared resid 0.108475 Schwarz criterion -2.794675Log likelihood 67.60791 Hannan-Quinn criter. -2.898091F-statistic 27.47049 Durbin-Watson stat 2.236366Prob(F-statistic) 0.000000
1.4
1.3
1.2
1.1
1.0
0.9
0.8
2002 2003 2004 2005
Int. visitor days, s.a. (model)± 2 standard errors
Forecast (model): Intl. visitor days
Actual: International visitor days
Forecast sample: 2002M06 2005M12
Included observations: 43
Root Mean Squared Error 0.050226
Mean Absolute Error 0.039894
Mean Abs. Percent Error 3.389676
Theil Inequality Coefficient 0.020853
Bias Proportion 0.000000
Variance Proportion 0.096563
Covariance Proportion 0.903437
Theil U2 Coefficient 0.569519
Symmetric MAPE 3.376099
Sources: Hawaii DBEDT Monthly Economic Indicators (http://dbedt.hawaii.gov/economic/mei/) and State of Hawaii Data Book
(2004) (http://dbedt.hawaii.gov/economic/databook/db2004/), U.S. BLS (https://data.bls.gov/cgi-bin/surveymost?r9) Slide copyright 2020
Post-9/11 recovery
SARS
SARS episode, March
through July 2003
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International visitor days before and after two famous Black Swans;
SARS associated with $360 million foregone tourism receipts (2019$)
Sources: Monthly data from Hawaii Tourism Authority and Hawaii DBEDT (http://dbedt.hawaii.gov/economic/mei), Federal Reserve Bank of St. Louis, OECD-based Recession Indicators for Japan from the Peak through the
Period preceding the Trough [JPNRECP] (https://fred.stlouisfed.org/series/JPNRECP); seasonal adjustment by and polynomial regression estimates by TZE
Monthly, million days, s.a. (log scale)
1.6
1.4
1.2
1.0
0.81997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
SARS
9/11
Japan recessions shaded
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Hawaii real General Fund tax revenues now are headed for Sudden Stop
of a magnitude at least as large as experienced several times before
Quarterly, million constant 2019$, s.a. (logs)
2,000
1,600
1,200
800
4001970 1975 1980 1985 1990 1995 2000 2005 2010 2015 2020
Reagan
Reagan
Waihee
WaiheeCayetano
Lingle
U.S. recessions shaded
Sources: Quarterly data from Hawaii Department of Taxation and Hawaii DBEDT (http://dbedt.hawaii.gov/economic/mei), U.S. Bureau of Labor Statistics (https://data.bls.gov/cgi-bin/surveymost?r9); seasonal adjustment,
deflation, and regression estimate on the stationary component of real General Fund revenues by TZE
Lehman
Brothers
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Hawaii real General Fund tax revenues and post-Great Recession
trajectory through calendar 2019: set up like a bowling pin?
Sources: Quarterly data from Hawaii Department of Taxation and Hawaii DBEDT (http://dbedt.hawaii.gov/economic/mei), U.S. Bureau of Labor Statistics (https://data.bls.gov/cgi-bin/surveymost?r9); seasonal adjustment,
deflation, and regression estimate on the stationary component of real General Fund revenues by TZE
Quarterly, million constant 2019$, s.a. (log scale)
2,000
1,600
1,200
8002006 2008 2010 2012 2014 2016 2018 2020
Lingle
trick (2)
The Great
Recession
(U.S.)
Lingle
trick (1)
Abercrombie fade“In Hawaii, every
year is a record year”
H1N1-A
COVID-19
(TBD)
46
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Hawaii real General Fund revenues, seasonally adjusted, indexed to
“Quarter 2 = 100 (in parentheses)” and six episodes of “compression”
Sources: Quarterly data from Hawaii Department of Taxation and Hawaii DBEDT (http://dbedt.hawaii.gov/economic/mei), U.S. Bureau of Labor Statistics (https://data.bls.gov/cgi-bin/surveymost?r9); seasonal adjustment,
deflation, and regression estimate on the stationary component of real General Fund revenues by TZE
80
85
90
95
100
105
110
1 2 3 4 5 6 7 8 9 10
Abercrombie (2012Q3)
80
85
90
95
100
105
110
1 2 3 4 5 6 7 8 9 10
Dot.com recession (2001Q1)
80
85
90
95
100
105
110
1 2 3 4 5 6 7 8 9 10
Double-Dip recession (first; 1980Q1)
80
85
90
95
100
105
110
1 2 3 4 5 6 7 8 9 10
Gulf War (1991Q1)
80
85
90
95
100
105
110
1 2 3 4 5 6 7 8 9 10
SARS + Iraqnaphobia (2002Q4)
80
85
90
95
100
105
110
1 2 3 4 5 6 8 9 10
Great Recession (2008Q1)
Desert
Storm
9/11
SARS Lehman
Brothers
Reagan
tax cut
Lingle
trick
Ige Primary
80.1
H1N1-A
95.993.4
89.3 89.091.9
47
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Slide copyright 2019
Pau