The state's newest economic forecast revises downward projections for tourism, personal income, jobs and state gross domestic product, though says there continues to be a few bright spots in the economy.

The newest quarterly outlook shows slippage in major economic measures for the state — tourist arrivals are predicted to decline 10.1 percent this year versus the minus 6.7 percent the state forecast released three months ago. The number of wage and salary jobs are now projected to be unchanged from last year. Three months, ago the forecast was for a 0.2 percent increase.

The report is the latest of forecasts released by economists showing Hawai'i has taken a body blow by a series of shocks including oil prices reaching record prices, the subprime mortgage crisis and industry-specific problems hitting several large Hawai'i employers. During the past three months there too has been the financial crisis on Wall Street that's jarred the global economy and forced a record bailout response in Congress.

More gloomy forecasts are expected today and tomorrow when First Hawaiian Bank and then the University of Hawai'i Economic Organization release their economic prognosis for the state.

"Hawai'i's economy has so far avoided the degree of economic slowdown experienced nationally," said Ted Liu, director of the state Department of Business, Economic Development and Tourism, in a statement released to the media.

"However, the impact of the financial uncertainties can be seen in the slowing off our construction and tourism sectors and will impact the state's economy through next year."

Liu said there are a few places in the economy that are positive, including continued federal and military spending as well as state government's own effort to accelerate building projects at airports, harbors, schools and elsewhere. Inflation is also projected to be lower in the newest forecast.

But the overriding story in the newest forecast is Hawai'i's hard economic slog hasn't gotten better in recent months and that the disheartening economic climate will continue into next year as visitor arrivals fall along with income and jobs.

"DBEDT is forecasting virtually no growth in Hawaii's economy through most of 2009," the forecast said.

"Assuming national growth turns positive around midyear 2009, Hawaii's economy should begin seeing some improvement later in that year and modest growth in 2010."

The report noted that a slowing of the economy had occurred during the July to September quarter and was primarily the result of the worsening national economy and decline of the visitor industry.

It said the average number of civilians who were unemployed rose by almost 58 percent to 29,500 during the quarter and that the third quarter's unemployment rate of 4.4 percent was 1.5 percentage points higher than a year earlier. The slower job growth prompted a revision of job numbers downward for this year and for a decline next year.

Key drivers of Hawai'i's economy are found in the U.S. and Japanese economies, both of which have had their outlooks lowered recently. DBEDT said that That prompted DBEDT's economists to cut their prior forecasts for this year and next. They projected Hawai'i's gross domestic product will grow 0.3 percent this year when adjusted for inflation.

That was 1.6 percentage points less than the prior forecast and lower than the 1.4 percent growth for U.S. gross domestic product as cited by Blue Chip Economic Consensus Forecasts.

Next year DBEDT forecast Hawai'i GDP will be flat with this year, which is better than the 0.4 percent decline forecast for the nation.

Other estimates included in the new forecast:

--Visitor arrivals next year are now projected to fall by 1.9 percent, or more than twice the 0.8 percent previously thought.

--Visitor expenditures will dip 9.5 percent this year and rise by 0.7 percent next.

--Personal income adjusted for inflation will recede by 0.2 percent this year, down from the positive 0.4 percent previously estimated. Next year the income estimate is for a 0.4 percent decline.

--Residents will get a break from inflation as it only increases 4.2 percent this year (4.5 percent was the prior estimate) and advances by 2.6 percent next year.

The forecast also said construction permits, while lower in the first nine months of 2008, are still high by historic levels. DBEDT said continuing military projects and prospects for increasing state construction expenditures will cushion a decline in private activity.

The state said a midyear recovery by the U.S. economy in 2009 should position Hawai'i's economy for a modest recovery in 2010 as visitor arrivals increase and new jobs are created.

The gradual recovery will continue in 2011.