Hawai'i entered a recession in recent months that will stretch well into 2009, with only a weak recovery expected in 2010, according to the latest in a series of forecasts on the state's economic outlook.

The report released by University of Hawai'i Economic Research Organization is the last and gloomiest of economic prognoses published this week. The new projections are mostly lower than those issued by UHERO in a September report.

"From the analysis we've done, Hawai'i's already in recession," said Carl Bonham, UHERO executive director.

"We're predicting things are going to remain bad through the third quarter of next year."

Also this week the state Department of Business, Economic Development and Tourism and First Hawaiian Bank released forecasts showing the state is in an economic slump and that some aspects of the economy will worsen before things get better. The UHERO report is similar in its outlook, though predicts deeper downturns in visitor arrivals, jobs and unemployment next year.

UHERO said prospects for Hawai'i's economy worsened in recent months because of the worldwide financial crisis and a widening global downturn. It is similar to some other forecasts in noting Hawai'i's recovery will be dependent on an upturn in the U.S. economy.

Bonham said UHERO's estimate of a third-quarter 2009 end to a recession here is only that — an estimate that may change depending on twists and turns in the world and U.S. financial situation. Moreover, individual forecasters vary in how deep the downturn may be. For example, Bank of Hawaii's forecast calls for visitor arrivals to decline by 0.2 percent next year, while UHERO sees a 5.7 percent drop.

The UHERO report notes that definitions of what constitutes a recession on the state level vary, but can include large declines in employment, increases in unemployment.

On this basis, Hawai'i had recessions that started in September/October 1981, October 1991, July/August 1993, February 1995 and June 2001.

The same methodology found the recession threshold was crossed in the July-to-September period this year.

"This analysis confirms what many have suspected — that the Hawai'i economy entered a recession in recent months," UHERO's forecast said. "Now the question is, how long it will last."

The forecast suggests a significant recovery won't begin until 2010. The outlook includes:

Visitor arrivals will fall by 10.8 percent this year. Hawai'i had 7.27 million visitors last year; each percentage point decline this year represents roughly 73,700 arrivals.

The biggest decline in vacationers will occur among Mainland tourists. UHERO said their visits will be off by 14.2 percent this year. Japan vacationers will be off by 9.8 percent.

The number of payroll jobs will be unchanged this year this year and by 0.8 percent in 2009. Hawai'i has about 620,000 nonfarm jobs.

The average jobless rate will rise this year to 3.9 percent from 2.7 percent last year. In 2009 and 2010 the rate will be more than twice 2007's average.

Inflation in Honolulu will moderate this year and fall further the next two years.

Personal income adjusted for inflation will decline this year and next.

The report does show a brightening state outlook in 2010, with visitor arrivals rising by 6.6 percent and a return to job growth. Personal income will also show the first gain in three years.

Reach Greg Wiles at gwiles@honoluluadvertiser.com.