UHERO forecasts recession, effects dependent on tourism
The University of Hawaiʻi Economic Research Office predicts a mild recession in 2023. How that’ll impact Hawaiʻi hinges on the state’s tourism numbers.
The state's economic future has worsened over the last year as a result of persistent inflation and interest rate hikes, according to UHERO's third-quarter report released Thursday.
“The main story for Hawaiʻi is just that we're out of sync with the rest of the country. It's just, you know, there's kind of a urban myth in Hawaiʻi that when the US economy goes one direction, six months later, Hawaiʻi follows,” UHERO economist Carl Bonham said. “That's not true.”
Bonham said that in two of the last four recessions, the state's economy actually grew while the U.S. economy shrunk. Even now, the state’s inflation rates are about 2% behind the national average.
“There is a possibility that Hawaiʻi could get through this without much of a downturn, and that's what our forecast says,” he told reporters Thursday. “It's mostly because we're still in recovery mode, we still have a ways to go.”
UHERO predicts that international visitor spending will offset the decline in U.S. visitor arrivals and spending, keeping the tourism market level. The state will also benefit from federal dollars for infrastructure or Department of Defense contract bills.
But neighbor island economies that rely on domestic travel may not see much of that boost.
“The negative impacts of the U.S. recession are going to be felt most acutely on Maui and Kauaʻi, on the two markets that are predominantly U.S. markets,” he said. “In contrast, because of our anticipated relatively strong return of Japanese visitors and spending, the smallest effects will be seen and in the end the best growth would be seen on Oʻahu and on the Big Island.”
UHERO also forecasts a slower rate of job creation, and a potential increase in unemployment.