The state's economic growth predicted to slow for most of 2023, UHERO says
While the economy continues to recover from the pandemic, a new report released by the University of Hawaiʻi Economic Research Organization shows just how gradually the state is improving.
UHERO's first quarter report was released Friday and Carl Bonham, the organization's executive director, said there's reason to be hopeful.
"This report, I'd characterize it as just a little bit more optimistic than our last report," Bonham said.
He explained that fear of a statewide recession continues to be a concern, but it won't happen as soon as originally anticipated.
"Mostly because the U.S. economy has sort of held up stronger than we have been thinking it would. As a result, we're sort of thinking that the coming U.S. recession is really later in 2023," he said.
What that means for the state economy is a slower rate of growth. According to the report, higher interest rates and prices will impact U.S. visitor arrivals, but will likely mean a larger return of international visitors — especially from the Japan market.
"We keep pushing back when we think we'll see any kind of meaningful recovery of Japanese visitors," said Bonham. "Now we're talking about really into the end of the year, fourth quarter, before we get to 50% of pre-pandemic levels."
When it comes to Hawaiʻi's job market, the report shows that the state is still recovering — mainly in the tourism sector. But that industry is still experiencing a worker shortage. Bonham said labor market conditions aren't any tighter than they were in 2019.
Meanwhile, UHERO reports that inflation has slowed significantly.
"Over the last six months, most of these prices have stopped growing. But for some items, prices are falling," Bonham said.
"Inflation for the last 12 months for Honolulu CPI [consumer price index] through January was 5.2% — down quite a bit from it's peak at 7.5%. But the last six months, that inflation was only 1%," Bonham said.
Whether or not inflation continues to slow or remains flat is dependent on the Federal Reserve's next move. Bonham said that could be determined by Friday's jobs report and the soon-to-be-released consumer price index.
Bonham added that he will also be paying close attention to whether or not Congress will raise the debt ceiling, which could disrupt the global economy.