Updated: 3/31/20, 10:42 a.m.
It’s been less than a week since a statewide stay-at-home order largely shut down Hawaii’s economy in an effort to contain the coronavirus. The latest economic projections indicate restarting activity will take much longer.
Economists across the country, and here in Hawaii, initially hoped for a steep, but short-lived drop in economic activity that would be followed by a rapid return to normal once the pandemic subsided, the so-called “V-Shaped Recovery.”
On Monday, University of Hawaii economist Carl Bonham told a state House committee that it now appears unlikely.
“We know Hawaii is already in a deep recession. That recession will surpass anything we have seen in our lifetimes,” Bonham told lawmakers and business leaders.
He went on to say it now appears the eventual recovery will not be the rapid one that his fellow economists once hoped for.
“Even as the health crisis wanes, even if it passes quickly, it’s going to take an extended period of time to return to previous economic levels.”
Bonham has repeatedly said that the eventual recovery was highly uncertain, and depended heavily on how long it takes to contain the COVID-19 coronavirus.
Less than a month ago, members of the state’s Council on Revenues, which generates forecasts on state tax revenue, said their estimate of 0% revenue growth for the second half of 2020 was conservative.
On Monday, Bonham said the state could see a tax revenue decline of 10% on the low end, but as high as 25%.
Visitor arrivals, the engine of Hawaii’s economy, may decline by more that 40% in 2020 compared to last year. Data from the state Department of Business Economic Development and Tourism already show that visitors have dropped to almost nothing.
Local unemployment, according to UHERO, could reach 25% just for the second quarter (April to June) and almost 14% for the year statewide. The average statewide unemployment rate during the Great Recession was 7%, according to the Hawaii Budget and Policy Center.
But there is a small silver lining, to use Bonham’s description.
The massive $2 trillion rescue package passed by the federal government will guarantee the wage of many workers who lose their jobs. Accounting for that assistance, income levels are only expected to drop less than 5% by the end of 2020.
Find details on the Coronavirus Aid, Relief, and Economic Security (CARES) Act can be seen here.