You might have heard that there’s an old adage about the economy and the state of Hawai’i, which also recently appeared in Big Island Now:
‘When the economy goes in one direction, so shall Hawai’i follow suit…around six months later or so.’
However, according to a recent article, that may not actually be the case—or, in the words of Carl Bonham, the executive director at the University of Hawai’i Economic Research Organization (UHERO), “that’s not true.”
According to Bonham, in two of the past four recessions—defined as a significant decline in economic activity spread across the economy, according to the National Bureau of Economic Research— “Hawai’i basically grew right through the U.S. recession, or at least grew much more than the U.S. economy did, which was shrinking.”
We certainly like the sound of that!
Accordingly, the UHERO program’s latest forecast for the Aloha State predicts that the economic outlook has indeed worsened overall, likely resulting in a mild recession during the first half of 2023. However, it also states that Hawai’i could likely come out of thing far better than the mainland, even as inflation continues sending interest rates toward the sky via the Fed’s ongoing hikes.
“[T]here is a possibility that Hawai‘i could get through this without much of a downturn,” said Bonham. “It’s mostly because we’re still in recovery mode; we still have a way to go. We are talking about a much slower rate of job creation throughout 2023.”
Per Bonham’s words, the state continues to benefit greatly from the ongoing recovery of our tourism industry, which could serve to shield the state from more-severe job losses as our international visitors from places like Japan have returned since the early summer.
Furthermore, UHERO is reporting that, likely by the first part of next year, the state will return to around 50% of our Japanese tourists from the averages seen prior to the pandemic. Currently, Japanese tourists account for only around 10% of their historic levels, leaving much room for growth in the remainder of 2022 and into 2023.
What’s more, according to Bonham, it turns out that all islands are not created equal—when it comes to feeling the impacts of a recession, that is! (emphasis ours)
“The negative impacts of the U.S. recession are going to be felt most acutely on Maui and Kaua‘i, on the two markets that are predominantly U.S. markets,” Bonham said. “In contrast, because of our anticipated relatively strong return of Japanese visitors and spending, the smallest effects and the best growth will be seen on O‘ahu and the Big Island, where you can actually imagine starting to see businesses that cater to Japanese visitors starting to come back.”
So folks, you heard it here first! The Big Island is poised to continue along the comeback trail for the rest of this year and beyond, hopefully signaling a true return to form in the coming years ahead. Of course, Karen Bail and co. will continue to track things here as they happen, helping you and your ‘ohana to navigate the challenges as they arise and providing you with one-of-a-kind realty services here on the Big Island.