(BIVN) – Economic recovery in Hawaiʻi was discussed by members of the House Select Committee on COVID-19 Economic and Financial Preparedness on Monday.
Carl S. Bonham, Ph.D., the Executive Director of UHERO – the Economic Research Organization of the University of Hawaiʻi – discussed the latest UHERO State Forecast Update during the virtual meeting. The forecast predicts another delay in economic recovery.
“Everything is pushed back roughly six months because of the surge in cases on Oʻahu, because of the additional shutdown, because of the postponement of reopening to tourism,” Bonham said. “And so rather than having a relatively robust bounce-back in 2021, it doesn’t start back up until the second half of 2021 when – in our baseline forecast of tourism – recovery is quite a bit stronger under a maintained assumption that by the second half of 2021 a vaccine will become more widely available.”
From the economic summary of the UHERO forecast:
- Tourism jobs fell 60% when the pandemic arrived in March and remains at less than half its pre-pandemic level.
- Industries outside tourism experienced high, single-digit percentage declines in employment.
- Only the construction industry avoided job losses.
- Government contracts awarded have surged fivefold this year, UHERO says, owing to several large military projects.
- Home prices will be held down by modestly higher supply and weaker demand.
- After the shutdown, the tourism recovery will still be hampered by the public’s reluctance to travel.
- Tourism will start to rise after the State begins its planned, pre-travel testing program on October 15. However, more significant tourism gains will be seen only after a vaccine becomes widely available, potentially in the second half of 2021.
- UHERO stressed that economic recovery not only hinges on the recovery of tourism, but on progress in controlling COVID-19 in Hawaii.
The executive summery in the UHERO forecast also contained this explanation on a “pessimistic scenario” for recovery.
In our pessimistic scenario, the much slower restart of tourism and continuing need for social distancing would weigh more heavily on demand. Facing larger and more prolonged budget deficits, the State Government would resort to partial furloughs. The aggregate result of all of this would be persistently weak employment and income, with unemployment remaining above 8% until 2022.
The UHERO summary also made this statement on the economic importance of controlling this second wave of COVID-19:
Hawaii government’s failure to take advantage of a nearly-two-month period without COVID-19 cases to prepare for an eventual resurgence is regrettable, to say the least. To avoid a deeper macroeconomic failure, we must maintain the recent progress in bringing this second virus wave under control, and the State and local governments—with the full support of business and the Hawaii community—must execute flexible plans for the safe and expeditious resumption of trans-Pacific travel and the reopening of the broader economy.
For more information, follow the link to the UHERO portal for the report, entitled UHERO State Forecast Update: Hawaii in early stages of recovery, then a setback.