The coronavirus is causing major problems for Hawaii’s economy, bringing setbacks that could take years to recover from, economists say. 

Hawaii’s job count could fall by 140,000 by June, according to a new report from the University of Hawaii Economic Research Organization.

The new forecast released Monday is already a grimmer outlook than UHERO projected just a month ago. At that time, the organization forecast a loss of 3,900 jobs in the service industry and a 10% drop in visitor spending.

“While it is too early to assess the full impact of these dramatic actions on Hawaii’s economy, it is clear that they will be sharp and painful,” the report says.

While the numbers are scary, the fallout may be softened by a series of relief bills coming from Congress.

There are more coconut trees than visitors at the Hilton Lagoon after the mandatory visitor 14-day quarantine for out of state arrivals.
Hawaii’s job losses could be higher than expected, according to a new report. Cory Lum/Civil Beat/2020

Air travel has dropped off after a mandatory 14-day quarantine went into effect for all travelers coming to the state.

Gov. David Ige also announced Monday restrictions on interisland travel that will likely include 14-day quarantines for people who are not traveling for work.

Steps taken by state leaders to halt the spread of COVID-19 will have a lasting impact on the economy, according to the report.

The brunt of the layoffs are expected to be in the accommodation and food sector, with a loss of 70,000 jobs from just that category. Trade industries could see job losses of 40,000 and transportation and utilities with losses over 10,000.

Personal income for residents this year is also expected to drop by nearly 6% over 2019 income. 

Employment may not return to 2019 levels until at least 2023, according to the report.

“We know Hawaii is already in a deep recession,” Carl Bonham, UHERO’s executive director, told a House special committee on COVID-19. “That recession will surpass anything we’ve seen in our lifetimes. There’s no comparison you could make to an economy that’s basically shut down hospitality and tourism.”

How fast the state’s economy can recover all depends on when the pandemic ends. And with little known about COVID-19, there’s no telling when that might be.

Unemployment could hit 13.7%, according to the report. The total non-agricultural jobs lost in 2020 compared to 2019 could be about 74,000.

Unemployment claims have already risen to over 80,000 just this month.

State tax collections are also expected to take a hit and drop significantly, Bonham said.

Industries propped up by tourism will be hardest hit by COVID-19. Screenshot: UHERO

The UHERO report assumes government-mandated shutdowns will end April 30, the current end date for Hawaii’s travel restrictions and statewide stay at home orders.

Bonham previously compared the path of recovery to a post-9/11 situation. Even that model may not be sufficient to explain the economic situation.

“Even as the crisis wanes in Hawaii, it will still take time to return to previous economic levels,” Bonham told the committee.

Local consumption of goods is expected to recover quickly after normal activity returns. However, the tourism industry will likely take longer to recover.

Air travel to Hawaii has dropped to nearly zero throughout March. The Hawaii Tourism Authority reported just over 800 travelers came to the islands Sunday, and the majority of them were either flight crew or returning residents.

The UHERO report doesn’t take into account a federal relief package that’s on the way for Hawaii.

The coronavirus stabilization package could bring $4 billion in federal money to the state. Congress also is considering more relief packages in the coming months.

Job losses may be eased by the package, said Congressman Ed Case.

The package includes $377 billion to help fund small businesses’ operations for an eight-week period, as well as a yet-to-be announced amount to help out corporations, like airline companies.

“The intent of the CARES Act isn’t to deliver unconditional relief to businesses,” Case told the committee. “The intent of the CARES Act is to keep people on the job.”

UHERO plans to release more reports this week on how the economy can recover, Bonham said.

The House committee will also focus on how business leaders and the state can shepherd Hawaii through the recovery period.

“I think everyone sees the common purpose at this point,” House Speaker Scott Saiki said. “Through this, we will make Hawaii more resilient, more stable.”

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