As Hawaii’s counties begin to open their economies, the latest forecast from University of Hawaii economists outlines three vastly different possible economic recoveries.

As might be expected, much depends on tourism: not when it will fully recover – that is predicted to take years no matter what – but when it will begin to return.

Although University of Hawaii Economic Research Organization’s authors note that uncertainties regarding the COVID-19 virus make predictions difficult, UHERO’s forecasts are important because they show economists’ best estimates of what Hawaii’s economy will look like. And they examine how various factors, including government action or inaction, can affect what happens.

UHERO’s overall baseline is that the local economy – the one geared to residents – will slowly rebound, and that when Hawaii does open to tourists, it will do so amidst muted enthusiasm for travel. In this scenario, visitor arrivals will be 50% below 2019 in the fourth quarter, and visitor spending 65% lower than the previous year overall.

Recovery will continue in 2021 and 2022, according to this baseline view. But even by 2022, Hawaii will have only 8 million tourists, 20% lower than the 10 million the state hosted in 2019. The result will be a blow to hotels, where the statewide occupancy rate will average 63% in 2022, compared with 81% in 2019.

But the paper’s lead authors, UHERO Executive Director Carl Bonham and economics professors Byron Gangnes and Peter Fuleky, also offer more optimistic and pessimistic scenarios.

The optimistic view is there’s a moderate return of visitors by late summer. By autumn, with the overall economy buoyed, businesses geared mainly toward residents could recover about 80% to 85% of the recent decline. About two-thirds of job losses would be recovered by next year, according to this view.

The pessimistic view: Tourists don’t return until the fall, causing visitor arrivals to remain low through the end of the year. Real income declines more than 6%, and the total non-farm jobs remain down by 20%, or well over 100,000, heading into 2021.

Hawaii’s Infection Rate Is Nation’s Lowest

The forecast gives Hawaii high marks for containing the spread of the COVID-19 virus. Hawaii imposed stay-at-home orders and a 14-day quarantine on arriving air passengers, which virtually shut down tourism but also reduced new cases of the virus.

The state’s 45 cases per 100,000 people is the lowest in the country, UHERO reported. And that rate compares with 233 in Washington state and 1,763 in New York.

But efforts to contain the virus have come at a stunning price. By April, UHERO reported, the economy had shed some 220,000 jobs, roughly 30% of the state’s labor force. More than half of these were the direct result of stopping tourism and the rest the result of the stay-at-home order.

What’s more, because so many tourism jobs have been lost, it affected large numbers of people already living paycheck to paycheck – economically vulnerable individuals and families.

Hawaii now faces the daunting decision of deciding whether to open itself to tourists — a move that would help the faltering economy but also likely bring new cases of COVID-19 to the state, at a time when there are virtually no cases.

“As we prepare this report, we are unaware of any progress by the State and counties to develop a plan to reopen tourism,” UHERO reported. “This is disturbing to say the least, and the pessimistic scenarios we present below become more likely the longer we wait to develop and operationalize such a plan.”