For months, Hawaii economists warned of an economic cliff facing Hawaii as federal stimulus money designed for small businesses and unemployed workers ran out over the summer. Now, those predictions are starting to come true – and it’s even worse than anticipated.
The reason, Bonham said, is that earlier forecasts about the economic impact of the COVID-19 crisis assumed Hawaii’s tourism industry would reopen some time during the summer, when the statewide count of new cases was virtually nil. But a surge of cases in July and August changed all that.
Now, Bonham noted, the industry has lost not only the summer, but all of September as well. And it’s far from clear that Gov. David Ige will modify the 14-day quarantine order for new arrivals in the state.
Bonham’s snapshot of the economy came Monday during the twice-monthly meeting of the House Select Committee on COVID-19 Economic and Financial Preparedness and an interview with news media afterward.
An index of indicators created by UHERO, Bonham said, shows that over the summer, as the virus was virtually eliminated in Hawaii, economic activity came back. Now, almost half of those gains have been lost, Bonham said.
The overriding lesson: the virus and economy are linked. And it’s not just that billions in federal stimulus money has dried up. There’s also the issue that people who do have money aren’t as likely to go out and spend it when there’s a dangerous virus said to be running rampant in the community. Stay at home orders don’t help.
“This is the same story that I’ve been telling for the last several months,” Bonham said. “When the spread increases, consumers retrench.”
UHERO last week launched a new weekly report using its new index, which aims to provide more timely economic data than the standard, lagging monthly reports on payrolls and unemployment insurance claims.
Despite widely reported problems, Hawaii benefited from a Small Business Administration program that provided forgivable loans to small businesses and a federal program that provided $1,200 direct payments to many people and $600 a week extra in unemployment insurance money for jobless workers.
The programs meant $1.3 billion for unemployed workers in Hawaii and $2.5 billion in SBA loan money. But almost all of that ran out by the end of July.
That’s put a big squeeze on not just businesses that rely on tourism, but the workers they once employed, said Wendy Laros, executive director of the Kona-Kohala Chamber of Commerce. Public officials need to understand the urgency of the situation, which is creating a dramatic “uptick in food needs” for families.