Despite the coronavirus stay-at-home orders and the frightening crash in the state’s tourism industry, overall personal income for Hawaii residents is expected to actually increase by 5% this calendar year over last year’s level, according to the latest projections by the state Council on Revenues.
That increase in overall income may seem utterly counterintuitive, but it was made possible by the enormous sums of federal aid that have flowed into the state, according to members of the council, which is a panel of experts tasked with projecting state tax collections.
Statistics compiled by the Hawaii Data Collaborative show that $10.23 billion in federal funds has been awarded to Hawaii under the four major coronavirus relief bills, and more than $7.65 billion of that has been expended.
More than $3.76 billion of that money went to assistance for individuals including unemployment benefits, economic impact payments to households, lost wages assistance and other programs.
Another $3.9 billion was earmarked to support businesses, including the Paycheck Protection Program that made loans to businesses that could later be converted to grants provided the companies kept their workers on their payrolls during the downturn.
The council had predicted in July that overall personal income statewide would decline by 7% this calendar year during the pandemic, but that hasn’t happened — yet. While the unemployment rate soared and state tax collections tanked in the second quarter of the year, the overall personal income growth statistic increased.
“Essentially, we’re not producing anything, we didn’t have any tourists, but we got this huge inflow of funds that suggests next year is going to be very weak,” said Carl Bonham, a member of the council and the executive director of the University of Hawaii Economic Research Organization.
That’s because most of the federal aid is drying up, and the U.S. Congress has so far been unable to agree on another stimulus package that might pump more money into the local economy.
Based on that scenario, the council on Thursday projected that overall statewide personal income will decline in calendar year 2021 by 4%.
Still, Bonham said he expects the state will get at least some additional federal support next year.
“I think whoever gets elected, we’re going to see additional stimulus next year,” he said.
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