LIHU’E – Inflation is expected to hamper economic growth in the Hawaiian Islands in 2023, but the delayed recovery of a key visitor market and public sector construction should avert a recession, officials said.
That was the key finding of the University of Hawai’i Economic Research Organization’s fourth-quarter forecast.
“It’s kind of interesting. This forecast isn’t really different from our last one or for Hawaii,” said Carl Bonham, executive director of the research organization commonly known as UHERO, during a Zoom conference on Thursday, December 15 to discuss the projected findings .
“And there’s a lot going on. … Last time we talked quite a bit about the recovery of Japanese visitors, which is really just beginning,” he said.
“Therefore we have lowered our forecast of when we will see a further rebound in Japanese visitors and you would think that would make our overall forecast more pessimistic or less optimistic and yet somehow the US market has continued to surprise the upside and come a bit.” stronger than expected.”
Bonham said the general trajectory of tourism is not that different going forward as the islands are expected to see declining visitor numbers and spending, particularly in relation to the second half of 2023 and into 2024.
What this means for the island of Kaua’i is a slight decrease in airborne visitor numbers from 1,341,800 in 2022 to an estimated 1,341,300 in 2023. The total is expected to increase to 1,315,800 or about 1 in 2024 .9 percent decrease the disadvantage.
But with the bad comes the good, and that’s still years away as visitor numbers are expected to climb to 1,344,000 by 2025, which would be a high for the Garden Island.
On the job front, the outlook is brighter, with the unemployment rate expected to fall to 3.8 percent in 2023 from 4.6 percent in 2022.
It is estimated that the unemployment rate will fall to 3.6 percent in 2024 and 3.0 percent in 2025 in the coming years as the island economy grows due to more visitor arrivals.
In addition, the fall in the unemployment rate should be accompanied by an increase in the number of non-farm payrolls, which is projected to rise from 30,400 in 2022 to 31,200 in 2023. This growth should continue in the following years, with the estimate being put at 31,600 in 2024 and 32,200 in 2025.
Views of neighboring islands
Projections for air traffic arrivals, the unemployment rate and non-farm payrolls are largely in the same direction as for neighboring islands over the next three years, albeit in numbers that reflect the size of each of those economies.
Honolulu County (O’ahu) is expected to see growth in airborne visitors from an estimated 4,917,900 in 2022 to 5,494,100 in 2023. Attendance is expected to reach 5,519,900 in 2024 and 5,648,400 in 2025.
The unemployment rate is expected to remain in a narrow range, falling from 3.7 percent in 2022 to 3.5 percent in 2023. The unemployment rate is expected to rise to 3.9 percent in 2024 and then fall to 3.4 percent in 2025.
Non-farm payrolls growth should be more resilient as it is estimated to reach 452,900 in 2023 from 442,900 in 2022. The number is projected to reach 454,900 in 2024 and 459,500 in 2025.
Maui County is expected to see a drop in visitor numbers from an estimated 2,962,500 in 2022 to 2,958,900 in 2023. Visitor numbers are expected to decrease to 2,925,200 in 2024 before increasing again to 3,011,800 in 2025.
The unemployment rate is expected to fall from an estimated 4.5 percent in 2022 to 4.2 percent in 2023. The forecast calls for the unemployment rate to fall to 3.9 percent in 2024 and then to 2.9 percent in 2025.
Non-farm payrolls growth is projected to increase to 75,200 in 2023 from 73,700 in 2022. This number is estimated to increase further to 76,000 in 2024 and 77,200 in 2025.
Hawaii Island is expected to see visitor numbers increase from 1,692,500 in 2022 to 1,779,000 in 2023 before falling to 1,735,000 in 2024. This number is expected to increase to 1,778,800 in 2025.
The unemployment rate is set at 3.4 percent in 2023, up from an estimated 3.9 percent in 2022. Unemployment is then expected to fall to 3.3 percent in 2024 and 2.9 percent in 2025.
Non-farm payrolls growth is expected to increase to 69,800 in 2023 from 68,500 in 2022. The number is estimated at 70,200 in 2024 and then 70,900 in 2025.
The Federal Reserve’s quarterly forecast banks continue to fight inflation with aggressive rate hikes, which it has signaled will continue to do so in 2023. These moves will result in a significant slowdown in the US economy, in large part because it makes financing everything from cars to more expensive homes.
But at least for the state of Hawaii’s economy, big federal contracts and hotel projects will prop up the construction sector, which in turn will offset a slower housing construction side and help stave off a recession.
“You can’t call our forecast a soft landing,” Bonham said.
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Wyatt Haupt Jr.Publisher, can be reached at 808-245-0457 or [email protected]
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