Updated: January 28, 2023
Thanks to strong tourism numbers and improved labor market conditions, Hawai’i’s economy will see little impact from the US recession predicted early next year, according to a new state report released Wednesday.
So far this year Hawai’i had 7.6 million visitors — nearly 89% of the arrivals seen in 2019, the state Department of Business, Economic Development and Tourism’s fourth quarter 2022 Statistical and Economic Report said. The state in 2019 saw more than 10 million visitors, the most in history.
The DBEDT report echoed a recent University of Hawaiʻi Economic Research Organization forecast that said international travelers will help shield the state from a US recession on the horizon. However, UHERO said Maui and Kaua’i will experience a slowdown unlike O’ahu and Hawai’i islands, which are buoyed by Japanese visitors.
In the state report, though, DBEDT Director Mike McCartney said there is reason to be optimistic about the future of Hawai’i’s economy.
“Since the last DBEDT economic forecast in August of this year, the state’s economy has remained firm, with improvements in major indicators,” he said in a news release. “Our visitor industry performance, labor market conditions and general excise tax revenue collections are all improving.”
“We’ve seen the construction and real estate industries slowing down in the last few months, but they are likely to improve as we enter into the new year,” he added.
Maui this year exceeded its 2019 visitor arrivals twice: in April and in September, the report said.
This year, visitor arrivals to the Neighbor Islands are more than 95% of what they were in 2019. However, O’ahu’s numbers were below 80% due to its reliance on international visitors.
Visitor spending totaled $15.9 billion through October 2022, representing an 8.5% increase over the spending amount of the same period in 2019, the report said. After adjusting for inflation, visitor expenditure recovery during the first 10 months of 2022 was approximately 95% of the 2019 level.
Looking ahead, total air seats in December and January are on pace with December 2019 to January 2020 seats.
Seats from the US Mainland will be 17.5% higher than 2019 and seats from international airports will recover 65.4%. Flights from Japan are scheduled to recover 47.4% between the two periods.
Visitor arrivals are projected to be 9.3 million in 2022, slightly higher than the number projected in the third quarter. Arrivals are forecast to increase to 9.8 million in 2023, 10.2 million in 2024, and 10.5 million in 2025, exceeding the 2019 record of 10.3 million.
Also, the labor market conditions continued to improve in the first 10 months of this year, according to the DBEDT report.
Hawai‘i’s seasonally adjusted unemployment rate during the first 10 months of 2021 was the 12th highest in the nation — it dropped to the 16th highest during the first 10 months of this year, the report said.
The unemployment rate was 4% seasonally adjusted and 3.7% not seasonally during the first 10 months of 2022. In comparison, the seasonally adjusted unemployment rate was 6.1% and not seasonally adjusted rate was 6% during the first 10 months of 2021.
Non-agriculture payroll jobs are predicted to bump up by 4.3% by the end of this year, slightly higher than previously projected. Payroll job counts will increase by 3% in 2023, 2.3% in 2024, and 1.9% in 2025. Non-agriculture payroll jobs will recover to the pre-pandemic 2019 level by 2025.
Inflation in the Honolulu area, as measured by the Consumer Price Index for All Urban Consumers, averaged 6.8% during the first nine months of 2022. There was a downward trend from 7.5% in March to 7% in May, 6.8% in July, and 6.6% in September.
DBEDT’s current report predicts Hawai‘i’s economic growth rate, as measured by the percentage change in real gross domestic product, will increase 2.6% this year over last year.
Next year, Hawai‘i’s economic growth is expected to slow down further, to 1.7%, due to the expected global economic downturn.
US economic growth is expected to grow at a mere 0.2% in 2023, with more than a 50% possibility that the US economy will enter a recession according to Blue Chip Economic Indicators.
In 2024 and 2025, Hawai‘i’s economic growth is expected to return to normal growth levels at about 2%, the state report said.
For the full fourth quarter 2022 Statistical and Economic Report, visit the state DBEDT website.