Financial promise and hazard await Hawaii in 2021

0
32
Visitors at Daniel K. Inouye International Airport on the first day of the Hawaii Safe Travel program in October.

2020 was a turbulent year for the local Hawaiian economy and the outlook for 2021 remains mixed and uncertain.

Hawaii’s economy suffered more than any other state from the loss of jobs per capita and the decline in total production in 2020.

Last place comes despite the modest economic recovery that has occurred since the relaunch of trans-Pacific tourism in October.

“Many, many more job losses than in any other state in the country,” said Carl Bonham, executive director of the University of Hawaii Economic Research Organization.

In a largely secluded briefing to lawmakers, Bonham said job losses were most acute in travel, leisure and retail, but almost every industry was affected.

“In Hawaii, job losses were really everywhere. The only major sector that did not lose jobs in 2020 was the federal government, ”Bonham said.

The rise in federal employment was largely due to the US Census Bureau hiring contract workers to do the 2020 census of everyone living in the United States.

Overall, Hawaii ended the year with a net loss of around 100,000 jobs. The state’s pre-pandemic workforce was approximately 650,000 people.

Despite the massive economic shock in 2020, there are some encouraging economic signs.

According to Eugene Tian, ​​chief economist for the state of Hawaii, the number of initial weekly jobless claims has stabilized since tourism restarted in October.

The return of tourists has also helped boost government tax revenues. Around a quarter of this is spent on visitor expenses.

Tian informed lawmakers that revenues from the state’s general excise tax, which fell sharply when the COIVD-19 pandemic imposed lockdowns and stopped travel, stopped falling and even began to improve.

“It’s not decreasing. It has increased slowly, especially in the last 4 months. It’s an upward trend, ”said Tian.

This was welcome news for the state legislature, which faces a multi-billion dollar budget deficit in the years to come. Without substantial improvements in local economic performance, they will be forced to make difficult decisions about spending cuts and vacation days for public employees.

Even with the mountain of data available to forecasters, it’s still difficult to predict what will economically hold in Hawaii in 2021.

Officials have been told not to expect a full recovery in the labor market until comprehensive vaccination is achieved and attendance increases significantly.

Financial support from the federal government is also a big unknown in the coming year.

The billions of dollars in pandemic aid sent to individual households in 2020 resulted in an 8% increase in personal income nationwide, despite the loss of tens of thousands of jobs.

The latest aid package passed by Congress extends some of these benefits through March 2021, what President-elect Joe Biden has referred to as a “down payment.”

With cases of COVID-19 in key Hawaiian tourism source markets like California and the western United States, the local tourism industry is likely to continue to decline well into 2021.

If the last round of fiscal support expires before additional aid is provided, Hawaii could see double-digit percentage decline in personal income in 2021, months before a more robust labor market rebound is expected.