The newly created House Select Committee on COVID-19 Economic and Financial Preparedness heard a grim diagnosis this morning of the near-term prospects for the Hawaii economy and was warned that unemployment claims are already beginning to increase.
The University of Hawaii Economic Research Organization issued a report this week that predicted that the coronavirus scare would cause visitor arrivals to decline by more than 7% this year, and more than 6,000 jobs in Hawaii will be wiped out before the economy begins to bounce back.
By comparison, the Sept. 11, 2001, attacks caused visitor arrivals to decline by 9.3 percent in 2001, and the onset of the Great Recession caused a 10.4 percent decline in visitor arrivals in 2008.
But University of Hawaii Professor of Economics Carl Bonham said this morning it is now clear the UHERO’s projections earlier this week were too optimistic.
“How long this goes on, really, no one knows. The uncertainty is just enormous,” Bonham told the committee. With stock markets tanking today, “it looks like job losses of 1.5%, it looks like a recession for Hawaii, it looks like a recession for the U.S.”
Hawaiian Airlines President Peter Ingram told his fellow committee members that “even before the rapid expansion of COVID-19 cases in the U.S., over the past several days demand from the U.S. mainland — Hawaii’s largest source of visitors by far — has slowed.”
Hawaiian’s book-load factor in March is running 7% to 8% lower than a year ago, “and losing ground by the day,” he said. “The notion from a month ago that U.S. visitors might pick up slack for lagging Asia demand is not a plausible reality.”
Hawaiian has already cut back on its flights serving Asia, and “we are currently evaluating the need to adjust our North American schedule to better match supply and demand in the near term,” Ingram said. Hawaiian is now one of the state’s largest private employers with 7,500 workers.
“Amid this gloom, I do believe that demand will return as health care authorities across the planet are able to bring the spread of the virus under control, and traveler fear is diminished. I have no basis to project how long this will take,” Ingram said.
House Speaker Scott Saiki opened the first meeting of the committee this morning with praise for the response by Gov. David Ige’s administration to the coronavirus, but a warning that the state needs to brace for the economic impacts.
“The House of Representatives created this committee to recommend actions that can be taken by all sectors to secure Hawaii’s economy and financial viability,” Saiki said to an audience in a third-floor hearing room in the state Capitol. “We all know that maintaining public confidence during a time like this is essential for Hawaii’s recovery. This committee demonstrates that we are all in this together and that we will be prepared.”