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Personal income forecast to fall 7% in Hawaii, remain flat in 2021

Hawaii’s Council on Revenues plans to deliver more bad news to Gov. David Ige: Hawaii’s total personal income is forecast to fall 7% for 2020 and remain flat for all of next year.

“We’ll remain in the 2020 doldrums through 2021,” said Council on Revenues member Jack Suyderhoud.

Last year at this time, during another banner year for tourism, the Council on Revenues predicted that overall personal income would jump 2%, to $81.2 million.

This year the forecast of a 7% decline for the year would represent a fall to $75.7 million in total personal income.

Thursday’s forecast by the Council on Revenues, which is responsible for the state’s economic forecasts, comes amid huge uncertainty for a tourism-based economy that in 2019 had seen 10.4 million visitors who spent nearly $18 billion across the islands.

Some members of the Council on Revenues debated whether Hawaii’s total personal income could fall anywhere from 6.5% to a whopping 10%.

Kristi Maynard, a member of the council, said she was willing to support a forecast of a 7% drop.

“It’s shocking,” Maynard said, “but it’s reasonable given where we are.”

The economic forecasts were based on more economic unknowns than certainties, including the absence of an extension from Congress for so-called plus-up unemployment benefits of $600 per week that supplemented state benefits before expiring this week; the ramifications of a surge in COVID-19 cases locally and across the country that will further affect isle tourism; efforts by Maui Mayor Michael Victorino to prohibit interisland arrivals to his county; a call from Mayor Kirk Caldwell to shutter bars for three weeks; and a postponement to begin the school year, which affects the ability of some parents to have affordable child care that makes them available for employment, among a slew of interconnected issues that affect personal income.

“The labor force impacts are sort of stark,” said Carl Bonham, executive director of the University of Hawaii Economic Research Organization, who serves on both the Council of Revenues and the House Select Committee on COVID-19, which is scheduled to meet Monday morning.

Out of all of the economic unknowns, Bonham said “the million-dollar question” is when tourism will reopen fully without a 14-day quarantine for arrivals, what those numbers will be and what effect they will have on the state’s economy.

“I don’t know what the probability is that we’ll open on Sept. 1,” Bonham said. “Obviously, we should be a little bit skeptical of that. And the fact that we still don’t have an announced plan that tells the public and the tourism industry what all the details are is disturbing, to say the least. … The longer that goes, the less likely we open on Sept. 1.”

In the interim, Bonham said, “We recognize that there are going to be business failures, and the uncertainties from these openings and closings are highly detrimental. I fully expect continued business closures. So if we shut down all the bars on Oahu for three weeks … a lot of them won’t reopen.”

Members of the Council on Revenues discussed whether there is “pent-up demand” — and how much — for travel to Hawaii during the traditionally slow months between summer and the holidays.

But Bonham said any expectations — including the possibility of a Japanese- Asian “travel bubble” — will rely on the confidence that visitors have in Hawaii’s ability to control its spread of COVID-19.

“Obviously, if we don’t get our own outbreak under control, no one’s going to want to travel-bubble with us,” Bonham said. “And if we don’t get our own outbreak under control, the community won’t be willing to open to tourism.”

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