More than 11,000 tenants were late paying their August rent, and about 9,000 of them were more than 60 days behind, revealing more economic problems from the ongoing damage to Hawaii’s COVID-19-ravaged economy.
Property owners and managers indicate that over 40% of their tenants have lost jobs, meaning they’re struggling to keep up with housing but “they’re not spending on other things,” Carl Bonham, executive director of the University of Hawaii Economic Research Organization, told fellow members of the House Select Committee on COVID-19 on Monday.
The number of delinquent renters means that only 85% of all island renters caught up with their payments by the middle of August. Normally, 95% to 96% of renters pay on time, Bonham said.
Bonham’s economic update to the House COVID-19 committee had plenty of other bad news.
Hawaii’s economy was the worst in the nation — at least when measured by its astounding 42.2% loss of gross domestic product for the second quarter of the year.
“We now have the distinction of having the weakest economy in the country,” Bonham said.
His presentation to the committee followed a previous discussion that revealed little clarity — and lots of questions — about what happens Thursday when trans-Pacific tourists arrive without a quarantine requirement after testing negative for the novel coronavirus 72 hours before boarding a flight, leading to concerns of another uptick in COVID-19 cases.
“These sort of gloomy statistics point to the hardship and the need to get this reopening right,” Bonham said. “We’re leading the country in (economic) decline, and this isn’t going to turn around significantly until we get some resumption in safe trans-Pac travel.”
Gross domestic product measures all goods and services, and economists generally consider GDP an important indicator of an economy’s health.
In terms of lost GDP, Hawaii had lots of company earlier this year as COVID-19 devastated the local and global economies.
Nevada had an identical 42.2% drop in GDP. But Hawaii’s first-quarter decline of 9% combined to rank Hawaii’s worst in the country, Bonham said.
Every other state and the District of Columbia saw double-digit losses of GDP, with Washington, D.C., having the lowest decline, 20.4%.
Rounding out the top five states with the worst second-quarter drops in GDP, following Hawaii and Nevada, were Tennessee (40.4%), Vermont (38.2%) and Michigan (37.6%).
States with the least worst GDP declines were Delaware (21.9%), Utah (22.4%), Virginia (27%) and Georgia and Maryland (both 27.7%).
Locally, construction remains one of Hawaii’s economic bright spots. But nearly every other sector has seen losses related to the pandemic, especially visitor accommodations, which suffered a whopping, nearly 60% decline, Bonham said.
At the same time, Hawaii’s health care system is experiencing a dramatic shift away from commercial health insurance toward the state’s public Med-QUEST health care program as workers lose both their jobs and their health care coverage.
Dr. Mark Mugiishi, a member of the committee and president and CEO of HMSA, did not provide numbers for the committee.
But Mugiishi called growing reliance on public health care while state government struggles with lost tax revenue to pay for services during a pandemic “a trifecta of bad news.”
All of it means that Hawaii’s loss of residents — about 13,000 to 14,000 over the last few years — will get even worse.
Some 4% of isle residents are breaking their leases, Bonham said. About half are moving out of state, and half are moving in with friends and family.
But the overall loss of permanent residents is expected to get even worse as they seek jobs and a lower cost of living somewhere else.
“We see it accelerating in 2021 and 2022 and then flattening out,” Bonham said.
But there are still so many economic unknowns connected to COVID-19 that could affect how many people end up leaving Hawaii.
“Depends on the economy,” Bonham said.
BY THE NUMBERS
>> 11,000+: Number of isle renters who were late paying their August rent
>> 9,000: Number of renters who were 60 days late on their rent payments
>> 40%: Estimate of percentage of tenants who have lost jobs
>> 42.2%: Loss of all island goods and services
Source: Carl Bonham, executive director, University of Hawaii Economic Research Organization