A new local economic forecast expects mainland tourist volume to near pre-pandemic levels by July, helping advance Hawaii’s economic recovery faster than previously anticipated.
The report by the University of Hawaii Economic Research Organization released for publication today is considerably more positive than a forecast from early March because of recent visitor arrivals, enormous federal stimulus receipts and accelerated COVID-19 vaccine deliveries.
“The basic picture is: better faster,” said Carl Bonham, UHERO executive director.
Still, a full rebound for the state economy to where it was in 2019 remains several years off, according to the report.
“We’re still sort of facing a long slog,” Bonham said.
UHERO expects total statewide visitor arrivals to reach 6.4 million this year, which is 1.4 million more than UHERO forecast for the year in a March report.
The new projection compares with an abysmal 2.7 million visitor arrivals last year and is 62% of the record 10.4 million visitors in 2019.
Next year UHERO expects visitor arrivals will rise to 8.8 million and then close to 9.2 million in 2023.
The report said recent daily visitor arrivals from the mainland, Hawaii’s dominant market, outperformed prior expectations and should reach just over 90% of pre-pandemic levels by July because of pent-up demand from travelers who in many cases have built-up financial savings.
“We’re basically talking about normal (mainland arrivals) by July,” Bonham said.
Earlier this year UHERO had expected that rising COVID-19 cases for much of the mainland would weigh down tourism here. Instead, mainland visitor arrival volume in April surprisingly topped 50% of its pre-pandemic level.
“It sort of became clear that there was this pent-up demand that was going to happen despite the COVID cases ramping up,” Bonham said.
Meanwhile, visitors from international markets will be much slower to recover because of lagging vaccination rates and travel restrictions that should put daily visitor arrivals by late summer at 70% of their pre-pandemic level, according to the report.
If such tourism growth materializes, it would be the biggest driver for an expected 3.6% boost in jobs this year and a 4% gain in the value of all goods and services produced in the state.
UHERO expects the number of nonfarm jobs this year will be 577,500. That would be up 3.6% from 557,500 jobs last year but still down 80,900 jobs, or 12%, from 658,400 jobs in 2019.
UHERO expects the job count to rise 7.7% to 622,200 next year and then 2% to 634,900 in 2023, which would still be 23,500 fewer jobs than in 2019.
This lagging anticipated jobs rebound is affected by factors that include virus concerns by folks who are out of work, uncertainty from employers over their business prospects and parents with schoolchildren still out of school.
The report also noted that Hawaii’s labor force has shrunk because of people moving out of the state, and that employers are reporting difficulty finding necessary labor.
“Vaccination progress will support an improvement of job gains,” the report said. “However, the payroll job count will not approach pre-pandemic levels for several years.”
Hawaii’s unemployment rate is forecast to improve to 7.3% this year from 11.8% last year and then continue improving to 4.8% next year and 3.9% in 2023. In 2019 the rate was 2.5%.
The value of all goods and services produced in Hawaii adjusted for inflation, known as real gross domestic product, is forecast to rise 4% this year to about $93 billion from $90 billion last year. Real GDP is expected to rise 3.1% to $96 billion next year and then 1.5% in 2023 to nearly $98 billion, which would top $97 billion in 2019.
UHERO said a significant range of uncertainty remains around its forecast, which has continually grown more optimistic since late last year.
Because of this the organization published two less likely scenarios for economic change.
A more optimistic one, based in part on better U.S. economic growth and vaccinations, projects about 800,000 more visitor arrivals and 9,900 more jobs this year, among other things.
A more pessimistic forecast, based in part on persistent overseas COVID-19 surges, projects about 800,000 fewer visitor arrivals and 8,800 fewer jobs this year, among other things.