Economic forecasters say Hawaii might not fare as badly as the U.S. as a whole over the next two years — but that doesn’t exactly translate to “happy days are here again.” What it does mean is that while the U.S. may be pushed into a sustained economic downturn — a recession — because of rising federal interest rates, Hawaii may squeak through with minimal growth.

Sounds like a plan. With careful individual financial planning, support for island-based businesses and employees, and strategic assistance from government bodies, Hawaii can and should remain on a positive trajectory.

Analysts with the University of Hawaii Economic Research Organization (UHERO) project that the U.S. economy will experience a recession during the first half of 2023, with a return to a growing economy in 2024. But UHERO Executive Director Carl Bonham says Hawaii is “out of sync with the the rest of the country,” in a good way.

“There is a possibility that Hawaii could get through this without much of a downturn,” Bonham said. As he notes, during two of the last four U.S. recessions, Hawaii continued a growth pattern throughout.

One reason Hawaii is expected to continue growing is that the state is still in “recovery mode,” Bonham says. Hawaii weathered stratospheric unemployment and the shuttering of many businesses during the COVID-19 pandemic, thanks largely to government subsidies and rainy-day funds. And it also experienced a whiplash-inducing recovery, up to a point, when travel restrictions were loosened and U.S. tourists flocked to the islands.

Nonetheless, an economic downturn throughout the U.S. is considered likely. The U.S. Federal Reserve has signaled its willingness to push the nation into recession if that’s what it takes to calm inflation.

UHERO warns that rising interest rates, continued inflation and unpredictable global conditions can all inflict pain, predicting that Hawaii’s economy will not start growing again at a satisfactory rate until 2024.

As recession takes a toll on American jobs and incomes, travel from the mainland U.S. to Hawaii is expected to drop. UHERO projects that visits from Japan will continue to grow, cushioning Hawaii’s economy, but it also projects that Maui and Kauai, more dependent on domestic visitors, will feel the hurt more than Oahu and Hawaii island.

With economic outcomes uncertain, the wise path for Hawaii is to plant seeds now that can flourish when conditions allow.

Workers who are able would be wise to build and maintain a financial cushion, favoring savings with interest rates that reflect rising federal benchmarks. For those in precarious situations, or who are unemployed, it’s vitally important to gather one’s resources, avoid debt and have no hesitation in pursuing assistance that may be available, such as employment training, food bank distributions and Obamacare — subsidized health insurance. When shopping, shop local as much as possible to keep money circulating here. If vacationing, do so in the islands to boost the local economy.

Small businesses tend to feel the pain of inflation and higher interest rates more than national and international companies, which have a wider base of support. If Hawaii’s consumers support local business, it will help owners retain workers, creating a virtuous cycle.

Finally, the public sector can play a valuable role in the islands’ economy. Responsive action by the Department of Education and University of Hawaii to meet the needs of Hawaii’s K-12 and higher education students, building a resilient, capable workforce, is a protection against recessionary effects.

Hawaii’s state and county leaders must ensure that budgets are balanced and plans are in place to ride out hard times while maintaining essential services. Maintaining rather than neglecting operations such as education, health care and criminal justice is the prudent course to keep Hawaii on a positive slope.