The newest University of Hawaiʻi Economic Research Organization (UHERO) report focuses on the impact of natural disasters and sagging construction on Hawaiʻi’s economy.
UHERO reports that Hawaiʻi’s economic expansion has slowed along several dimensions this year. Volcanic activity and flooding have dealt a setback to tourism. The construction sector has continued to shed jobs, dropping back further from the peak reached in 2016.
Total payroll employment growth has slowed to a nearstop. At the same time, the fundamentals underpinning the local economy look favorable. And even with the recent job weakness, Hawaiʻi continues to enjoy its lowest unemployment in many years.
Tourism on top, but disasters hurt
Natural disasters have been the headline story for Hawaiʻi tourism in 2018, but the year is still turning out to be another very strong one for the industry statewide. Year-to-date visitor arrivals are running 8 percent higher than a year ago, and inflation-adjusted expenditures are up 9 percent. For the state overall, this will be another record year when all is said and done.
Job picture not as pretty
Hawaiʻi labor markets continue to be very healthy, but there are now signs of softening. Having settled at historically low levels, the statewide unemployment rate and initial claims for unemployment compensation have changed very little over the past year. In recent months, the labor force and employment have been trending up, but they are flat for the year to date.
Enjoying income gains—for now
Real personal income and nonfarm labor earnings rose approximately one percent over year-earlier levels. The greatest gains were recorded in the finance, insurance, and real estate industry, which will slow from a mid-single-digit pace to below 2 percent by the end of the year.
Rebuilding infrastructure and image
The tourism industry, already bumping into capacity constraints, will now have to do without some of the facilities impacted by the disasters. And because media coverage tends to focus on the rare but graphic and dramatic events, industry representatives will also have to restore Hawaiʻi’s image as a safe destination for family vacations. Eventually rebuilding—whether financed from local resources or federal relief funds—will provide a bump in construction jobs.