Hawaiʻi’s economic recovery, which resumed with the end of a late-summer COVID-19 Delta wave, faces an uncertain threat from the Omicron variant. That’s according to a new report from the University of Hawaiʻi Economic Research Organization (UHERO), released on December 17.
“At this point, more is unknown than known about Omicron. We do not yet know whether it is more or less virulent than earlier variants, or whether it can evade the protection of existing vaccines,” said the forecast. “The good news for Hawaiʻi is our very high vaccination rate, which will surely provide some protection. And new treatments will reduce the severity of health impacts. Our underlying economic fundamentals are strong. But it is increasingly clear that COVID-19 will not just go away, and that efforts to adapt to ongoing risks will be key to a sustained recovery.”
Other highlights of the report:
- National and international lenses: U.S. and global economies saw a modest summer slowdown during the Delta wave. Labor market gains have been slow to arrive, and now consumer price inflation has surged. This is due both to supply chain bottlenecks and increased demand from pandemic support policies, accumulated savings and robust spending. In response, the U.S. Federal Reserve has signaled a more rapid phase-out of supportive policies.
- Visitor industry: New travel restrictions have pushed back the forecast for the return of international visitors. Even if they are predicted to rejoin the strong U.S. market in 2022, a full recovery of this sector of tourism may remain several years down the road.
- Labor market: Employment gains over the past two years have brought local unemployment down sharply. But many workers who left the labor force during the pandemic have yet to return. This has led to a tight labor market and upward pressure on wages. The payroll job count will expand at a moderate pace over the next two years, but that will still leave the job base in 2023 about 5% lower than its 2019 level.
- Housing: Local home prices have surged this year, mirroring a national trend. Together with high rents and higher consumer price inflation, this is a challenging time for home-hunting families. Construction activity continues at a healthy pace, and the industry will benefit from new and pending federal infrastructure spending.
UHERO is housed in UH Mānoa’s College of Social Sciences.
Read more on UHERO’s website.
This work is an example of UH Mānoa’s goal of Excellence in Research: Advancing the Research and Creative Work Enterprise (PDF), one of four goals identified in the 2015–25 Strategic Plan (PDF), updated in December 2020.