Hawaii economists predict continued slow growth for the state’s economy, amid a decline in travel from the state’s most important international market and the aftermath of the tragic August wildfire, which dealt a significant blow to Maui tourism. 

University of Hawaii Economic Research Organization’s executive director Carl Bonham’s preview of UHERO’s latest outlook on state’s economy on Thursday comes a day after U.S. Federal Reserve Chairman Jerome Powell sent stocks soaring with comments signaling that the U.S. economy may be headed for an elusive soft landing – and, eventually, lower interest rates – after a period of rising inflation and rate increases designed to tame it.

The optimistic outlook for the U.S. as a whole is welcome news for the Aloha State, which has been depending on increasing visitor spending from the U.S. mainland to make up for a continued decline in Japanese visitors. The Japanese market dried up during the Covid-19 and is now back only to about 50% of pre-pandemic levels.

Despite what UHERO’s forecast describes as “headwinds,” the Hawaii economy continues to grow.

“I don’t even know you would call it a landing,” Bonham said Thursday, comparing Hawaii’s outlook to the mainland’s predicted soft landing. “It’s continued slow growth.”

Bonham’s comments came during a media briefing on UHERO’s forecast, which was made public early Friday. The headline of continued growth is perhaps the most remarkable aspect of the report, which offers numerous variations on a less-than-rosy theme.

High mortgage rates have hurt home sales, UHERO notes. The researchers predict yet another year of declining population. And tourism seems to have hit a wall.

The wildfires have hurt the high-value travel to Maui. Japan’s weak yen means there’s no sign the lucrative market will fully bounce back soon. UHERO’s bottom line for the state’s key visitor industry: “Overall real visitor spending will drop in 2024 and firm thereafter.” The losses could amount to $1 billion from a $20 billion market. 

Still, Bonham said, Maui has bounced back faster than expected. As many as 3,800 people out of work on Maui in September have found work, Bonham said.

And UHERO predicts, “Maui rebuilding will drive further expansion of an already hot Hawaii construction industry,” although getting and housing workers will be a challenge. 

While Bonham said, “There’s still a long road ahead,” he said UHERO expects 1% job growth in 2024.

UHERO expects the construction industry to drive the economy beyond next year, and not just because of Maui rebuilding. The issue, however, is capacity. Having enough workers and homes where they can live could be a challenge.

“We estimate that at their peak, rebuilding efforts on Maui will require about 2,000 additional construction workers,” UHERO reported. “Projects slated for construction in Honolulu will require another 3,000 construction workers, bringing total industry employment in the state above 42,000 workers by 2027, by far the highest level on record.”

Rebuilding Maui, UHERO predicts, will be a major economic story until late in the decade, and so will the need to help Maui residents.

“Displaced Maui residents will need to have the financial and moral support of our community for years to come,” UHERO reported. 

“Hawaii’s Changing Economy” is supported by a grant from the Hawaii Community Foundation as part of its CHANGE Framework project.