Fri, Sep 2, 2022 6:00 AM
By Kim Jarrett, The Center Square
Hawaii’s economic growth is slowing but is still outpacing projected economic growth for the U.S., according to the Department of Business, Economic Development and Tourism.
The Hawaiian economy will grow 2.6% in 2022 and 1.7% in 2023. The U.S. economy is projected to grow by 1.5% in 2022 and 0.7% in 2023, according to Blue Chip Economic Indicators.
“We are now facing a few new challenges,” DBEDT director Mike McCartney said in a news release. “One, slowdown in construction and real estate activity and the labor shortage; two, the wars and upheavals among world regions and worldwide inflation due to supply chain interruptions and drastic energy price increases; three the continuation of COVID-19 worldwide; and four, slowing economic growth worldwide, especially in the U.S. economy.”
Hawaii’s construction industry has already shown signs of slowing, according to DBEDT. The value of private building permits dropped 30% during the first half of 2022, and construction payroll jobs declined 2.7%.
The state is also recovering from a steep decline in tourism brought on by the Covid-19 pandemic. The state is 86.8% recovered compared to 2019 numbers, according to the DBEDT. But tourism spending is 5.8% higher through July compared to the same period in 2019.
“For tourism, the reopening of international flights, especially from Japan, Oceania and Korea, will change the mix of guests and help local businesses,” McCartney said.
Tax collections were up 35.1% during the first seven months of 2022 compared to the same time in 2019, according to DBEDT’s report.
“The increase in tax revenues was partially due to the higher inflation rate and partially due to economic growth,’ the report said.
Inflation in Honolulu was 6.8% through July of this year. It’s down from 7.5% in March, according to the DBEDT.
“The increase in inflation was partly driven by energy prices, which jumped 35.6 percent due to an increase in crude oil prices,” the report said. “Supply chain disruptions also contributed to the higher inflation rate with an increase for commodities in Honolulu at 12.2% percent in July 2022.”
But the news wasn’t all bad. DBEDT officials predict that the state’s unemployment rate of 4.2% will continue to improve in 2022.
“Hawaii’s economy is showing momentum and continues to move forward positively as evidenced by more jobs and strong tax collections,” McCartney said. “In 2023 we are expected to exceed $100 billion in GDP for the first time ever.”