A leading Hawaii economist believes the state’s economy might not completely recover from the Kilauea eruption before the next major economic recession.
Paul Brewbaker, principal of Hawaii consultancy TZ Economics, delivered a keynote presentation at the annual membership meeting of the Hawaii Island Economic Development Board last Wednesday, in which he expounded on the future of the state’s economy, particularly following the devastating eruption.
The 2018 eruption, Brewbaker said, represented a disruption to the state’s economy roughly on par with those caused by 9/11 — when a widespread fear of flying caused visitors to the island to drop precipitously — and the concurrent closures of Aloha Airlines and ATA Airlines in 2008. While the economy eventually rebounded from those disruptions, Brewbaker said this time might be different.
Even before the eruption, unemployment was rising statewide, Brewbaker said, which he explained is possibly indicative of an upcoming nationwide economic recession. And, after the eruption began in May, unemployment in Hawaii County rose from 2.3 percent to 3.5 percent.
Unemployment has been declining steadily for a decade since the 2008 recession, when it reached more than 10 percent. The post-eruption spike in unemployment abruptly reversed that trend and has yet to correct itself.
Meanwhile, economic growth throughout the state has slowed during the past several years. While median single-family home values have increased in the past decade, that increase has slowed year-by-year, reaching about $400,000 on the Big Island in February, shy of the peaks before the 2008 recession.
“There’s something going on in SoCal that we’re missing,” Brewbaker said.
Brewbaker said construction throughout Hawaii is generally stagnant. The construction industry had been losing jobs steadily since 2016, well before the eruption.
While some economic trends seem to indicate an impending financial recession, Brewbaker said there is a chance the cyclical “roller coaster” of the national economy might instead be stabilizing into an “escalator”: a shallower, steadier upward slope without massive fluctuations such as 2008.
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Email Michael Brestovansky at mbrestovansky@hawaiitribune-herald.com.
