What's Happening?
A report by the University of Hawai'i Economic Research Organization (UHERO) highlights that Hawaii's economy ranks among the weakest in the U.S. when adjusted for local prices. Despite a nominal GDP of $108.02
billion in 2023, Hawaii's price-adjusted per-person GDP, income, and productivity growth have stagnated since the early 1990s. The report indicates that Hawaii's economic performance is comparable to states like Kentucky and New Mexico when adjusted for cost of living. The state's heavy reliance on tourism, compounded by the 2023 Maui wildfires and the pandemic, has exacerbated economic challenges. The report suggests that Hawaii's economic growth has been below national averages for decades, contributing to a sense of financial strain among residents.
Why It's Important?
The findings underscore the challenges Hawaii faces in achieving sustainable economic growth. The state's high cost of living, coupled with stagnant economic indicators, affects residents' purchasing power and quality of life. The tourism-dependent economy is vulnerable to external shocks, as seen with the Maui wildfires and pandemic impacts. The report calls for policy rebalancing to address productivity and growth drivers, emphasizing the need for investment in R&D, workforce development, and tourism resilience. Addressing these issues is crucial for improving living standards and economic opportunities in Hawaii.
What's Next?
UHERO recommends policy changes to enhance productivity and economic growth, including expanding workforce pipelines and increasing R&D investment. The state government is also focusing on short-term relief measures, such as expanding early education and workforce supports. The Department of Business, Economic Development and Tourism remains optimistic about a recovery in visitor numbers, forecasting growth through 2026. However, without structural changes, Hawaii's economic challenges are likely to persist, affecting residents' living standards and economic prospects.
