By Kevin Knodell

Hawaii continues to deal with inflation as the prices of housing and energy rise and as wages fail to keep up, with younger residents being hit especially hard.

“Inflation (has) remained elevated, and then shot up with the oil price shock, and what you probably didn’t know is that Honolulu’s inflation is above the U.S. inflation rate,” said Carl Bonham, executive director of the University of Hawaii Economic Research Organization.

Bonham pointed to a series of charts on a stage at the Prince Waikiki hotel Thursday as he delivered a State of the Economy presentation at the Chamber of Commerce Hawaii Young Professionals Program’s Fourth Annual Cost of Living Summit, explaining that “we’re a full percentage point above the U.S.”

The Trump administration’s war against Iran unleashed a regional conflict in the Middle East that has disrupted oil production, refining and shipping across the globe, sending ripples across the global economy.

Bonham said that currently “the energy component of this is only contributing about 1 percentage point — it’s shelter, it’s the housing costs, it’s rents that are really driving these numbers.” But he added that “the longer the disruption in Iran goes on, the longer the oil prices stay elevated, then those price increases start working their way through into all the other goods … that’s really the concern long term.”

Struggles to pay for housing and basic goods have weighed heavily on Hawaii residents as the islands have seen an ongoing decline in population as people leave for better-paying jobs and cheaper costs on the mainland.

Mary Kishimoto, 31, helped plan Thursday’s summit and has been involved in the annual event from the start through the Young Professionals Program.

“It’s always so hard to get your start,” she said. “We’re still considered young per se, but especially right when you get out of college or you start in the workforce, getting that first five- to seven-year start in your career, in your life, that’s when most people leave.”

A study that the University of Hawaii at Manoa’s Social Science Research Institute and the state Office of Wellness and Resilience released Monday found that half of Hawaii residents considered moving out of state in the past year, with the cost of living emerging as the leading reason.

Hawaii’s economy has often been described as a “three-legged stool” dependent on tourism, federal defense spending and construction after the decline of large agricultural operations that once defined the island economy.

In recent years tourism has been on the decline. The COVID-19 pandemic cratered the tourism industry and it has been slow to recover, also taking hits in the aftermath of the 2023 Maui wildfires and this year’s historic storm season.

“Our forecast for the whole year is about a 2% decline in visitor spending in real dollars, and that comes out to $400 million of lost spending, which then ripples through the economy and affects tax revenues, it affects people’s wages, etc.,” Bonham said. “And that’s on a forecast that is is based on recovery, based on people starting to come back again at Christmas after these storms.”

Bonham said while the numbers might climb back up and it may “look like things are recovering,” that “we’re still below where we were before the wildfire. We’re still below where we were before the pandemic.” He argued “what that means is that tourism is not contributing to economic growth. It’s contributing to economic volatility, but it’s not contributing to long-run economic growth.”

Perry Arrasmith, policy director for Housing Hawaii’s Future, attended the summit, where his organization had a booth. He said that “we stopped building housing in the ’70s. Fifty years later, young folks who are entering the housing market, whether they’re looking to rent or whether they’re trying to buy their first condo, they don’t have a lot of options.”

Arrasmith argued that many of the options that are available are older buildings in homes that often come with hidden costs in the form of maintenance, high homeowners association fees and other challenges and that “if we could find a way to make it cheaper to build new housing for residents, I think we could do a lot to lower the costs.”

Kaya Ishimine, 24, is the executive director of the Young Professionals Program. She said that when it comes to conversations about Hawaii’s skyrocketing cost of living, “I think a lot of the time, it’s very siloed.”

“People in the construction industry, legislators, businesses, they’re working in their own silos to try to tackle problems in different ways,” she said. “Whereas this (summit) gives us the opportunity to bring young professionals to the table to give them a voice.”

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