UHERO Warns: Oil Prices Threaten Hawaii’s Economy

The University of Hawaii Economic Research Organization (UHERO) has warned that rising oil prices and persistent inflation are worsening Hawaii’s economic outlook, according to its latest forecast. The report, titled "War brings more stormy weather to Hawaii," highlights how the ongoing conflict involving Iran has driven up global energy costs, increasing consumer expenses and slowing growth in key visitor markets. While UHERO downplays the immediate risk of a recession, Executive Director Carl Bonham cautioned that prolonged high oil prices could still trigger one. Elevated interest rates, meant to curb inflation, are expected to remain high for years, further depressing housing sales and consumer spending. Meanwhile, the U.S. Senate confirmed Kevin Warsh as the new Federal Reserve leader, replacing Jerome Powell, amid speculation over whether Warsh will maintain the Fed’s independence. Separately, a survey of top economists projects inflation to hit 6% in the second quarter, with elevated levels persisting into the third quarter before easing slightly by year-end. The Federal Reserve’s target of 2% inflation remains elusive, with long-term projections still above the desired rate.